Businesses Act Review

Consumer & Corporate Regulation Division – the dti

Presentors:MacDonald Netshitenzhe (Chief Director:Policy& Legislation)

:Baneka Dalasile (Director: Legal Support)

:Tshifhiwa Mavhuthugu (Director: Legislative Drafting)

:Lonwabo Sopela (Deputy Director: Legislative Drafting)

Purpose of Act

The purpose of the Act is to:• promote the right to freedom of trade, occupation and profession

and any rights contained in the Constitution;• promote the development of South African economy by providing a

standardised regulatory framework within which business licencing would take place;

• to encourage a conducive environment that promotes compliance and sustainability of businesses;

• set essential norms and standards applicable nationally, provincially and in municipalities relating to licensing of businesses.

Application of the Bill

• any natural or juristic person or seeks to or carrying on business within the Republic.

• Licensing authority may in consultation with – Minister of Trade and Industry – Minister of Cogta– Relevant MEC

exempt categories of persons or applications for licenses from one or more of the provisions of the Act, Provincial legislation or a by law.• Publication of such application for exemption for a period of not less

than 30 days in a gazette for public comments.

Summary of the Bill• The Bill seeks to provide:

– a simple and enabling framework for procedures for application of business licences by setting national norms and standards ;

– framework for co-operative governance and harmonisation of standard procedures and minimum requirements for application of business licences ;

– framework for support monitoring and standard setting by national government in order to build local government into an efficient, frontline agency capable of integrating the activities of all spheres government for the overall social and economic upliftment of communities in harmony with their local natural environment ;

…….Summary of the Bill

– to provide for the appointment of inspectors; to provide for

framework of penalties and administrative fines for non-

compliance;

– to repeal the Businesses Act, 1991 and all proclamations,

notices, regulations promulgated under that law; and

– to provide for matters connected therewith.

Licensing authority

• Is any local municipality or Metropolitan municipality as defined in Municipal Structures Act (Act no 117 of 1998)

• Licensing authority to keep an up to date central registry• Compile and submit to MEC a consolidated report of all

licensed businesses and any other prescribed information.

General interpretation of the Act

• If there is an inconsistency between any provision of this Act and a provision of any other national or provincial legislation, or municipal by-law- – the provisions of both Acts apply concurrently, to the

extent that it is possible to apply and comply with one of the inconsistent provisions without contravening the other; and

– to the extent it is impossible to apply or comply with one of the inconsistent provisions without contravening the provisions of the second, the provisions of this Act shall prevail.

Application of licenses

South African citizen Foreigners

• Relevant licensing authority • Relevant licensing authority

• Prescribed manner and form • Prescribed manner and form

• Comply with the Act, Provincial • Comply with the Act, Provincial

legislations and by laws legislations and by laws

• Payment of prescribed fee • Payment of prescribed fee

Valid business permit ( Immigration Act, 2002)

Any other documentation required to verify the status of such a foreigner (Immigration Act and refugees Act)

Licensing process

Decision within 30 days

Issue Licence Request additional documents

No action after 14 days by applicant

Deemed abandonment of application

Documents received

Issuing of licence

Reject applicatio

n

Appeal to ADR

structure

Request extension

No action after 30 days and extension period by

authority

Deemed issuing of licence

Reject application

Appeal to ADR structure

A license

• Valid for 5 years• To be renewed three months before the expiry date • Upon death or incapacity of license holder, the administrator may continue to

conduct licensed activities in the name of the estate, or make an application to transfer the license to another person.

• License can be amended by the licensing authority (in the public interest/ license holder to be informed) (s22)

• License can be amended on application by the license holder (s23)

Automatic revocation

• Consistent failure to comply with compliance notices (without plausible explanation)

• Disqualified in terms of section 24 of the Bill• Guilty of selling counterfeit goods• Guilty of contravening Customs and Excise Duty Act• Guilty of contravening Foodstuffs, Cosmetics, and disinfectants Act• Guilty of employing illegal foreigners• Contravening immigration Act, refugees Act or any related legislation in the

Republic.• Guilty of conducting illegal business from licensed premises

Fronting and prohibitions

• Fronting is not allowed (s19)• Contravention of licence conditions, related legislation and bye laws is

prohibited• Failure to produce license when requested to do so• Obstructing, interfering and hindering an inspector while performing his duty• Refusing to provide an inspector with the document or information required• Falsifying, altering a licence or compliance notice• Providing false information, or misleading forged document

Penalty

• Fronting(s19) and prohibitions (s25) carry a penalty of a fine, or• Imprisonment for a period not exceeding 10 years, or• Both a fine and imprisonment

Enforcement

• There will be inspectors and Accredited Community Based Organisations that will assist the licensing authorities in monitoring the enforcement of the legislation.

• The inspectors have the powers to:– Conduct inspections, monitor and enforce compliance – Investigate complaints – remove and confiscate goods– issue fines– issue compliance notice– close a business or premises pending further investigation– Enter premises, request a document and question anyone

14

Inspectors

• Suitable person appointed by the Licensing authority• Person designated by the Minister• Any member of SAPS• Commissioner or any officer for Customs and Excise• Traffic officer • Any person appointed under section 10 of foodstuffs,

Cosmetics, and Disinfectants Act• Peace officer contemplated in section 334 of Criminal

Procedure Act

15

Transitional arrangements

• Any application for a licence or matter received by a licencing authority under the Business Act,1991,before the date of commencement of this Act and not disposed of prior to the date of commencement of this Act, must be disposed of by that authority in terms of that Act despite its repeal.

• A licence issued under 1991 Act and all compliances notices or fines remains valid until it expires, thereafter it shall be renewed in terms of this Act unless revoked by the licensing authority.

• A Licence holder must convert a licence issued under the Business Act, 1991, into a licence issued under this Act, may do so within twelve (12) months from the commencement date of this Act.

16

Progress status

• The Bill was published for comments for 30 days ( 18 March to 18 April 2013), extended until 30/04/2013

• Analysis of comments from Public has commenced

- Many comments are in support but worried problems relating to

implementation e.g. lack of capacity

- DHA officials are of the view that foreigners whose status is not yet

confirmed (6months) should not be granted licenses

- DHA also requests that the provisions of the Bill be aligned to the provisions

of Immigration and Refugees Act

- CogTA is of the view that security matters should be provided for in the

object/Purpose of the Act• No decision has been taken in support or not on the comments internally

17

What is likely to happen when the Bill is passed? impact

• The Bill will foster:

- smooth implementation of harmonised norms and standards in

implementation

- certainty in doing business in all tiers of government

- building of capacity relating to enforcement of the Act• The Bill with its Regulations will prescribe costs that are very minimal

throughout the country.

18

Conclusion

• The Business Act, 1991 is in existence as for now before this Bill comes into operation.

• Its implementation throughout the country is not uniform• No capacity for implementation is built• This Bill seeks to harmonise certain minimum standards in the implementation

in order to foster cooperative implementation throughout all three tiers of government.

• It is not the intention of this Bill to introduce regulatory burden eg prescribed costs will be minimal

19

20

THANK YOU