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Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003)

Verification Manual

15. Fronting

 

 

15.1 The Verification Agency assesses the risk of fronting by the measured entity and shall include the following minimum procedures when identified:

 

15.1.1 Review official ownership structure of the measured entity and understand the relationship between the measured entity and the holding company, affiliates and subsidiaries and related parties.

 

15.1.2 Review the organisational structure of the measured entity and the job descriptions of each position in the structure.

 

15.1.3 Inspect documentation which set out the responsibilities of the directors/ management to determine who participates in the core activities of the measured entity.

 

15.1.4 Confirm that the responsibilities, accountabilities and reward of black directors/management do not differ from the non-black directors/ management on the same level.

 

15.1.5 Review the minutes of the meetings of the board of directors and management and confirm who is responsible for making strategic decisions.

 

15.1.6 Inquire from directors or management what their role within the measured entity  is.

 

15.1.7 Inspect personnel records and minutes for suspicious  appointments  and resignations of directors/management.

 

15.1.8 Inspect personnel records to determine significant differences in remuneration packages of black directors/management compared to the non black directors/management  on the same level.