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Mineral and Petroleum Resources Development Act, 2002 (Act No. 28 of 2002)

Notices

Codes of Good Practice for the Minerals Industry

5. Ethics of Conduct

 

5.1 FRONTING PRACTICES

 

Fronting practices include, but are not limited to:

 

5.1.1 Window-dressing

 

This includes cases in which black people are appointed or introduced to an Enterprise on the basis of tokenism and may be:

(a) Discouraged or inhibited from substantially participating in the core activities of an Enterprise; and
(b) Discouraged or inhibited from substantially participating in the stated areas and/or levels of their participation;

 

5.1.2 Benefit Diversion:

 

This includes initiatives implemented where the economic benefits received as a result of the BEE Status of an Enterprise do not flow to black people in the ratio as specified in the relevant legal documentation.

 

5.1.3 Opportunistic Intermediaries:

 

This includes Enterprises which have concluded agreement with other Enterprises with a view to leveraging the Opportunistic Intermediary's favorable BEE Status in circumstances where the agreement involves:

(a) Significant limitations or restrictions upon the identity of the Opportunistic Intermediary's suppliers, service providers, clients or customers;
(b) The maintenance of their business operations in a context reasonably considered improbable having regard to resources; and
(c) Terms and conditions which are not negotiated at arms-length on a fair and reasonable basis.

 

5.1.4 Indicators of Fronting

 

The fronting indicators include, but are not limited to:

5.1.4.1 The black people which an Enterprise claims are its shareholders, executives or Management are unaware or uncertain of their role or participation within an Enterprise
5.1.4.2 The black people who serve in executive or management positions in an Enterprise is paid significantly lower than the market norm, unless all executives or management of an Enterprise are paid at a similar level
5.1.4.3 The black people identified by an Enterprise as its shareholders, executives or management have limited knowledge of an Enterprise;
5.1.4.4 There is no significant indication of active participation by black people identified as top management at strategic decision making level

 

5.1.5 Non Compliance

 

Non-compliance with the Codes of Good Practice will render the entity to be in breach with the MPRDA and subjected to section 47 of the Act