Strict BEE rule in South Africa officially scrapped
The Property Practitioners Regulatory Authority (PPRA) has officially confirmed that it will no longer require a BEE certificate to issue Fidelity Fund Certificates (FFCs) to property practitioners.
This follows a High Court ruling in early September that declared provisions of the Property Practitioners Act (PPA) unconstitutional and set them aside.
“Property practitioners are advised that, in terms of the Court’s interim order and for the duration of the suspension period, the PPRA will no longer require a BEE certificate in order to issue an FFC,” it said.
The need for a BEE certificate has been part of the PPA since it was enacted in 2022, under section 50(a)(x).
Until April 2024, FFCs were issued based on the requirement of a property practitioner having a valid BEE certificate.
However, from April 2024, the PPRA imposed a new policy which required practitioners to meet the “accepted level of compliance” of 40 points or more (BEE Level 8). This was non-negotiable, it said.
If a practitioner were not BEE compliant, an FFC would not be issued. Operating without an FFC is a criminal offence.
Further muddying the matter was the question of what constitutes a property practitioner, with the overbroad definitions in the laws capturing small businesses, individuals, advertisers, and others under the same scheme.
The policy change was challenged by business and property groups, with Sakeliga taking the matter to court.
The key argument was that the laws require only a BEE certificate, not any level of BEE compliance, nor do they empower the PPRA to set it.
The High Court ultimately agreed, but went further to say that the entire section 50(a)(x) created too much uncertainty and had to be struck down entirely.
Section 50(a)(x) provides that the Authority may not issue a Fidelity Fund certificate to “any person” who is not “in possession of a valid BEE certificate”. However, the PPA does not define that expression.
“Neither the PPA nor the applicable statutory framework identifies with reasonable certainty what document is required, from whom it is required, or what substantive standard must be satisfied for the document to be ‘valid’,” the court said.
“Those affected by the provision, and the Authority charged with administering it, cannot determine those matters from the legislation with reasonable certainty…s 50(a)(x) therefore fails the requirement of legal certainty inherent in the rule of law.”
Changes for now
The PPRA noted that the court’s declarations still need to be confirmed by the Constitutional Court before taking effect.
While BEE certificates are no longer required for FFCs, this could change—either if the Constitutional Court does not confirm the ruling, or later, when Parliament amends the laws to correct them.
Changes to the definitions are in a similar position. The court declared paragraph (b) of the definitions was invalid.
This declaration of invalidity is suspended for a period of 24 months from the date of the confirmation by the Constitutional Court.
During the suspension, the court order read in a replacement, which limits the definition of who qualifies as a property practitioner under the PPA.
This now explicitly excludes “a natural person” involved in marketing or promoting a property they own in their personal capacity, and excludes cases where such activity is undertaken in the course of property development or in a business involving the sale and marketing of properties.
It also excludes those whose involvement goes no further than disseminating or hosting adverts placed by another person and is not otherwise participating in the sale.
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