B-BBEE in 2025 - What South African businesses must know

Broad-Based Black Economic Empowerment (B-BBEE) has become more than just a compliance requirement. In 2025, it is a strategic imperative. For businesses operating in South Africa, changes to legislation, sector-specific codes, and increasing enforcement have made it critical to review B-BBEE strategies with urgency. Non-compliance now carries legal, reputational, and financial risks that few businesses can afford to ignore.

One of the most significant developments this year is the implementation of sector-specific employment equity targets. These stem from amendments to the Employment Equity Act, which came into force in August 2024. In April 2025, the Minister of Employment and Labour published final targets for 18 economic sectors, requiring designated employers to submit five-year plans that align with these benchmarks. Businesses have until 31 August 2025 to comply, failing which they could face penalties or even disqualification from government tenders. These changes signal a move towards greater state oversight and stricter enforcement, particularly in the context of public sector procurement. Legal experts have noted that the amended Act also places the burden on employers to provide “reasonable grounds” when targets are not met. The focus is shifting toward measurable transformation outcomes, not just procedural compliance. (Baker McKenzie)

Another change affecting small businesses, particularly Exempted Micro Enterprises (EMEs), is the refinement of the B-BBEE affidavit verification process. As of June 2025, the Department of Trade, Industry and Competition (DTIC) requires affidavits to include Standard Industrial Classification (SIC) codes and confirmation of permanent black ownership status. These affidavits must also be submitted to the appropriate sector charter councils. This is part of a broader effort to prevent fronting and ensure more meaningful participation in empowerment structures. (LPC Legal Practice Council)

For legal professionals, the introduction of the Legal Sector Code is one of the most significant B-BBEE milestones in recent memory. Gazetted in September 2024, the code outlines specific obligations for law firms, including a minimum of 50 per cent black ownership, 3.5 per cent of payroll to be spent on black skills development, and mandatory procurement targets from black-owned legal service providers. Firms whose financial years began before 20 September 2024 may still be measured under the Generic Codes, but that window is closing. The code also anticipates the formation of a Legal Sector Charter Council and a transformation fund, which will further formalise and centralise monitoring of compliance across the profession. (Legal Academy)

The consequences of non-compliance have never been more serious. Fronting, which involves creating the illusion of empowerment without real economic or voting power, remains a criminal offence under the B-BBEE Act. Offenders face fines of up to 10 per cent of annual turnover, potential imprisonment for directors, and exclusion from public sector contracts. These penalties are not theoretical. The B-BBEE Commission has launched investigations into several high-profile companies in recent years, signalling that enforcement is a top priority. (Bee Chamber)

B-BBEE is also playing a growing role in mergers and acquisitions. The Competition Commission has made it clear that transformation will form part of the “public interest” assessment in merger approvals. This means that due diligence processes must now evaluate a target company’s B-BBEE status, including its ownership structure, scorecard history, and ability to meet sector-specific requirements post-transaction. Failure to do so could result in delays, conditional approvals, or even blocked deals. (Company Partners)

Ownership structuring is one of the most complex elements of B-BBEE compliance. The Codes assess ownership not only by the percentage of shares held by black South Africans but also by their voting rights, economic interest, and long-term value realisation. Effective structures often include employee share ownership plans, community trusts, or equity equivalents for multinationals or capital-constrained businesses. These must be designed with care to ensure they are legally compliant and commercially viable. Structures that are legally sound on paper but hollow in practice may invite scrutiny or even be declared invalid. (Signa Advisors)

The key message for 2025 is that B-BBEE is no longer an isolated compliance exercise. It must be integrated into all aspects of business planning, from hiring and procurement to ownership and dealmaking. This includes aligning annual verification cycles with broader business reporting, embedding transformation in investment strategies, and building lasting partnerships with black-owned suppliers and service providers.

Legal firms like Moodley Attorneys are increasingly called upon to navigate these complexities. From structuring ownership transactions and advising on due diligence to helping clients meet procurement and skills development thresholds, the legal sector plays a critical role in turning compliance into a competitive advantage.

For businesses looking to remain relevant, attract investment, or unlock new markets, transformation cannot be an afterthought. In today’s environment, it is a signal of credibility, readiness, and long-term sustainability.