Fallout over NEEEF growing
Numerous white businesspeople are seeking assistance and advice on options to either fight the New Equitable Economic Empowerment Bill in court or to relocate their businesses to other countries.
Eben de Klerk of ISG Risk Services said he is inundated with queries and at this stage it appears that Mauritius is the country of choice because of its flat 15% tax rates, ease of doing business, and the fact that it is the African country with the lowest corruption index while boasting a per capita Gross Domestic Product (GDP) of N$130 000.
“This is the opposite of the non-enabling legal, political and economic environment in Namibia,” he commented.
An opinion from a senior advocate was already sought on the prospect of a court challenge, and more specifically, to ask for a declaratory order from the High Court on the constitutionality of the bill in its current form.
“We were advised that although possible, it is more likely that the court will resort to a fall-back argument that the bill is still in draft format and that the court cannot make an order at this consultative stage,” he said.
Moreover, extensive research is required on the prospect of moving businesses offshore.
De Klerk said although there are several safeguards in the Namibian Companies Act, it must be assumed that amendments to this Act will follow to give effect to the empowerment bill.
During the consultative meeting in the Khomas Region on 20 July, the permanent secretary in the Office of the Prime Minister, Andrew Ndishishi, remarked that the bill does not contravene the Namibian Constitution and mentioned that several countries have successfully implemented similar legislation.
De Klerk subsequently wrote to Ndishishi, saying many senior legal experts would disagree with him on the constitutionality of the bill and asked for specific examples of where such legislation is successful.
De Klerk asked that Ndishishi provide these references or to “at least admit” to the Namibian public that he made a “false statement in support of legislation that will no doubt cripple Namibia’s economy”.
He asked the Law Reform and Development Commission (LRDC) what research was conducted at the inception of the bill which looked at the number of companies in Namibia owned by previously disadvantaged people (PDPs) as opposed to whites, what portion of the private sector is white and black owned, including for example exploration concession enterprises, mining and fishing companies, as well as construction companies.
The bill in its current form compels all white male Namibians owning an existing or future company to transfer at least 25% ownership to PDPs and that at least 50% of the management of these companies must be PDPs. This requirement includes sole traders.
White males may similarly not sell ownership to their white wives who count among the PDPs.
PDPs may never sell any part of their businesses to white males or to a “foreign enterprise owned by a person that is not previously disadvantaged”.
The latter part of this proposed provision has raised questions whether Chinese nationals count among the “previously disadvantaged” and by whom they were previously disadvantaged.
Because it is not clear from the bill who will fund forced selling of businesses, an observation was made that peddling in pension funds will become rife as a result of the amendment to Regulation 28 of the Pension Funds Act that forces pension funds to invest in unlisted investments.
The bill provides for the establishment of a council consisting of Cabinet members and six other persons who will be bound by a confidentiality clause, thus disallowing any disclosure of any information relating to the affairs of the council, which means its activities will not be open to public scrutiny.
All businesses will be subject to investigation and seizure of documents and equipment by this council.
Non-compliant businesses could be refused fitness certificates, tax good-standing certificates, social security standings or transport licences, which De Klerk said would no doubt result in the forced closure of such businesses.
CATHERINE SASMAN
Eben de Klerk of ISG Risk Services said he is inundated with queries and at this stage it appears that Mauritius is the country of choice because of its flat 15% tax rates, ease of doing business, and the fact that it is the African country with the lowest corruption index while boasting a per capita Gross Domestic Product (GDP) of N$130 000.
“This is the opposite of the non-enabling legal, political and economic environment in Namibia,” he commented.
An opinion from a senior advocate was already sought on the prospect of a court challenge, and more specifically, to ask for a declaratory order from the High Court on the constitutionality of the bill in its current form.
“We were advised that although possible, it is more likely that the court will resort to a fall-back argument that the bill is still in draft format and that the court cannot make an order at this consultative stage,” he said.
Moreover, extensive research is required on the prospect of moving businesses offshore.
De Klerk said although there are several safeguards in the Namibian Companies Act, it must be assumed that amendments to this Act will follow to give effect to the empowerment bill.
During the consultative meeting in the Khomas Region on 20 July, the permanent secretary in the Office of the Prime Minister, Andrew Ndishishi, remarked that the bill does not contravene the Namibian Constitution and mentioned that several countries have successfully implemented similar legislation.
De Klerk subsequently wrote to Ndishishi, saying many senior legal experts would disagree with him on the constitutionality of the bill and asked for specific examples of where such legislation is successful.
De Klerk asked that Ndishishi provide these references or to “at least admit” to the Namibian public that he made a “false statement in support of legislation that will no doubt cripple Namibia’s economy”.
He asked the Law Reform and Development Commission (LRDC) what research was conducted at the inception of the bill which looked at the number of companies in Namibia owned by previously disadvantaged people (PDPs) as opposed to whites, what portion of the private sector is white and black owned, including for example exploration concession enterprises, mining and fishing companies, as well as construction companies.
The bill in its current form compels all white male Namibians owning an existing or future company to transfer at least 25% ownership to PDPs and that at least 50% of the management of these companies must be PDPs. This requirement includes sole traders.
White males may similarly not sell ownership to their white wives who count among the PDPs.
PDPs may never sell any part of their businesses to white males or to a “foreign enterprise owned by a person that is not previously disadvantaged”.
The latter part of this proposed provision has raised questions whether Chinese nationals count among the “previously disadvantaged” and by whom they were previously disadvantaged.
Because it is not clear from the bill who will fund forced selling of businesses, an observation was made that peddling in pension funds will become rife as a result of the amendment to Regulation 28 of the Pension Funds Act that forces pension funds to invest in unlisted investments.
The bill provides for the establishment of a council consisting of Cabinet members and six other persons who will be bound by a confidentiality clause, thus disallowing any disclosure of any information relating to the affairs of the council, which means its activities will not be open to public scrutiny.
All businesses will be subject to investigation and seizure of documents and equipment by this council.
Non-compliant businesses could be refused fitness certificates, tax good-standing certificates, social security standings or transport licences, which De Klerk said would no doubt result in the forced closure of such businesses.
CATHERINE SASMAN
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