Draft legislation may create additional obstacles for new businesses By Danie Strachan -Adams & Adams The Department of Trade and Industry (“DTI”) has published the Licensing of Businesses Bill, 2013 (“Bill”) for comment. This Bill has received quite a lot of criticism, as it requires that all businesses must be registered with the municipalities within their operating regions (“the licensing authority”) in order to trade. According to the Bill, its purpose is to promote the development of the South African economy by providing a standardised regulatory framework within which business licensing will take place and encourage a conducive environment that promotes compliance and sustainability of businesses and to set essential norms and standards. The Bill has very wide scope - it will apply to any person carrying on business or who seeks to carry on business within South Africa. The Bill has been interpreted to be wide enough to cover amongst others, every grocery store, car dealership, pharmacy, trader of livestock, factory outlet and wholesaler of heavy machinery. This interpretation includes every service provider, from lawyers and hospitals to hotels, airports, freight carriers and advertising agencies. The Bill provides that the licensing authority in consultation with the Minister of Trade and Industry (“Minister”) after thorough investigation and on any reasonable and justifiable grounds, out of its own initiative or upon application by any person may exempt categories of people from the application of certain provisions of the Bill. The Bill provides for a 30 day period of waiting to be issued the licence, and if necessary and on justifiable grounds the licensing authority may extend the period with not more than 14 days. The business licences are proposed to be valid for five years, subject to the renewal of the licence, should the licence holder satisfy the requirements set by the Bill. The Bill provides for “deemed inspectors” who have excessive powers in terms of the Bill, which amongst others, include the power to confiscate goods and/or the closing down of licensed premises for the period directed by the licensing authority. In order to tackle illegal immigrants trading without a business licence, it grants the DTI powers to refuse to issue a licence should a person be disqualified from applying for a licence. The criticism directed towards the Bill includes the claim that it is draconian and impossible to implement successfully. Some people also argue that it will have a very restrictive effect on free enterprise in view of the additional hurdle it creates for a person who wishes to start a business. Furthermore, a lot of what the Bill intends to regulate is already dealt with by way of existing legislation. For instance, company law regulates the registration of companies in South Africa and in terms of a database relating to the collection of revenues, the South African Revenue Service already fulfils that function. The Consumer Protection Act also contains provisions that will soon require businesses to register business names (subject to certain exceptions). According to reports, the legislature is working on a revised version of the Bill. Developments will be closely followed in view of the potential ramifications of this new legislation.
Posted on: Fri, 07 Jun 2013 06:42:50 +0000
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