PSIRA Bill will undermine investor confidence - SACCI

Neren Rau says multinational electronic companies like Apple, Sony, Samsung and Panasonic will be affected


The South African Chamber of Commerce and Industry (SACCI) is concerned about the proposed legislation that will force security companies to forego 51% of their ownership. The broad definition of a security company in the proposed Private Security Industry Regulation Amendment Bill will force multinational electronic companies like Apple, Sony, Samsung and Panasonic to sell 51% of their ownership to domestic shareholders. SACCI appreciates the objective of the Bill to improve regulation of the security industry, but believes the 51% domestic ownership requirement and wide scope of application will significantly undermine investor confidence.

Less than 10% of South Africa's typical security firms are owned by multinationals that provide their services across the world, but the ownership requirement sets a dangerous precedent that can spill onto other industries and weaken property rights and investor confidence.

The Bill has been passed by both the Houses of Parliament, but has not been signed into law by President Zuma. The property rights infringement and vague scope of application cannot be said to be rationally linked to the goal of improving the regulation of South Africa's security industry, and for this reason is likely to be unconstitutional. In addition, the last minute introduction of the domestic ownership requirement also calls into question whether sufficient stakeholder engagement took place on the domestic ownership requirement.

SACCI has requested President Zuma to refer the Bill back to Parliament in order to fix some unintended drafting errors and withdraw the ownership requirement.

Statement issued by CEO of SACCI, Mr. Neren Rau, April 1 2014

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