Citizen Economic Empowerment Act: E25 000 fines for fronting

MBABANE – Businesses and individuals fronting for foreigners face fines of up to E25 000 or imprisonment under new empowerment regulations designed to increase citizen participation in commerce.

This penalties form part of the proposed Citizens Economic Empowerment Regulations, 2026 tabled by Minister for Commerce, Industry and Trade Manqoba Khumalo.

The regulations specifically prohibit fronting, the provision of false or misleading information and the misrepresentation of the empowerment status of an entity to obtain any benefit, preference, incentive or advantage under the Citizens Economic Empowerment Act and the regulations. The regulations further empower the Citizens Economic Empowerment Council currently led by businessman Lincoln Motsa to investigate allegations of fronting and misrepresentation, while recommending administrative sanctions in addition to possible criminal proceedings. The proposed measures are contained in the Citizens Economic Empowerment Regulations, 2026, which are intended to operationalise the Citizens Economic Empowerment Act.

The regulations provide for a broader enforcement framework under which the council will be able to conduct audits, inspections and verification exercises to establish whether businesses and State institutions are complying with the empowerment requirements.

Where the council determines that a company or State institution is not compliant, it may issue compliance directives, require corrective action, impose administrative sanctions of up to E25 000, suspend or downgrade empowerment recognition status or recommend disqualification from public procurement opportunities.

The regulations also provide for compliance notices requiring an entity to correct identified shortcomings within a specified period. Failure to comply with such a notice or directive constitutes an offence.

The council may then issue a written warning, direct the person or entity to undertake or stop a specified activity, impose an administrative penalty of up to E25 000 or suspend or cancel a trading licence pending compliance.

In cases of persistent or material non-compliance, the council may refer the matter to the minister, who may exercise powers to cancel the registration, incentives or benefits of the affected person or institution. The regulations also allow the council to impose a written warning, issue a public censure, order corrective action, impose a penalty of up to E25 000 or suspend or cancel a trading licence where an entity contravenes the regulations or a compliance notice.

The council may additionally recommend that a non-compliant entity be disqualified from public procurement opportunities or have its investment incentives suspended.

The proposed regulations do not only target fronting. A person who provides false, misleading or fraudulent information for purposes of an empowerment assessment could face a fine of up to E25 000, imprisonment for up to six months or both. Companies and State institutions that fail to submit required annual compliance reports or submit false or misleading information, could face the same maximum criminal penalty.
The council will also be responsible for verifying ownership.

Its verification process may require incorporation documents, shareholding records, beneficial ownership declarations and evidence of management participation. Knowingly providing false information during this verification process carries a fine of up to E3 000, imprisonment of up to six months or both. Similarly, a person who obstructs an inspection or knowingly provides false information to authorised officers could face a fine of up to E3 000, imprisonment of up to six months or both.

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