General Policy on the Application of Commercial Fishing Rights 2021

6. EXCLUSIONARY CRITERIA The following exclusionary criteria will apply to all applications for a right in each of the fisheries. 6.1 Improper Lodgment Criteria Improperly lodged applications as referred to in 6.1.1 and 6.1.2 may be excluded, whereas improperly lodged applications referred to in 6.1.3 – 6.1.8 will be excluded. The Delegated Authority has no discretion to condone applications not compliant with 6.1.3 – 6.1.8. An application will be considered improperly lodged and will be excluded if – 6.1.1 an applicant submits his or her or its application after the set due date and time for submission of the application; 6.1.2 an applicant did not pay the prescribed application fee in full and on time; 6.1.3 an applicant submits his or her or its application without using the prescribed application form and lodges his or her or its application contrary to the instructions of the Department i.e. such as by fax, email, or post; 6.1.4 an applicant is not a South African person;

6.1.5 an application is submitted by a deregistered juristic person; 6.1.6 the applicant is not Tax Compliant; 6.1.7 an application is not submitted by the applicant or his or her or its authorized representative; and

6.1.8 an individual applicant is under the age of 18. 6.2 Criteria for materially defective applications Materially defective applications will be excluded. The Delegated Authority has no discretion to condone the inclusion of materially defective applications.

An application will be considered materially defective and will be excluded if – 6.2.1 an applicant or the applicant’s authorized representative did not sign the application form; 6.2.2 the applicant submits more than one application for a right in the same fishing sector; 6.2.3 the applicant submits false and/or misleading information or false documentation; 6.2.4 the applicant fails to disclose material information for the purposes of evaluating his or her or its application; and

6.3 Criteria for non-compliant applications An application may further be excluded if –

6.3.1 an applicant or any of its authorized personnel / representative(s) attempt to improperly influence the Delegated Authority or Minister with regard to its application (e.g. an applicant attempts to communicate directly with the Minister or Delegated Authority with regards to the application). 6.3.2 an applicant or any of its Directors, Trustees, Senior Management, Shareholders or Members (where such shareholding or members interest exceeds 10%) or Skippers has entered into a plea bargain in terms of section 105A of the Criminal Procedure Act, Act 51 of 1977, for a contravention of the MLRA, the regulations, or permit conditions and subjected to sentencing of imprisonment without the option of a fine. The details of the period of exclusion will be indicated in the Fishery Sector Specific Policies; 6.3.3 an applicant or any of its Directors, Trustees, Senior Management, Shareholders or Members (where such shareholding or members interest exceeds 10%) or Skippers has been convicted in terms of the MLRA or its regulations or permit conditions since the period determined in the Fishery Sector Specific Policies (e.g. an applicant or any of its Directors, Trustees, Senior Management, Shareholders or Members (where such shareholding or members interest exceeds 10%) or Skippers has been convicted with more than two contraventions and subjected to sentencing exceeding R5000 or imprisonment without an option of the fine); 6.3.4 an applicant had an asset forfeited to the State for a violation of a provision of the MLRA2

6.3.5 an applicant had a fishing right or permit cancelled or revoked for a period defined in the Fishery Sector Specific Policies. In the event a fishing right or permit has been cancelled or revoked, the decision of the Minister or the Delegated Authority is suspended pending the outcome the appeal. 6.4 Paper Quota Risks

6.4.1 An applicant will be considered to be a paper quota risk and may be excluded if they- a) fail to present the following:

i) Bank statements and/or proof of bank accounts ii) Financial Statements iii) Applicants' list of productive assets relevant to the fishing industry iv) Proof of insurance cover held by the Applicant v) List of and details of employees employed by the Applicant vi) Export Permits held by the Applicant vii) Detailed business plan including fishing plan for Applicant’s fishing business.

2 The Delegated Authority will determine whether the applicant was ordered by a court of law to forfeit an asset. Only in cases of a court ordered forfeiture of an asset will an applicant be penalized under this scoring criterion b) Have not been directly involved in the catching, processing or marketing of their fish during the period which they held a right in the sector they are applying for. c) Did not apply for a catch permit during the period which they held a right in the sector they are applying for; d) Did not land any fish during the period which they held a right in the sector they are applying for; e) Will not catch and land any fish. (It is important to note that applicants are only required to submit the above-mentioned information where such information / documentation applies to them). If, for example, an applicant does not export fish, the applicant is not required to submit an export permit.

6.4.2 an applicant will be considered to present a paper quota risk by the Delegated Authority as defined by the 2021: General Fisheries Policy if -

a) it appears from the application that the right holder applicant fails to demonstrate a substantive interest in the exploitation, processing and/or marketing the fishing right held or to be allocated. In determining whether the right holder applicant poses a paper quota risk, the following will be considered: (i) Cumulative conduct of the right holder applicant over the period of the right allocated. (ii) Right holder applicants who have failed to invest in jobs, the harvesting of their fishing right(s), the processing and beneficiation of fish and/or the marketing and sale of their fish.

b) it appears from the application that the right holder applicant has no serious intention to share the risk of fully participating in the sector, especially if a danger exists that an applicant has not applied in order to enter the industry but to gain some financial benefit without direct involvement in the main activities associated with exploiting the right that may be granted. In determining whether an applicant poses such a paper quota risk, the applicant’s assets and access to capital and its financial and business planning and commitments will be considered. The Delegated Authority must endeavor to prevent paper quota applicants from entering the fishing industry because paper quotas undermine and circumvent the objectives of the commercial fishing rights allocation process. 6.4.3 The Delegated Authority must take all reasonable steps to remove paper quota applicants that may have been granted commercial fishing rights. The Delegated Authority may consider as paper quotas, applicants that have been granted commercial fishing rights but who are reflecting weak or non-existent performance records combined with no investment or direct involvement in fishing industry.

6.4.4 The Delegated Authority will also exclude as “paper quota risk” applicants considered to be “fronts” for other beneficiaries. Fronting occurs when, in order to circumvent a policy objective, an application is submitted through another compliant entity. This commonly involves reliance on data or claims of compliance based on misrepresentations of facts, whether made by the party claiming compliance or by any other person. An example is an application made by an ostensibly transformed entity with the intention that the main benefits will flow to an untransformed entity or individuals that are not designated persons. Another example is when a foreign entity or individual collude with the South African person by not declaring the actual owner(s) of the vessel, which the applicant has indicated to be his or her or its vessel whilst submitting the application for a right thereby subverting the rights allocation process. 6.4.5 The Department will ultimately institute section 28 proceedings in terms of the MLRA against right holders who turn out to be paper quota holders or fronts. 6.4.6 The Department may revoke commercial fishing rights held by right holders who fail to utilise their rights in the first two years after being granted their rights. 6.4.7 An applicant failed to utilise any of his or her or its fishing right, in the same fishing sector for which a right is applied, during the duration of the commercial fishing right which was granted to him or her or its in LTRAMP2005 and FRAP 2013.