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AMENDED B-BBEE CODES VS THE OLD CODES

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On the 11th of October 2013 the Amended Broad-Based Black Economic Empowerment Codes (“Amended BEE Codes”), gazette number 36928 was published by the Department of Trade and Industry (“Dti”). The implementation date of these codes were 11 October 2014, however the Dti provided extension up until 30 April 2015 for entities to align themselves with these Amended BEE Codes as well as for the Sector Codes to be aligned with the Amended BEE Codes and for an Amended Broad-Based Black Economic Empowerment Qualifying Small Enterprise Scorecard (“Amended QSE Scorecard”) to be drafted and published. On the 1st of May 2015, the Amended BEE Codes became effective even though no Sector Code have been aligned to the Amended BEE Codes and also knowing that no Amended QSE Scorecard have been published.

 

On the 15th of May 2015 a Notice of Clarification was issued by the Dti, stipulating the following points:

 

“1. By virtue of the powers vested in me in terms of section 9(1) of 14(2) of the Broad-Based Black Economic Empowerment Act, 2013 (Act no. 46 of 2013), I Dr Rob Davies, Minister of Trade and Industry, hereby:

 

  • Confirm that the Amended Codes of Good Practice, gazette No 36928 will come into effect on the 1st of May 2015. Clarify that all B-BBEE verifications conducted using the financial year ending before 30 April 2015 can be verified using the old Codes of Good Practice, gazette No 29617 and all B-BBEE verifications conducted using the financial year ending after the 1st of May 2015 must be verified using the Amended Codes of Good Practice, with the exception of the Sector Codes.

 

  • Further extend the transitional period for the alignment of Sector Codes to the end of October 2015. From the 1st of November 2015 Sector Codes that are aligned shall be effective in accordance with section (a) above of this Notice. Sector Codes not aligned and ready for gazette by the end of October 2015, a consideration shall be made for them to be repealed.

 

  • Determine that for the inaugural year of the Amended Codes of Good Practice, all valid B-BBEE certificates issued under the Old Codes of Good Practice gazette No 29617, as well as the relevant Sector Codes should remain valid and should therefore be accepted and should be treated as empowering suppliers.

 

For all Exempted Micro Enterprise (“EME”) certificates issued without Empowering Supplier Status, the interpretation stated in the Amended Codes of Good Practice clause 3.3.1, Amended Code Series 400 Gazette No 36928 will be applied, which state that “Exempted Micro Enterprises and Start-ups are automatically recognised as Empowering Suppliers.”

 

This particular Notice provided some long awaited clarity on certain issues.

 

It is imperative that sector code companies take note of paragraph (b). This clearly states that they are still governed by their sector charter, therefore the thresholds within their sector charters still apply to them. Also take note of paragraph (a). Entities with a year-end before 30 April 2015 may still be verified according to the “Old BEE Codes” for one last time.

 

Furthermore, on the 6th of May 2015 part 2 of the Amended B-BBEE codes was gazetted. Phase 2 of the Amended Codes contains the following which included further clarification on the Amended B-BBEE Codes as well as provided the industry with a Qualifying Small Enterprise (“QSE”) scorecard.

 

 

 

 

 

According to the Amended B-BBEE Codes of Good Practice, entities are classified as follows:

 

 

TYPE OF SCORECARD

 

2007 Old BEE Codes

 

2013 New BEE Codes

 

Exempted Micro Enterprise (“EME”) Turnover ≤ R5 million Turnover ≤ R10 million
Qualifying Small Enterprise (“QSE”) Turnover of R5-35 Million Turnover of R10-50 Million
Generic Enterprise Turnover > R 35 Million Turnover > 50 Million

 

Herewith the changes to the B-BBEE recognition levels:

 

BROAD-BASED BEE STATUS CATEGORIES

 

 

B-BBEE Status

 

 

Qualification New Codes

 

Qualification Old Codes

 

B-BBEE recognition level

 

Level One Contributor

 

> 100 points on the Generic Scorecard

 

> 100 points on the Generic Scorecard

 

 

135%

 

Level Two Contributor

 

> 95 but < 100 points on the Generic Scorecard

 

> 85 but < 100 points on the Generic Scorecard

 

 

125%

 

Level Three Contributor

 

 

> 90 but < 95 points on the Generic Scorecard

 

> 75 but < 85 points on the Generic Scorecard

 

 

110%

 

Level Four Contributor

 

 

 

> 80 but <90 points on the Generic Scorecard

 

> 65 but < 75 points on the Generic Scorecard

 

100%

 

Level Five Contributor

 

 

 

> 75 but <80 points on the Generic Scorecard

 

> 55 but < 65 points on the Generic Scorecard

 

80%

 

Level Six Contributor

 

 

 

> 70 but < 75 points on the Generic Scorecard

 

> 45 but < 55 points on the Generic Scorecard

 

60%

 

Level Seven Contributor

 

 

 

> 55 but <70 points on the Generic Scorecard

 

> 40 but < 45 points on the Generic Scorecard

 

50%

 

Level Eight Contributor

 

 

 

> 40 but < 55 points on the Generic Scorecard

 

> 30 but < 40 points on the Generic Scorecard

 

10%

 

Non-Compliant Contributor

 

 

 

< 40 points on the Generic Scorecard

 

< 30 points on the Generic Scorecard

 

0%

 

 

At first glance the Amended QSE codes look very intimidating, but once you have gained a thorough understanding of these set of codes, you will be able to score good points and a good level with a little bit of hard work and planning.

 

 


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