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Key Changes to the Current B-BBEE Codes of Good Practice

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On 31 May 2019 the Department of Trade and Industry Gazetted four Notices on the General Codes of Good Practice as amended (2013). These notices will become effective within 6 months of the Gazettes being published. Therefore, these amendments will be effective on all verifications conducted after 30 November 2019.

*Notice 303 of 2019 replaces Schedule 1 of the Amended Codes of Good Practice*

The following definitions under Schedule 1 has been amended:

“Absorption” means a measure of the Measured Entity’s ability to successfully secure long-term contract of employment for the Employee, Learner, Intern or Apprentice. Previously, absorption points could be obtained for assisting a Learner with further education or training.

“long-term contract of employment” was added to Schedule 1 which means a legal agreement between an individual and an entity that this individual would work for until his or her mandatory date or retirement. This means that fixed term contracts will not be considered under the qualification criteria for Absorption.

“Current Equity Interest Date” has replaced “Net Value Date” but in essence means the same under both definitions

*Notice 304 of 2019 replaces Code Series 400, Statement 400 of the Amended B-BBEE Codes (Enterprise and Supplier Development Element)*

Key changes to take note of under Enterprise and Supplier Development is as follows:

  • Under the Preferential Procurement section of the scorecard, 11 points are awarded for procurement spend on 51% Black Owned Enterprises (previously only 9 points) and the target has increased from 40% to 50%;
  • A supplier to the Measured Entity that is at least 51% Black Owned can now receive enhanced recognition by a factor of 1.2 on the Preferential Procurement scorecard;
  • Generic entities are also included under Enterprise Development and Supplier Development beneficiaries (previously not included) provided that the Measured Entity provided assistance prior to the beneficiary reaching Generic Status. The contributions to these qualifying Generic beneficiaries may only be assisted for another 5 years after reaching Generic Status;
  • Under the benefit factor matrix for qualifying contributions for Supplier and Enterprise Development initiatives, the provision of security requirements has been amended to state that 50% (instead of 3% of any positive differential between the initial capital value of the loan and the value of security taken) of the guarantee amount will be taken into consideration.

*Notice 305 of 2019 replaces Code Series 300, Statement 300 (Skills Development Element)

The key changes to take note of under Skills Development, is as follows:

  • Skills Development expenditure of Black People (employed and unemployed) has changed from 6% to 3.5%, the total points awarded is not 6 and was previously 8 points;
  • The following section was added on the scorecard for Skills Development expenditure on Bursaries for Black Students at Higher Education Institutions. The target is 2.5% of Leviable Amount and you can receive 4 points for this section;
  • Bursaries spend on Black Students at Higher Education Institutions cannot form part of the total Skills Development expenditure target (and vice versa). This spend must be over and above the 3.5% Skills Development spend;
  • The target and points for the number of Black People participating in Learnerships, Apprenticeships and Internships has increased from 4 points to 6 points and the target has increased from 2.5% to 5%;
  • Informal training under the Skills Development Matrix (Category F and G training) was capped at 15% of total Skills Development expenditure. It has now been increased to 25% of the total value of Skills Development expenditure;
  • Legitimate training costs such as accommodation, catering and travelling costs are still capped at 15%, however it must be noted that these costs cannot form part of the expenditure under Bursaries spend on Black Students at Higher Education Institutions.

*Notice 306 of 2019 replaces Code Series 000, Statement 000

The most important part to focus on here is that a whole section of how unincorporated Joint Ventures must be interpreted, verified and handled in the future.

It is important to factor these changes into your B-BBEE Strategic Planning. If your current B-BBEE Certificate expires after 30 November 2019, these changes will have a dramatic influence on your renewed B-BBEE Certificate.

Please contact Annemarie Kotzé at Integra BEE Solutions for any assistance and clarification on this.

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