Search Results

At times, we may find that there are differences between concepts under the Amended General B-BBEE Codes of Good Practice as well as specific B-BBEE Sector Codes of Good Practice. This is evident when comparing the definition of a Start-up Enterprise under the Amended Construction B-BBEE Sector Codes Of Good Practice which states that a:   “Start-up Enterprise means a recently formed or incorporated Entity that has been in operation for less than 1 year. An entity that was formed and incorporated some time ago, but which has been dormant (non-operational), will qualify as a start-up enterprise for the first year after it commences operations. A start-up enterprise does not include any newly constituted enterprise which is merely a continuation of a pre-existing enterprise.”   It is important for Members to take note of the differences between B-BBEE Sector Codes of Good Practice to ensure that the correct implementation takes place.   Technical Compliance Services  are available to guide members on requirements under B-BBEE Sector Codes of Good Practice.

The Measurement of Ownership for Built Environment Professionals (BEPs) under the Amended Construction B-BBEE Sector Codes of Good Practice is quite unique. There is a focus on Registered Professionals and Shareholders being a part of Executive Management. Clause 3.1.3 of the Amended Construction B-BBEE Sector Codes of Good Practice states the following:     “3.1.3 The Measurement of Ownership in BEPs;   3.1.3.1 More than 50% of the total ownership held in a Measured Entity as a BEP must be held by individuals who are both:   3.1.3.1.1 Professionally registered with any of the statutory professional councils in the BEP environment in South Africa; and at the same time,   3.1.3.1.2 A member of the Executive Management of the Measured Entity;   3.1.3.2 Therefore when measuring the black ownership of any BEP, where the measured entity does not meet the requirements of 3.1.3.1 above, only 50% of the black ownership of those owners who do not meet the requirement of 3.1.3.1 may be included in the total measurement of black ownership in the measured entity.   3.1.3.3 For the avoidance of doubt, Executive Management in this context is defined as “Top Management” in terms of the Employment Equity Regulations and include the ‘Executive Directors’ and ‘Other Executive Management’ of the Measured Entity.   3.1.3.4 Where the ownership of a BEP is held by a holding company, the ownership in the holding company must comply with the provisions of 3.1.3.1, for the black ownership in the measured entity to be recognised, otherwise 3.1.3.2 will apply.   3.1.3.5 In addition, where the measured entity does not meet the requirement of 3.1.3.1, the measured entity does not qualify for automatic enhancement in terms of Clauses 4.2.3, 4.2.4, and 5.3.2. nor will it qualify for bonus points in 2.4 of the ownership scorecard.”   Technical Compliance Services are available to guide members in understanding these requirements.

Under the element Socio-Economic Development, there is an emphasis on the concept of the objective of facilitating income generating activities for targeted beneficiaries.  As per Statement 500 of the Amended General Codes of Good Practice, the following is stated under Clause 3.2: 3.2  Socio- Economic Development Contributions: 3.2.1       Socio-Economic Development Contributions consist of monetary or non-monetary contributions actually initiated and implemented in favour of beneficiaries by a Measured Entity with the specific objective of facilitating income generating activities for targeted beneficiaries.   Furthermore, the definition of Socio-Economic Development Contributions  is stated under Schedule 1 of the Amended General Codes of Good Practice as follows:   “Socio-Economic Development Contributions means monetary or non-monetary contribution implemented for communities, natural persons or groups of natural persons where at least 75% of the beneficiaries are Black people. The objective of Socio-Economic Development Contributions is the promotion of sustainable access for the beneficiaries to the economy. Socio-Economic Development Contributions commonly take the following forms:   (a)   development programmes for women, youth, people with disabilities, people living in rural areas; (b)   support of healthcare and HIV/AIDS programmes; (c)    support for education programmes, resources and materials at primary, secondary and tertiary education level, as well as bursaries and scholarships; (d)   community training; skills development for unemployed people and adult basic education and training; or (e)   support of arts, cultural or sporting development programmes;”   Technical Compliance Services  are available to guide members in understanding the concept of Socio-Economic Development.

Q |  In 2023, a Measured Entity had an unemployed Learner enrolled in an NQF 4 Learnership. In 2024 the same Learner was enrolled in an NQF 5 Learnership. Does a continued Learnership constitute Absorption?   A | Schedule 1  of the Amended General B-BBEE Codes of Good Practice defines Absorption as: “…Measured Entity’s ability to successfully secure a long-term contract of employment for the Employee, Learner, Intern or Apprentice.”   Furthermore, “long-term contract of employment” means a legal agreement between an individual and an entity that this individual would work for until his or her mandatory date of retirement;   As the Learner was unemployed and thus did not have a long-term contract of employment before the Learnerships, the Skills Development Scorecard does not recognise Absorption.   The only exception is if a B-BBEE Sector Code of Good Practice defines Absorption differently.   Skills Development Services are available for Members  with regards to the concept of Absorption.

Q | A Measured Entity enters into an Enterprise Development Beneficiary contract that involves a Start-up Enterprise. Schedule 1  of the Amended General B-BBEE Codes of Good Practice defines a Start-up Enterprise as “a recently formed or incorporated Entity that has been in operation for less than 1 year. A start-up enterprise does not include any newly constituted enterprise which is merely a continuation of a pre-existing enterprise”.   Does a Start-up business qualify as an Enterprise Development Beneficiary?    A | An Enterprise Development Beneficiary must meet the definition of ‘Entity’ as it appears in Schedule 1 of the Codes of Good Practice which: “means a legal entity or a natural or a juristic person conducting a business, trade or profession in the Republic of South Africa”.   Therefore, the Measured Entity can claim a Start-up Enterprise as an Enterprise Development Beneficiary, providing the objectives are clear and measurable when entering into an agreement.   Enterprise & Supplier Development Services are available for Members to understand Beneficiary requirements.

Statistics South Africa is the source used to determine the Net Profit After Tax (NPAT) for calculating the targets for Enterprise Development, Supplier Development and Socio-Economic Development. The latest statistics  were published during June 2024. The statistics in this version will be for the 1st quarter of 2024.   Any B-BBEE Verification from hereon would most commonly apply the latest Industry Norm published by Statistics South Africa. For example, if a B-BBEE Verification takes place in July 2024, the latest published stats to be used would be those posted during June 2024.    Technical Compliance Services  are available to guide members in calculating their Targets.

The below image extracted from the 24th Annual Commission for Employment Equity Report illustrates the Provincial EAP by Population and Gender. It is important to note that Section 42 of the Employment Equity Act requires designated employers to take into account the demographics of both the National and Provincial EAP when conducting the analysis of their workforce (section 19) and when they develop the EE numerical targets and goals in their EE Plans (section 20).   Human Capital Services   are available to assist members with their Employment Equity Strategies.

The below image extracted from the 24th Annual Commission for Employment Equity Report illustrates the National EAP by Population and Gender. The EAP includes persons between the ages of 15 to 64 years, who are either employed or unemployed, but seeking employment. The EAP is used as a benchmark to assist employers in the analysis of their workforce to determine the degree of under or overrepresentation of the designated groups in the workforce. It also guides employers in the setting of numerical goals and targets for the achievement of an equitable and representative workforce.     Human Capital Services   are available to assist members with their Employment Equity Strategies.

Enterprise Development and Supplier Development were designed to complement one another. Under the General Amended B-BBEE Codes of Good Practice, the aim is for an organisation to develop a Beneficiary through Enterprise Development, then procure a good or service from them, and then elevate them to a Supplier Development Beneficiary. Bonus Points are available for such a successful elevation.   To achieve the Bonus Points on offer, organisations must ensure that all these sub-elements are claimed in the same Measurement Period.   Technical Compliance Services  are available to help members determine how to claim these Bonus Points.

Under Statement 400 of the Amended General B-BBEE Codes of Good Practice , there are allowable exclusions when calculating Total Measured Procurement Spend (TMPS) and one of those items include Imports. However, there are certain rules that need to be considered.   Clause 6.5 under Statement 400 of the Amended General B-BBEE Codes of Good Practice states the following:   6.5       Imports: the following imported goods and services: 6.5.1    imported capital goods or components for value-added production in South Africa provided that:   6.5.1.1 there is no existing local production of such capital goods or components; and 6.5.1.2     importing those capital goods or components promotes further value-added production within South Africa;   6.5.2    imported goods and services other than those listed in paragraph 6.5.1 if there is no local production of those goods or services including, but not limited to, imported goods or services that – 6.5.2.1     carry a brand different to the locally produced goods or services; or 6.5.2.2     have different technical specifications to the locally produced goods or services.   6.5.3    The exclusion of imports listed under 6.5.2 are subject to them having developed and implemented an Enterprise Development and Supplier Development plan for imported goods and services. This plan should include:   6.5.3.1 Clear objectives 6.5.3.2 Priority interventions 6.5.3.3 Key performance indicators; and 6.5.3.4 A concise implementation plan with clearly articulated milestones             6.5.4    The Department of Trade and Industry will from time to time consult with the industry and issue practice notes with regard to the provisions on import exclusion.   Enterprise & Supplier Development Services are available to assist Members meeting the requirements for Import Exclusions.

As per Schedule 1 of the Amended General B-BBEE Codes of Good Practice , a “Start-up Enterprise” means a recently formed or incorporated Entity that has been in operation for less than 1 year.  A start-up enterprise does not include any newly constituted enterprise which merely a continuation of a pre-existing enterprise.   Further rules applicable to Start- Up Enterprises include:   Start-up Enterprises are deemed to have qualifying B-BBEE Status in accordance with the principles of paragraph 4 of Statement 000 of the Amended General B-BBEE Codes of Good Practice. A Start-up Enterprise may be measured in terms of the QSE scorecard, or the Generic scorecard should they choose to. A Start-up Enterprise must submit a QSE scorecard when tendering for any contract, or seeking any other economic activity covered by Section 10 of the Act, with a value higher than R10 million but less than R50 million. For contracts of R50 million or more they should submit the Generic scorecard. The preparation of such scorecards must use annualised data.     Technical Services  are on hand to assist with the understanding the requirements of Start-Up Enterprises.

There are two facets to take into account on the Skills Development Scorecard, namely:   1.     Skills Development Expenditure; and 2.     Headcount.   The total points for Skills Development expenditure on Black People are ten against a total target of 6% of the Leviable Amount. The 2019 changes to the Amended General B-BBEE Codes of Good Practice for Large Enterprises further splits the target as follows:   2.5% of the Leviable Amount, specifically for Category A Bursaries for courses registered with the Department for Higher Education and Training (DHET) (4 Points). 3.5% of the Leviable Amount available from all categories, namely A to G, applicable to Bursaries not claimed above, Learnerships, Internships, Apprenticeships, skills programmes, short courses and in-house training (6 Points). An additional target of 0.3% of the Leviable Amount is available to organisations that provide training to Black Employed persons with disabilities. This expenditure for training such employees counts towards achieving an overall 6% expenditure target. Put another way; the expenditure could reflect in two ways, either under general expenditure or bursary expenditure (4 Points).   Skills Development Services  are available to assist Members with understanding the above.