Frequently asked questions
Q. The use of the term BLACK in B-BBEE – It is not in line with the generic term Black because it includes Indian’s and Coloured’s
Q. HDI – is it now clear what the term means – does HDI mean the same and are they inclusive of black people and white women. HDI – are we double counting? Possibility in that request for HDI status, women status and disabled, unless timely detected. If question states “did not have franchise” this would refer only to black women.
Q. What is the economy going to look like after 10 years, i.e. the outcome?
Q. Alignment of the Codes with the different Charters?
Q. What are the timelines for the conclusion of the process with regard to fronting? And When are the Codes going to be reviewed?
Q. How flexible are the Codes? Can they be seen as minimum standards only?
Q. How are the Codes of Good Practice, PPPFA, and other related regulations going to be aligned?
Q. Section 9 (1) of the Codes, Schedule 1 Part 2, defines a “ Competent Person” The difficulty with this definition is that it is very broad, would one for example a. Need to have any previous qualifications, or be in a specific industry in order to qualify as a competent person? b. Are there specific accredited institutions which can award one with the necessary qualifications? c. What sort of experience and knowledge is required and would be acceptable to the dti to become a Competent Person?
Q. The Formulas in the Codes are very difficult to understand, for example members of the Institute of Chartered Accountants are having great difficulty in being able to apply them.
Q. the dti Codes and Sectoral Charters – Which one will take precedence?
Q. Can Sectoral Charters be more stringent than the Codes?
Q. Which Sector charters are section 9, and which are section 12? What is the significance of the two categories?
Q. How does one define BEE Compliant Entities?
Q. Are Black Women owned Enterprises treated as level 2 or level 3 contributors?
Q. What provision has been made for the ownership element of the scorecard in evaluating State Owned Entities?
Q. Beneficiary-base: is there not too much weighting given to ownership, management control, and preferential procurement?
Q. What happens if South African companies relocate to a neighboring or country to qualify to use equity equivalents on the ownership element?
Q. Black ownership without economic interest and exercisable control is meaningless.
Q. How does one apply for exemption to participate in the Equity Equivalent programmes
Q. The recognition of Ownership after the Sale of Loss of shares by black participants (Once-empowered always empowered)
Q. How will equity equivalents be valued?
Q. How long can the companies retain their status (continuing consequence) after they have lost their black investors?
Q. The Sale of Equity Instruments in non-South African operations
Q. The Equity Equivalent calculation, does not allow companies to score full points on day one, even if they have spend the allotted funds
Q. What is the turn-around time for the processing of applications by multinationals?
Q. Will SOE’s have to come to the dti for approval of a supplier’s equity equivalent application?
Q. How many points are multinationals that have sold 25% of their local operation entitled to claim on Ownership?
Q. If you elect to show Top Management as Senior Management, you cannot count these points under Code 300, What happens to the 5 points that are now short in Code 300?
Q. The formula for Gender Recognition is not clear, please provide clarity
Q. Why are the targets not aligned to the Employment Equity Act? The Department of Labour was part of the development process.
Q. Do the Codes replace the Employment Equity Act?
Q. What is the implication of the parity principle?
Q. The Codes state that no Measured entity shall receive any points for this section unless they have achieved a sub-minimum of 40% for each of the targets set in this section.
Q. Constant reference is made to the EE Act and that the same data that is filed with DOL must be used for purposes of the Code. However, the code refers to “Black Disabled people” and the EE Act refers to “Disabled people” irrespective of race or color. Again clarity is sought on this as we are of the opinion that “All races” should be included under disabled as is the case of the EE Act
Q. The EE Code states that where a Measured Entity does not distinguish between Middle management and Junior Management it can consolidate the Measured Categories as follows: Senior Mng : 8 points Junior Mng : 6 points 14 However, per the code these three categories total 13 points being: Senior Mng : 5 points Middle Mng : 4 points Junior Mng : 4 points 13 points The weighted points for this category would now not add up.
Q. The Learning Program Matrix does not really allude to counting training that is conducted abroad. The vehicle manufacturers send many staff abroad for technical training, skills that they bring back to SA. This is a critical part of their business and the development of their staff – sometimes they spend months in Germany / Japan / USA, etc. The Codes do not allow the benefit to be taken into account. There is no cost of the training charged back to the local car companies. The Codes do not allow for the inclusion of salary costs. This needs to be dealt with as this training is so vital to bringing skills back to South Africa.
Q. The total allocation of budget for procurement allocation. Was this included in case study?
Q. Best practice models. Is there a central point where other government departments can source such information?
Q. Does it mean that PPPFA does not extend to SOE?
Q. With the Codes now being gazetted what is the process going forward?
Q. Working within constraints of PPPFA what is the creative way to still achieve compliance?
Q. How do we set-aside to circumvent for e.g. ownership.
Q. Do we assume the B-BBEEE Act will take over but still required to use point system within the codes?
Q. Currently construction industry development board is using minimum requirements to tender, prior to taking into account 80/20-90/10.
Q. How much do you do as a department to approach companies to get onto the dti database? This can start immediately
Q. What should we do to for e.g. to fast track payments, etc.
Q. What is the role of CIDB in the pre-tendering/qualification?
Q. In the strategy, will it include processes for empowerment of the SMME’s etc. How will we overcome the barriers? Is the dti willing to deploy resources to assist SMME’s etc.
Q. Do the points that a company receives affect the pricing of the product?
Q. What is the policy regarding public companies?
Q. How will SOE’s be measured?
Q. General lack of compliance between SOE’s and private enterprises?
Q. How will the value added aspect be recognised?
Q. How is the balance struck between companies who are charging slightly different prices, but where one company scores more procurement points than others?
Q. We assume that if a company buys a product from a local value-adding enterprise, and the same supplier is a recipient of Enterprise Development, that they would apply the multiple of 1.2 for value adding supplier, and then 1.25 as the supplier is a recipient of Enterprise Development. For example, if they spend R1m on such a supplier, the calculation is R1m
Q. Paragraph 3.3 – Need to clarify that spend with both an enterprise development recipient and a value adding recipient cannot be multiplied by both 1.2 and 1.25 – it’s one or the other (or is it cumulative)
Q. Need to clarify the definition of a Value-adding Enterprise for the automotive industry (the definition on page 93 is not clear enough)
Q. Paragraph 4.2 – What does “…. Complying with all the elements of the Codes mean?” – e.g. does this require compliance with a minimum score for each of the 7 elements?
Q. Paragraph 6.1 Does “Taxation” include customs duty (we’re assuming it does).
Q. Should enterprise development funds not be incorporated into NEF and other existing bodies?
Q. Are funds sector specific?
Q. The compliance target in the Enterprise Development Scorecard states that where NPAT is not used Turnover is to be used and the formula is: “3 x indicative profit margin (NPAT/TURNOVER) x turnover”
Q. How have companies been incentivised to operate in poor, rural and economically marginalized areas?
Q. The codes refer to socio-economic development with the specific objective of “facilitation of sustainable access to the economy for beneficiaries”. There are currently hundreds of millions of CSI funds which focus on health, welfare, arts, sports development and other such causes which do not specifically meet this condition.
Q. Are contributions made by the Measured Entity directly to government institutions or other institutions (e.g. NBI, Business Trust), but who are not acting directly as implementing partners, as a means of indirectly reaching black people, included as SED.
Q. It is noted that new products that are donated or discounted can be included as a qualifying contribution. What needs to be clarified is the base price that should be considered in determining the value of the benefit offered, i.e. the ‘selling’ price of the goods or the ‘direct cost-to-company’.
Q. There is an essential difference between providing ‘new’ products and services, and passing on old or redundant products and services that may still have some value (albeit a reduced value). In the latter case, the company is trying to reduce the levels of redundant products, but when stuck with such products make an effort to ensure they are used for a good cause. Therefore a cause still benefits, but only as a consequence of business practice rather than any deliberate or proactive attempt to support Socio-Economic Development. Therefore one issue requires clarification: Does the sale of old, redundant product qualify as a contribution to Socio-Economic Development? If yes, how should such donations be valued?
Q. Can the cost of research undertaken by the company, to determine the most effective way of making an investment in a cause, or the impact of an investment already made, be included as part of the contribution? If this research is undertaken by a third party (e.g. experts in a particular developmental field), can the cost still be included? If research into a particular aspect of socio-economic development is funded, but not associated with a particular project the company is supporting (or intends supporting), can such cost be included? The compliance target in the Socio-Economic Development Scorecard states that where NPAT is not used Turnover is to be used and the formula is: “3 x indicative profit margin (NPAT/TURNOVER) x turnover”
Q. Wouldn’t one argue that if you exempt small businesses, does that not remove incentives to grow business?
Q. Will thresholds of R5m and R35m be indexed to inflation?
Q. Who verifies the verification agencies?
Q. How will verification agencies be regulated?

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