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In the context of the B-BBEE Act, the generic term for Black People includes African, Indian and Coloured’s, further qualified as including only natural persons who are citizens of the republic of South Africa by birth or descent; or are citizens of the Republic of South Africa by naturalization:
a. Occurring before the commencement date of the constitution of the RSA Act of 1993; or
b. Occurring after the commencement date of the Constitution of the RSA Act of 1993, but who, without the Apartheid policy would have qualified for naturalization before then;
Other legislation, however, define HDI’s, as
individuals who, due to the apartheid policy
that had been in place had no franchise in
national elections prior to the introduction of
the Constitution of the RSA, 1983 (Act 110 of
1983) or the Constitution of the RSA, 1993
(Act 200 of 1993) (“the Interim Constitution)
and/or
a. who is a female; and/or.
b. who has a disability
which differs from the Codes of Good Practice for Broad-Based Black Economic Empowerment.
HDI – although it also includes black people, further includes white women and white disabled people. The Codes seek to address a certain group of individuals. The targets are giving the picture that should prevail in the economy – a transformed and strong economy that’s reflective of SA demographics. The B-BBEE Act is the primary piece of legislation in terms of which the Minister may issue the Codes of Good Practice to provide details on how to implement the Act. The Charters are intended to allow the different industries or sectors to interpret BEE in a way that accommodates their unique circumstances. The guideline on Fronting has been posted on the dti website and will assist in identifying fronting practices as well as provides the process that companies will follow when reporting a fronting case.
In terms of the review of the Codes, the BEE Unit will release a strategy that will provide guidance to that.
The targets set in the Codes are considered to be minimum targets, companies are allowed to do over and above the minimum targets set in the Codes.
The dti has assured the public that a mandate has been received from Cabinet to deal with the alignment of the PPPFA and the Codes of Good Practice, the project is already underway.
With reference to "Competent Person" - reliance will be placed on Normal Market Practices. i.e. For the valuation of a building we would expect a qualified valuer or assessor to conduct this valuation; for pension/ provident funds, the norm is to use an actuary so we would expect the same. In other words we would expect that in terms of the job specification a qualified individual should be assigned to that post.
Clarification and Examples are provided in the Interpretive Guide which is available on the dti website.
the Codes of Good Practice for B-BBEE takes precedence over sector charters gazetted by the dti under section 12 of the B-BBEE Act. However if any charter is gazetted under section 9 of the B-BBEE Act, then this charter has the same status as the Codes, as it will be gazetted as a Sector Code under Statement 003 of the Codes of Good Practice.
The key principles, weightings and targets must be aligned to the Codes. However if there are deviations in the sectoral charter, detailed justification, should be given for these deviations, and should substantiate the impact that it will have on transformation within that sector.
Currently only the Tourism Charter has been gazetted under section 9. And only 6 Charters have been gazetted under section 12 so far namely: Agri BEE, Property Charter, Financial Services Sector Charter, Construction Charter, Marketing, Advertising and Communication Charter and Forestry Charter. Updated information on the charters is also available on the dti website.
Charters gazetted under section 12 of the B-BBEE Act are for information purposes only and only signatories to the charter are bound by it. However, if a Charter is gazetted under section 9 of the B-BBEE Act that charter will have the same status as the Codes of Good Practice for B-BBEE, and will be utilized by the sector and
Compliance is determined using the BEE Recognition levels as your BEE Status.
Only Black owned and Black women owned enterprises that are Exempted Micro Enterprises, but it depends on the amount of contribution or compliance to B-BBEE.
They will be measured out of 6 elements instead of 7. The ownership element has been removed and the weighting points adjusted.
The Beneficiary Base for B-BBEE includes
• Black workers and job seekers, black unemployed and the rural poor under Employment Equity, Skills Development and Socio-Economic Development
• Black Entrepreneurs are included under Preferential Procurement and Enterprise Development
• Emerging Black Middle class and Investors are included under Ownership and Management Control.
The split therefore allows for the participation of all black people at all levels in the South African Economy.
If a company domiciled in the Republic of South Africa has relocated offices to a neighboring country, for the purposes of the Codes they will still be recognised as a South African Entity, and will not be able to apply for exemption to participate in the Equity Equivalent programmes.
The Scorecard on Ownership cannot be measured without Voting rights and Economic Interest.
Applications should be forwarded to the dti’s BEE Unit: Equity Equivalent Secretariat.
Continuing consequence (once-empowered-always-empowered) principle is intended to avoid punishing white companies that lose their black ownership due to factors beyond their control and to stop the distortion of the value of shares owned by black investors (illiquid due to the lock-in periods), as long as the affected company has transformed in the other areas of the scorecard and has created net value in the hands of black shareholders (although this is limited to a maximum of 40% of any company’s black shareholding.
Two options have been provided in the Codes for valuing Equity Equivalents. The 4% of Turnover is totally unrelated to the 25% of the value of the South African operation. If a company chooses the 4% of turnover they would utilise this for the duration of measurement. If the company chooses the 25% they would proportion it as per the project or once again according to the period of measurement. The two options do not relate to each other.
Further clarity provided in the guide.
Further Clarity has been provided in Statement 103 under paragraph 6.3
Equity equivalent calculation has been rectified. And statement 103 has been updated.
This is dependent on a case to case base.
The dti issues certificates to Multinationals that have been approved as Equity Equivalent participants, this can be verified with the dti by the SOE’s.
If a Multinational company fulfills all the requirements on the Ownership scorecard they are able to claim up to the maximum points allocated to the Ownership scorecard. The point scoring on the Ownership scorecard is dependent on the requirements being met by the Multinational in each category.
If a company has moved their Senior Management to the Management Control scorecard, they will then collapse the points to effectively read as
Middle Management: 7 points
Junior Management: 6 points
Noting that the targets for Middle management now become the base.
Examples provided in the Guide.
The Department of Labour’s targets are as per the EAP targets, the Codes have been aligned to the EAP targets as per the Department of Labour and the Employment Equity Commissions recommendations.
The Codes do not replace the Employment Equity Act targets; besides, the information used to calculate the employment equity score is commonly sourced from the EEA2 Form – part of the submission to the Department of Labour in accordance with the Employment Equity Act.
Parity principle implies that half of the black representation should be comprised of black women in skills development.
Further clarity provided in the guide.
The B-BBEE Act and the Codes are specific to the benefit of different categories of black people.
Clarity provided in the guide.
Senior Management 7 points
Junior Management 6 points
Total 13 points
Any training that takes place needs to be accredited, and needs to meet the requirements of the Learning Programme Matrix as per Department of Labour. When we look at SD we are looking at the amount that companies spend on skilling their employees. Salary costs are only recognised in categories B, C and D.
Focus is on what was spent and trends in PP – what was spent and what had been spent on HDIs –
looked at not only in nominal but also
The dti has established a centrally accessible B-BBEE IT database that will help with such information for monitoring and reporting on B-BBEE.
Clarity provided in the Guide on how PPPFA relates to SOE’s.
That every player in SA economy should apply the Codes in their daily business practice to ensure economic transformation.
Immediate implementation – by using PPPFA – uses minimum compliance level of point system.
Restrictions of PPPFA – debate on setting aside – in PPPFA environment – you set aside suppliers from certain tenders e.g. black suppliers. COGP different in that it takes into account not who you are but what you do.
Currently both Acts to be worked with because PPPFA has not been amended. Challenge is that the PPPFA is in progress of amendment.
Make all the other conditions of the tender the basic requirements of the tender.
Companies always encouraged joining dti database.
The Codes also seeks to reward entities for early payment of goods and services through Enterprise Development Element.
CIDB construction projects and engineers are able to undertake projects – these are requirements by the industry but still have to comply with PPPFA and B-BBEE.
Agencies of dti can provide channels for private sector to channel funding for dti agencies to promote enterprise development.
Dti has agencies to develop SMME’s etc.
No it does not. It only allows the company purchasing the service to claim additional procurement points.
Public companies will be scored on all other matters except on the ownership aspects.
They will be measured as any other company with the exclusion of the ownership aspect.
All SOE’s must also report to the B-BBEE Advisory Council, chaired by President, on transformation. This provides a platform by which SOE’s will be held accountable for progress or lack thereof.
There is an enhancement formulae that is applied in addition to the ordinary scoring, resulting in any value added activities receiving additional points.
There is need for alignment for B-BBEE legislation with PPPFA. It is a subjective issue that will have to be dealt by the respective SOE.
Yes! This is correct the company will receive double enhanced recognition for this using this supplier.
Yes! This is correct the company will receive double enhanced recognition for using this supplier.
Examples provided in the guide.
It simply means that they have to produce or provide a scorecard.
All Government levies and Taxes form part of this taxation.
Lots of individual initiatives in the market, and true there are some institutions already providing these services which may have their capacity increased due to additional requests and additional funds provided.
The funds utilised for Enterprise Development do not have to be sector specific, the dti encourages all types of funds and initiatives that meet the objectives of the Enterprise Development Code.
Examples and clarity provided in the guide.
The statement on Socio Economic Development – 700, clearly lays out incentives for companies to participate and contribute to marginalized communities.
Examples provided in the Guide.
If the ultimate beneficiaries of any intervention meet the criteria as per Clauses 3.2.1 and 3.2.2, the expenditure should be included.
The Benefit Factor Matrix provides guidance on this.
It is suggested that contributions should be acknowledged, in order to encourage such practices. However, the price used should be significantly discounted to either procurement price (where old equipment is donated), or original sales price (where returned or devalued products are donated). The means of determining a value needs further consideration.
Where costs are incurred to sort, refurbish, or distribute such products, they should be included as part of SED expenditure.
Examples provided in the Guide.
Where costs are incurred to sort, refurbish, or distribute such products, they should be included as part of SED expenditure.
There is a circumvention of the Act where you split business activity simply to ensure designation as Micro or QSE. Companies want to grow and make profits; therefore the incentive for profit is greater than the disincentive.
The intention is to review the thresholds and for it to be indexed to inflation.
The dti will check the BEE credentials of verification agencies.
With regard to the actual process of verification agency accreditation of BEE credentials, SANAS will be responsible.
Verification Agencies will be overseen and regulated by SANAS (a division of the dti). SANAS will determine the regulatory framework, together with the methodology that will be used in verifying the BEE credentials of companies. In addition the Association of BEE Verification Agencies (ABVA) will play a key role in regulating the activities of members within a prescribed Code of Conduct.
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