1. Amended BBBEE Codes of Good Practice UNIVERSITY OF THE WESTERN CAPE – 21 SEPTEMBER 2016

2. Purpose
To introduce the amendments to the BBBEE Codes of Good Practice, published in the Government Gazette on 11 October 2013, implemented May 2015.

3. INTRODUCTION AND BACKGROUND
CONSTITUTION: Section 9 of the Bill of Rights
“Equality includes the full and equal enjoyment of all rights and freedoms. To promote the achievement of equality, legislative and other measures designed to protect or advance persons or categories of persons disadvantaged by unfair discrimination maybe taken”
Legislative framework: B-BBEE Act no. 53 of 2003
Codes of Good Practice for B-BBEE 2007
Amended Codes of Good Practice 2013 (18 Months Transitional Period)
B-BBEE Amendment Act No 46 of 2013 October 2014
Implementation of the Amended Codes of Good Practice 1 May 2015

4. Objectives of the Amended Codes of Good Practices
Establishment of the BBBEE Commission.
Introduced various criminal offences for misrepresenting of providing false information regarding a firm’s BBBEE status.
Introduced a statutory right for Government and public entities to cancel any contract awarded due to false information on BBBEE status.
Strengthened the application of the Codes to all organs of state and public entities.

5. Objectives of the Amended Codes of Good Practices
Introduced various criminal offences for misrepresenting of providing false information regarding a firm’s BBBEE status.
An offender may be subjected to a fine or imprisonment not exceeding 10 years, or to both a fine and imprisonment.
If the offender is an enterprise and not a natural person, it could be subject to a fine of up to 10% of its turnover.
No contract with the any sphere of government for up to
10 years.
Cancelation of contracts.

6. Classification and Thresholds adjustment
Increased from R5 million to R10 million
EMEs
(Exempted Micro Enterprises)
Increased from R5 million – R35 million to R10 million – R50 million
QSEs
(Qualified Small Enterprises)
R50 million and above
Large Entities

7. B-BBEE Status Levels
A EMEs and QSEs is deemed to have a BEE status of Level 4 and a procurement recognition of 100%.
Enhanced status:
EMEs and QSEs with 100% Black ownership are deemed to have a BEE status of level 1 with a procurement recognition of 135%.
EMEs and QSEs with a 51% Black ownership are deemed to have a BEE status of level 2 with a procurement recognition of 125%.
EME’s may still elect to be measured under the QSE scorecard
An Affidavit/CIPC BB-BEE Certificate sufficient
confirming Annual total revenue and
black Ownership

8. B-BBEE Status Levels Level of supplier (OLD CODES-2007)
(NEW CODES-2013) %
claimable
Amount spent (eg)
Amount
(eg)
Level 1 (100pts +)
Level 1 (>100%)
135%
R10 000
R13 500
Level 2 (85 – 99)
Level 2 (>95 %<100pts)
125%
R12 500
Level 3 (75 – 84)
Level 3 (>90% <95 pts)
110%
R11 000
Level 4 (65 – 74)
Level 4 (>80% <90 pts
100%
Level 5 (55 – 64)
Level 5 (>75% <80 pts)
80%
R10 000
R8 000
Level 6 (45 – 54)
Level 6 (>70% – <75 pts)
60%
R6 000
Level 7 (40 – 44)
Level 7 (>55% <70 pts)
50%
R5 000
Level 8 ( )
Level 8 (>40% <55 pts)
10%
R1 000
Non-compliant (less than 30)
Non-compliant (less than 40 pts) 0% R0

9. BEE Generic Scorecard October 2013
The Generic Scorecard is aligned in accordance with government key priorities ; The Generic Scorecards has been adjusted from 7 elements to 5 elements.
ELEMENT
Ownership
Management Control
Skills Development
Enterprise & Supplier Development
Socio Economic Development
WEIGHTING
25 Points
15 Points
20 Points
40 Points
5 Points

10. B-BBEE Generic Scorecard Elements
PRIORITY ELEMENTS
Enterprise and Supplier Development
Skills development
Ownership

11. B-BBEE Generic Scorecard Elements: Priority Elements cont.….
A large enterprise is required to comply with all of the Priority Elements.
A Qualified Small Enterprise is required to comply with ownership (compulsory) and one other element Skills Development or Enterprise & Supplier Development.
Previously a QSE (turnover between R10M and R50m) had the choice of complying with any four elements of the scorecard.
Discounting principle: Entities who do not meet the thresholds (40% in each) in the priority elements, the overall score will be discounted as follows:
Large entities score: One level (1) down
QSE score, one (1) level down.

12. B-BBEE Generic Scorecard Elements
A measured entity is required to achieve a minimum of 40% on Net Value point (i.e. 8 points )
as the key driver of true ownership in the hands of black people and it is important to measure economic interest on an annual basis;
Non-compliance with this sub-minimum target will result in the achieved BBBEE status level being discounted by one level.
Ownership
25 points
Voting rights
Economic Interest
Realisation Points- Net Value

13. BBBEE Generic Scorecard Elements
Management Control
Management Control carries a weighting of 15 points and includes Senior Management and Middle Management.
Where a Measured Entity does not distinguish between Top Management and Senior Management, then Top Management is measurable as a single indicator with a weighting of 5 points.

14. BBBEE Generic Scorecard Elements
Skills Development
Skills Development carries a weighting of 20 points and its compliance targets are based on 6% of the annual payroll of the company as well as 2.5% of the total number of employees.
The Amended Codes introduced a 40% threshold as a requirement.
Compliance targets are based on Economically Active Population demographic representation of black people as defined in the Employment Equity Act.
If the threshold is not achieved the entity will still score whatever actual points it achieved on Skills Development, but the overall score will be discounted.

15. BBBEE Generic Scorecard Elements
Enterprise and Supplier Development
The Enterprise and Supplier Development element carries a weighting of 40 points and is one of the priority elements.
Preferential Procurement points may only be claimed from BBBEE companies who are Empowering suppliers.
The sub-minimum requirement for Enterprise and Supplier Development is 40% for each of the three categories, within the Enterprise and Supplier Development element, namely:
* Preferential Procurement;
* Enterprise Development and
* Supplier Development.

16. BBBEE Generic Scorecard Elements
Value Adding Supplier replaced with Empowering Supplier definition as follows:
•An Empowering Supplier in the context of B-BBEE is a B-BBEE compliant entity which can demonstrate that its production and/or value adding activities take place in the country.
Criteria for Empowering Suppliers :
QSEs must comply with ONE and Large enterprises should comply with at least THREE criteria listed below:
•25 % of cost of sales excluding labour cost and depreciation (unless in the service sector) must be spent in RSA;
•50% of jobs created must be for black people;
•Beneficiation of raw materials;
•Skills transfer (12 days); and
•85% labour costs in service industry.
EME’s and Start-ups are automatically recognized as Empowering Suppliers

17. BBBEE Generic Scorecard Elements
Social Economic Development
Beneficiaries should be 75% Black.
The key principle is to provide “access to the economy”.
Socio Economic Development carries a weighting of 5 points and the compliance target is 1% of net profit after tax.

18. questions & discussion

19. Integrated Economic Development Services (IEDS)
George Cloete
Department of Economic Development & Tourism
+27 (0)
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