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Broad-Based BEE Verification Agency

BEE RATED Newsletter – January 2014

1.       Amended BEE Codes of Good Practice:  much to digest, “forewarned is forearmed”!

The amended B-BBEE Codes of Good Practice were gazetted on 11 October 2013. A transitional period of one year has been allowed, after which it becomes mandatory for all BEE verifications to be undertaken in terms of these new Codes.

As you are probably aware, the amendments are far reaching and, unless properly addressed and prepared for, will have a significantly adverse effect of your BEE rating.

We held a briefing session last November for our clients, and had a good turnout – more than 80 people attended from a large number of our clients, big and small. For those who were unable to attend, please find attached the slides from the workshop.

It is evident from the changes to the Codes that it will be necessary for businesses to prepare and adapt accordingly, failing which one’s scorecard rating will be affected badly. For example:

  • The amended Contributor rating levels have been extensively adjusted: eg, the Level 4 target was 65 points, this is now increased to 80 points!
  • Unless one achieves the sub-minimum 40% score in the ‘Priority Elements’ (Ownership, Skills Development, Enterprise & Supplier Development), your rating drops by one level!
  • ‘Empowering Supplier’ – you have to be one otherwise your certificate can’t be recognised!

Please note, there is much in these amended Codes that requires clarification and interpretation, so the interpretation and understandings contained in the presentation must be taken as somewhat preliminary.

2.       Update on queries regarding the amended Codes

Our industry body ABVA (Association of BEE Verification Agencies) is presently engaging with the Department of Trade and Industry in order to obtain clarity on the many questions that have arisen regarding clarity and interpretation. But, little has been forthcoming of note at this stage.

As and when we are updated, we will keep our clients informed. In the meantime, should have any queries, kindly contact ourselves. 

3.       Sector Codes target increases under the existing (2007) Codes

Please take note that the targets for a number of the Sector Codes are due to increase in June 2014, ie, for:

  • Construction
  • Transport:  Forwarding & Clearing sub-sector
  • Forestry

However, given that the amended Codes are set to supersede the existing Codes in October this year, it appears that the increases in the existing Sector Codes are effectively rendered redundant. The various Sector Councils have been given to this October to align with the amended Codes, but even if there is a delay, this is not likely to affect measurement against these new Codes for Companies whose financial year ends after 11/10/14.

4.       Amended B-BBEE Act – highlights

The President has assented to the amended B-BBBEE Act, and it will gazetted in due course. Highlights are:

  • Setting up of the B-BBEE Commission – to monitor and evaluate the implementation of B-BBEE, and will have powers of enforcement.
  • Introduction of offences, penalties and prohibitions to address non-compliance and circumvention, and will clamp down hard on misrepresentation – maximum penalties for misrepresentation of B-BBEE status are a fine of up to 10% of annual turnover and/or up to 10 years in prison!
  • NB:   Organs of the state and public entities are able to set criteria for procurement that exceed those set out in the Codes.
  • All businesses will have to report to their sector councils on an annual basis regarding compliance. Failure to submit a report could result in a one year jail term

5.       Interesting comments, undermined by the new amended Codes 

Public Enterprises Minister, Mr. Malusi Gigaba, has told a meeting of the Black Management Forum (BMF) that he would continue to pursue a review of the Preferential Procurement Policy Framework Act in a bid to hasten empowerment. He said Government would leverage both private sector funds and State funds to support economic empowerment and to open up space for emerging black industrialists. The minister cautioned, however, that black business would not be rewarded without hard work and “hands-on application”, which would enable these companies to become true entrepreneurs rather than “middle men”.

“As government, we are committed to supporting the building of a cadre of black
industrialists that are ready, able and willing to get their hands in the mud and create long-term, sustainable, job-creating and skill-developing inclusive wealth.”

However, the amended Codes do not require Black owned businesses with annual revenues as high as R49 999 999 per annum to be independently measured against the 5 elements in the Codes, all they need to do is provide a sworn affidavit as proof of turnover and ownership. As such, it seems that Black owned businesses are de facto exempted from engaging in the transformative objectives of the Codes – to name but a few, skills development of Black employees and of the unemployed and youth, support and assistance to Black owned micro-entrepreneurs, assisting Black SED beneficiaries.

Questions and Comments are welcomed – please send to BEE RATED:  

Tony Kruger at;  Kim Odell at