BEE Amended Act October 2013

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1 OBJECTIVES OF THIS STATEMENT
1.1 Specify the interpretative principles of Broad-Based Black Economic Empowerment(B-BBEE);
1.2 Specify the application of the Codes and the basis for measurement under the Codes;
1.3 Indicate the qualifying thresholds for Measured Entity to qualify as Exempted Micro-Enterprises (EME) or Qualifying Small Enterprises (QSE);
1.4 Specify the method of measuring Start-Up Enterprises;
1.5 Specify the elements of B-BBEE measurable under the Generic Scorecard and Qualifying Small Enterprises;
1.6 Specify the basis for determining compliance by Entities with the Codes; and
1.7 Provide for the Transitional Period before the compulsory use of the Generic and Qualifying Small Enterprise Scorecard starts.

2. KEY PRINCIPLES
2.1 The fundamental principle for measuring B-BBEE compliance is that substance takes precedence over legal form.
2.2 In interpreting the provisions of the Codes any reasonable interpretation consistent with the objectives of the B-BBEE Act as amended and the B-BBEE Strategy must take precedence.
2.3 The basis for measuring B-BBEE initiatives under the Codes is the B-BBEE compliance of the Measured Entity at the Date of Measurement.
2.4 Any misrepresentation or attempt to misrepresent a Measured Entity’s true BBBEE Status will be dealt with in accordance with the provisions as set out in the B-BBEE Act as amended, and may lead to the disqualification of the entire scorecard of the entities concerned.

2.5 Initiatives which split, separate or divide a Measured Entity as a means of ensuring eligibility as an Exempted Micro-Enterprise, a Qualifying Small Enterprise or a Start-Up Enterprise may constitute an offence and will be dealt with in accordance with the provisions as set out in the B-BBEE Act as amended.
2.6 Any representation made by an Entity about its B-BBEE compliance must be supported by suitable evidence or documentation. A Measured Entity that does not provide evidence or documentation supporting any initiative must not receive any recognition for that initiative.
2.7 Wherever a Standard Valuation Method applies to measuring an indicator, the same standard should apply, as far as reasonably possible, consistently in all other applicable calculations in this statement.

3. APPLICATION OF THE CODES
3.1 The following Entities are measurable under the Codes:
3.1.1 all Organs of State and Public Entities;
3.1.2 all Measured Entities that undertake any economic activity with all Organs of State and Public Entities;
3.1.3 any other Measured Entity that undertakes any economic activity, whether direct or indirect, with any other Measured Entity that is subject to measurement under paragraph 3.1.1 to 3.1.2 and which is seeking to establish its own B-BBEE compliance.
3.2 The basis for measuring the B-BBEE compliance of an Entity in terms of paragraph 3.1 is:
3.2.1 Paragraph 4, in the case of an Exempted Micro-Enterprise;

3.2.3A Measured Entity in a sector in respect of which a sector code has been issued in terms of Section 9 of the BBBEE Act as amended, may only be measured for compliance in accordance with that code.

3.3 PRIORITY ELEMENTS, SUBMINIMUM AND DISCOUNTING PRINCIPLE
3.3.1 The Priority Elements are as follows:
3.3.1.1 Ownership:

3.3.1.1.1 The sub-minimum requirement for Ownership is 40% of Net Value(40% of the 8 points) based on the Time Based Graduation Factor as provided in Annexe 100 (E).

3.3.1.2 Skills Development
3.3.1.2.1 The sub-minimum requirement for Skills Development is 40% of the total weighting points for Skills Development.
3.3.1.3 Enterprise and Supplier Development:

3.3.1.3.1 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; Supplier development and Enterprise development.

3.3.2 COMPLIANCE TO PRIORITY ELEMENTS
3.3.2.1 A Large Enterprise is required to comply with all the Priority Elements;
3.3.2.2 A Qualifying Small Enterprise is required to comply with Ownership as a
compulsory element, and either Skills Development or Enterprise and Supplier Development.
3.3.3 DISCOUNTING PRINCIPLE EFFECT
3.3.3.1 Non-compliance with the 40% sub-minimum requirements of any of the priority elements, as per paragraph 3.4.2 above, will result in the following outcomes for both Large Enterprises and Qualifying Small Enterprises:

3.4.3.1.1.1. The actual points scored by the Measured Entity and the consequent level that the Measured Entity would have achieved were it not for noncompliance with the 40% sub-minimum requirements will be recognised by the Verification Agency (“the Recognition Level”);
3.4.3.1.1.2. Notwithstanding the recognition in 3.4.3.1.1 above, the Measured Entity’s B-BBEE status level will be discounted by one level down until the next applicable verification period in which the Measured Entity can demonstrate compliance with the 40% sub-minimum requirements, at which point the Recorded Level will become the applicable ratings level for that Measured Entity in that verification period.
3.4 The requirement to submit data to the Department of Labour under the Employment Equity Act 55 of 1998 is only applicable to ‘designated employers’ who employ 50 or more employees. However, for the purpose of measurement for both Generic and Qualifying Small Entities that employ less than 50 employees are required to submit sufficient evidence for verification purposes.

4. ELIGIBILITY AS AN EXEMPTED MICRO ENTERPRISE (EME)
4.1 Any enterprise with an annual Total Revenue of R10 Million or less qualifies as an Exempted Micro-Enterprise.
4.2 An Exempted Micro-Enterprise is deemed to have a B-BBEE Status of “Level Four Contributor” having a B-BBEE recognition level of 100% under paragraph 8.2.
4.3 Enhanced B-BBEE recognition level for an Exempted Micro-Enterprise:
4.3.1 Despite paragraphs 4.2 an EME which is 100% Black owned qualifies for elevation to “Level One Contributor” having a B-BBEE recognition level of 135%.

4.3.2 Despite paragraph 4.2 and 4.3.1, an EME which is at least 51%Black owned qualifies for elevation to “Level Two Contributor” having a B-BBEE recognition level of 125%.
4.4 Despite paragraphs 4.2 and 4.3, an EME is allowed to be measured in terms of the QSE scorecard should they wish to maximise their points and move to a higher B-BBEE recognition level.
4.5 An EME is only required to obtain an sworn affidavit on an annual basis, confirming the following:
4.5.1Annual Total Revenue of R10 million or less; and
4.5.2 Level of Black ownership.
4.6 Any misrepresentation in terms of Para 4.5 above constitutes a criminal offence as set out in the B-BBEE Act as amended.

5. ELIGIBILITY AS A QUALIFIFYING SMALL ENTERPRISES (QSE)
5.1 A Measured Entity with an annual Total Revenue of between R10 million and R50 million qualifies as a Qualifying Small Enterprise.
5.2 A QSE must comply with all of the elements of B-BBEE for the purposes of measurement.
5.3 Enhanced B-BBEE recognition level for QSE:
5.3.1A Qualifying Small Enterprise which is 100% Black owned qualifies for a Level One B-BBEE recognition.
5.3.2A QSE which is at least 51% Black owned qualifies for Level Two B-BBEE recognition level.
5.3.3A QSE is only required to obtain an sworn affidavit on an annual basis, confirming the following:
5.3.3.1 Annual Total Revenue of R50 million or less; and
5.3.3.2 Level of Black ownership.

5.4 Any misrepresentation in terms of Para 5.3 above constitutes a criminal offence as set out in the B-BBEE Act as amended.

6. START-UP ENTERPRISES
6.1 Start-up Enterprise must be measured as an Exempted Micro-Enterprise under this statement for the first year following their formation or incorporation. This provision applies regardless of the expected total revenue of the Start-up Enterprise.
6.2 Start-up Enterprise is deemed to have the qualifying B-BBEE Status in accordance with the principles of paragraph 4 of this Statement.
6.3 In order to qualify as a Start-up Enterprise, the enterprise must provide an independent confirmation of its status in accordance with paragraph 4.5.
6.4 Despite paragraph 6.1 and 6.2, 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.

7. The GENERIC SCORECARD
7.1 The Ownership Element, as set out in Code series 100, measures effective ownership of entities by Black people.
7.2 The Management Control element, as set out in Code series 200, measures the effective control of entities by Black people.
7.3 The Skills Development element, as set out in Code series 300, measures the extent to which employers carry out initiatives designed to develop the competencies of Black employees and Black people internally and externally.

7.4 The Enterprise and Supplier Development element, as set out in Code Series 400, measures the extent to which entities buy goods and services from Empowering Suppliers with strong B-BBEE recognition levels. This element also measures the extent to which enterprises carry out supplier development and enterprise development initiatives intended to assist and accelerate the growth and sustainability of black enterprises.
7.5 The Socio-Economic Development and Sector Specific Contributions element, as set out in Code series 500, measures the extent to which entities carry out initiatives that contribute towards Socio-Economic Development or Sector Specific initiatives that promote access to the economy for Black people.

8. The B-BBEE GENERIC SCORECARD
8.1 The following table represents the B-BBEE Generic Scorecard

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8.2 B-BBEE RECOGNITION LEVELS
8.2.1 Based on the overall performance of a Measured Entity using the Generic Scorecard and Qualifying Scorecard Enterprise Scorecard, the Measured Entity will receive one of the following B-BBEE Status uses with the corresponding BBBEE recognition level:

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9. ENHANCED RECOGNITION FOR CERTAIN CATEGORIES OF BLACK PEOPLE
9.1 Throughout the Codes, various criteria appear which advance the interests of certain categories of Black people. These include:
9.1.1 Black women, should form between 40% and 50% of the beneficiaries of the relevant Elements of the Scorecard;
9.1.2 Black people with disabilities, Black youth, Black people living in rural areas and Black unemployed people form part of the beneficiaries of the relevant Elements of the Scorecard.

10. TRANSITIONAL PERIOD
10.1 For the first year after the gazette of this Statement, a Measured Entity may elect to use:
10.2 The Amended Codes of Good Practice; or 10.3 The Generic Scorecard in Code series 000, Statement 000 issued on 9
February 2007, notwithstanding the repeal of that Statement.
10.4 Thereafter the first year, as per paragraph 10.1, all B-BBEE compliance measurement will be in accordance with this Statement.

11. ADJUSTMENT OF THRESHOLDS
The Minister may, by notice in the Gazette, adjust the thresholds in paragraphs
4 to 6. Any such changes apply to compliance reports prepared for a Measured Entity after a 12 month period following the gazetting of the adjustment.

12. DURATION OF THE B-BBEE CODES
12.1 A Code remains in effect until amended, substituted or repealed under Section 9 of the Act.
12.2 The Minister may review the Codes at any stage, and regular reviews will take place to monitor the implementation of B-BBEE throughout the economy.

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