10/11/2018 Presentation to the B Presentation to the B Presentation to the B Presentation to the B- - - -BBEE BBEE BBEE BBEE Codes of Good Practice Codes of Good Practice Codes of Good Practice Codes of Good Practice 10 October 2018 10 October 2018 10 October 2018 10 October 2018 Background Background Background Background • In terms of section 9 of the B-BBEE Act, the Minister is empowered to issue the Codes of Good Practice (the Codes). • We have the generic Codes and Sector Codes. • Instrument to drive transformation within the economy. • Applicable to both public and private sector. 2 1
10/11/2018 Code Series 000: Principles Code Series 000: Principles Code Series 000: Principles Code Series 000: Principles • The Codes measures 5 elements: – Ownership : 25 points; – Management Control: 19 points; – Skills Development: 20 points; – Enterprise and Supplier Development: 40 points; and – Socio- Economic Development: 5 points. • Points achieved will result into a B-BBEE recognition status. • There are eight recognition levels. 3 …Code Series 000: Principles …Code Series 000: Principles …Code Series 000: Principles …Code Series 000: Principles B-BBEE Status Qualification B-BBEE Recognition Level One Contributor ≥100 points on the Generic Scorecard 135% Level Two Contributor ≥95 but <100 points on the Generic Scorecard 125% Level Three Contributor ≥90 but < 95 points on the Generic Scorecard 110% Level Four Contributor ≥80 but < 90 points on the Generic Scorecard 100% Level Five Contributor ≥75 but < 80 points on the Generic Scorecard 80% Level Six Contributor ≥70 but < 75 points on the Generic Scorecard 60% Level Seven Contributor ≥55 but < 70 points on the Generic Scorecard 50% Level Eight Contributor ≥40 but < 50 points on the Generic Scorecard 10% Non-compliant Contributor <40 points on the Generic Scorecard 0% 4 2
10/11/2018 …Code Series 000: Principles …Code Series 000: Principles …Code Series 000: Principles …Code Series 000: Principles Classify Classify measured Classify Classify measured measured entities measured entities entities based entities based based on based on on on annual annual annual total annual total total revenue, total revenue, revenue, revenue, gross gross receipts gross gross receipts receipts or receipts or or allocated or allocated budget allocated allocated budget budget : budget • Exempted Micro Enterprises (EME): 0 0 – – R R10 10 million million 0 0 – – R R 10 10 million million – No verification requirements. – Sworn Affidavit or CIPC Certificate. – No more accounting officer letters. – Automatic B-BBEE level 4. – Enhanced recognition for 51% and 100% black owned EMEs. 5 …Code Series 000: Principles …Code Series 000: Principles …Code Series 000: Principles …Code Series 000: Principles … … … …Classify Classify measured Classify Classify measured measured measured entities entities entities based entities based based based on on annual on on annual annual total annual total total revenue, total revenue, revenue, revenue, gross gross gross gross receipts receipts or receipts receipts or or allocated or allocated allocated allocated budget budget budget : budget Qualifying Small Enterprises (QSE): above above above above R R R R10 10 10 10 million million million million but but but but • less R less less less R R50 R 50 50 50 million million million million. – Comply with the QSE scorecard – Only SANAS accredited verification professional/agency. – Enhanced recognition for 51% and 100% black owned QSEs. Only use a sworn affidavit. Large Enterprises: above above above above R R R R 50 50 50 million 50 million million million. • – Only SANAS accredited verification professional/agency . NB NB NB NB: : : : As As of As As of 1 of of 1 1 1 January January January January 2017 2017, 2017 2017 , , IRBA , IRBA IRBA auditors IRBA auditors auditors ceased auditors ceased ceased ceased to to issue to to issue issue B issue B B- B - - - BBEE certificates BBEE certificates. . BBEE BBEE certificates certificates . . 6 3
10/11/2018 …Code Series 000: Principles …Code Series 000: Principles …Code Series 000: Principles …Code Series 000: Principles • Measured entities to comply with priority elements under the following conditions: – QSE to comply with at least two of the priority elements : • Ownership is compulsory; and either • Enterprise & Supplier Development or Skills Development. – Large enterprises to comply with all priority elements . • Measured entities who do not meet the thresholds in priority elements, the overall score will be discounted one (1) level down. 7 …Code Series 000: Principles …Code Series 000: Principles …Code Series 000: Principles …Code Series 000: Principles Also covers the following Statements: • Statement 003: Development of sector Codes. • Statement 004: Specialised entities. – no ownership. – Granted automatic recognition levels based on a percentage of black beneficiaries. • Statement 005: Requirements for verification. 8 4
10/11/2018 Validity of B Validity of B Validity of B Validity of B- - -BBEE Certificate - BBEE Certificate BBEE Certificate BBEE Certificate • B-BBEE Certificates/Sworn Affidavits/CIPC Certificates are valid for 12 Months (i.e 19 June 2018 to 18 June 2019) Reissued Reissued B B- -BBEE BBEE certificates certificates must must have have 3 3 dates dates: : Reissued Reissued B B - - BBEE BBEE certificates certificates must must have have 3 3 dates dates : : • – When? When there is a material change. – Does not change date of expiry. – Reflect, date of first issue, date of re-issue and expiry date. Sworn Affidavits Sworn Sworn Sworn Affidavits Affidavits Affidavits: • – Deponent must select designation (Director, owner, member) – Indicate financial year (Date, Month and Year) 9 …Validity of B …Validity of B …Validity of B …Validity of B- -BBEE Certificate - - BBEE Certificate BBEE Certificate BBEE Certificate … … … …Sworn Sworn Sworn Affidavits Sworn Affidavits Affidavits: Affidavits – Choose between financial statements and management accounts. – Date of signature for deponent and commissioner of oath must be the same. – Person who has an interest cannot commission. – Obtainable at www.thedti.gov.za CIPC CIPC CIPC CIPC Certificate Certificate Certificate Certificate • – Send to Mr Madidimalo Ramare at MRamare@beecommission.gov.za for verification. 10 5
10/11/2018 …Validity of B …Validity of B …Validity of B …Validity of B- - -BBEE Certificate - BBEE Certificate BBEE Certificate BBEE Certificate B- B B B - - -BBEE BBEE BBEE BBEE Certificate Certificate by Certificate Certificate by SANAS by by SANAS SANAS SANAS accredited accredited accredited accredited verification verification verification verification • Professional Professional: : Professional Professional : : – Check accreditation status on SANAS website www.sanas.co.za – Can request confirmation from the verification professional. Their details available on SANAS website. – Conduct interviews with suppliers that stands a chance of being appointed to test ownership and management control. NB NB : NB NB : : : Build Build Build due Build due due due diligence diligence process diligence diligence process process to process to to to determine determine validity determine determine validity validity validity at at at at • time time of of contracting contracting. . time time of of contracting contracting . . 11 Invalid B Invalid B- Invalid B Invalid B -BBEE Certificate - - BBEE Certificate BBEE Certificate BBEE Certificate • In terms of section section 13 13O O ( (2 2) ) of the B-BBEE Act officials of section section 13 13 O O ( ( 2 2 ) ) organs of state and public entities have a responsibility to report fronting, including an attempt to front. • Failure to report: 1 year imprisonment. • Invalid B-BBEE Certificate must also be reported to the B-BBEE Commission. Section Section 13 13A A of the B-BBEE Act empowers organs of Section Section 13 13 A A • state and public entities to cancel a contract or award issued or granted based on misrepresentation. 12 6
10/11/2018 OWNERSHIP Code Series 100: Code Series 100: Code Series 100: Code Series 100: OWNERSHIP OWNERSHIP OWNERSHIP OWNERSHIP • Change ownership patterns of the economy. • Target of 25.1% Ownership. • Measure three aspects: exercisable voting rights, economic interest, and net value . • The 40% sub-minimum is applicable on NET VALUE . • Designated groups included in the main scorecard. • Threshold for new entrants increased to R50 million . • Sale of asset/business qualify for ownership points. 14 7
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