Chamber discusses revised codes of broad-based black economic empowerment (B-BEE)
The chamber of congress gathered during this past week to discuss this month's publication of revised codes for broad-based black economic empowerment (B-BEE) by the Department of Trade and Industry and how it should proceed with the changes.
MALALANE – The chamber of congress gathered during this past week to discuss this month’s publication of revised codes for broad-based black economic empowerment (B-BEE) by the Department of Trade and Industry and how it should proceed with the changes. Immediately following publication, many executives of entities subjected to sector codes starting asking questions as to how these would impact their sector-specific scorecards. This includes sectors such as agriculture, construction, information and communication technology, property, chartered accountants, transport, forestry, financial and tourism
The revised codes clearly stipulate that, where there has been a sector code issued in terms of Section 9, that the mentioned entities may only be measured in terms of their sector code. This means that despite the revised codes, the Construction Sector Charter, Financial Sector Charter and the others will still be the only basis for measurement until such time as they have been formally aligned to the revised codes. According to Statement 003, all sector codes must also be fully aligned to and address all the elements in the generic scorecard, including the use of the same definitions and the application of similar calculation methodologies.
This means that entities in these sectors may not apply the revised codes, in spite of the higher thresholds for exemption (R10 million) and the issuing of affidavits instead of BEE certificates, as stated in the revised codes.
The revised codes also state that from October 2014 all B-BBEE measurements must be undertaken according to the revised codes. Effectively this means that if a sector code has not been aligned accordingly by then, that it will not be meeting the requirements imposed on it under Statement 003. For this reason we can expect most sector councils to soon start working towards aligning their respective sector codes accordingly.
Some of the key areas in the revised codes that will have to be addressed in the sector codes are the following:
– Increase of the exemption threshold – the revised codes have increased the threshold from R5 million to R10 million turnover per annum
– One scorecard for both large enterprises (LE) and qualifying small enterprises (QSE)
– Measurement of black ownership for all LEs and QSEs
– Introduction of new skills-development criteria
– Combination of enterprise development and supplier development.
So what should businesses, that are currently subjected to sector codes, do? They should continue with their existing empowerment initiatives, with the current sector code as reference, but be acutely aware of the new measurement principles contained in the revised codes. Measurement under the new sector codes will happen soonest only after October 2014, but with national elections around the corner and new leadership potentially stepping in, it might just delay this measurement date even far into 2015. Just bear in mind that if an entity is measured in October 2014, its measurement will be based on the February 2014 financial statements, which means that this entity should have started implementation already from March 2013.
For any enquiries please e-mail Louis McLaren directly at louis@bee2business.co.za or Milanie on 012-940-1900 or admin@secc.co.za
McLaren is a director of BEE2Business and has advised hundreds of companies across various sectors since 2005 on broad-based black economic empowerment. He also served on the national executive of the AHI and on the Transpol Committee at Business Unity South Africa.
