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To bee or not to bee - how to get into BEE shape
If you’re an enterprise with a total annual revenue of R5 million or less then don’t read further. If your turnover is more then learn how to get into BEE shape
To Bee or not to bee - how to get into BEE shape
If you’re an enterprise with a total annual revenue of R5 million or less then don’t read further. If your turnover is more then learn how to get into BEE shape. Bregmans Attorneys work closely with Zainab Sarang, a BEE compliance expert. She can conduct an onsite audit to see how far you fall short of BEE compliance. Please contact me for a no obligation consultation with Zainab.
The BEE codes of good practice will remain in limbo for a few months until the Department of Trade and Industry (DTI) ties up some significant loose ends in developing the BEE legal framework. This was designed to allow for a smooth switchover to the broad-based scorecard required by the BEE Act. It expired at the beginning of February and will now be extended. The delay is actually a blessing for most companies that are still battling to understand how to become BEE aligned.
BLACK ECONOMIC EMPOWERMENT – WHAT DOES IT REALLY MEAN?
Black Economic Empowerment, or BEE as it is more commonly termed, has the country in a buzz. But how much do you really know about it and more importantly how does it affect you?
What is BEE?
BEE came into being by means of the Broad-Based Black Economic Empowerment Act 53 of 2003. According to the Act one of the aims of Broad- Based BEE (B-BBEE) is to:
“promote the achievement of the constitutional right to equality, increase broad based and effective participation of black people in the economy and promote a higher growth rate, increased employment and more equitable income distribution…”
In order to achieve this, the Minister of the Department of Trade and Industry signed into law the B-BBEE Codes of Good Practice. These Codes advise on exactly how BEE implementation should take place. Contrary to popular belief B-BBEE is not only about Black Ownership or Affirmative Action measures. Broad-based BEE is in fact made up of seven elements. In order to be BEE compliant a company needs to achieve a certain level of compliance with respect to each of these elements. Compliance here is measured by a point scoring system. But we’ll get to that later.
Does it apply to me?
Before we discuss what the Act says about the application of the Codes there is some good news for small enterprises. Achieving the scores as set out in the BEE Codes of Good Practice can be a bit onerous for smaller entities. For this reason the Codes state that if you’re an enterprise with an annual Total Revenue of R 5 million or less then you’re an Exempted Micro-Enterprise. This means that you are already deemed to be BEE compliant without any further effort on your part.
If your entity has a Total Revenue of between R5 million and R35 million you then qualify as a Qualifying Small Enterprise. A different, more easily attainable scorecard applies to these entities.
An Exempted Micro-Enterprise can voluntarily measure itself against the Qualifying Small Enterprises Scorecard to improve its score.
In terms of the Codes all public entities, organs of state or any entity wishing to conduct business with any organ of state or public entity must be measured in terms of the B-BBEE Codes. However, even if your entity is not compelled to comply, your supplier might be. Your supplier’s B-BEE Score is dependant on your B-BBEE status. So at some point or another, your entity would have to consider getting into BEE shape.
How does the scoring work? When is one compliant?
So, we’ve already made mention of points and scorecards but how does this work in terms of an entity’s BEE status? Well it’s rather simple actually. Each of the seven elements of BEE has a certain score. Depending on how well you have complied with each element you get a score; the total score of all the elements tallies up to 100 points. Your entity can be anything from a Level 1 to a Level 8 BEE Contributor depending on your score. If you attain 100 points or more you are a Level 1 Contributor. If your entity attains 30 points or more but less than 40 points the entity is a Level 8 Contributor. Anything less than 30 points is considered Non-Compliant.
So what are the elements and what points are allocated for each?
1. Ownership 20 points
2. Management and Control 10 points
3. Employment Equity 15 points
4. Skills Development 15 points
5. Preferential Procurement 20 points
6. Enterprise Development 15 points
7. Socio Economic Development initiatives 5 points
Okay, so now I know what BEE basically means how do I get my business in BEE shape?
If you can understand the Broad-Based BEE Codes of Good Practice, then that is where you would start. Each element is explained and measurement criteria stipulated. However, the Codes can get a bit confusing especially when you have to consider the role of black females in all the elements. Next step – get professional help to guide you through the initial process and you’ll soon find it much easier than you expected it would be.
