BEE consulting

• Percentage required to achieve targets have being re-adjusted.
• increased somewhat for Procurement and Skills Development with the introduction of capping of internal skills and the introduction of the 40% sub minimum.
• Introduction of points allocated for enterprise and supplier development.
• for enterprises which are less than 51% black owned and whose annual turnover is between R10 – R50 million, it is necessary to measure against all of the elements (previously only the top 4 of the 7 elements was taken into account);
• the concept of “priority” elements have been introduced – see explanation below;
• Black-owned businesses received an automatic B-BBEE recognition level but are required to be independently assessed on ownership structure if used for enterprise or supplier development.

• ‘Adjusted recognition for gender’ does not apply, males and females are measured separately.
• Points are also obtainable in Skills Development for upskilling of Black unemployed persons;
• A new sub-category introduced to encourage Supplier Development;
• Socio-economic Development – a large drop in points allocated, from 25 down to 5;
• Removing the bonus points increases will the difficulty of obtaining sufficient points to reach higher threshold levels

A QSE will now have to comply with Ownership as a compulsory* element, and can elect either Skills Development or Enterprise Supplier Development.

The significance of this is that these three priority elements have a 40% sub-minimum requirement for points obtained (termed the ‘Subminimum Principle’), and if a company scores less than 40% of the target, although whatever points scored will be recognised, the overall rating obtained will be dropped by one level.

For example: if actual overall outcome is a Level 4, the rating recorded on the Scorecard is (drops to) a Level 5.

Whereas under the old Codes companies can elect which 4 of the 7 elements to be measured against, under the amended Codes two of the elements become compulsory, i.e., in the sense that failure to comply with minimum requirements will result in an automatic drop in the overall level on their rating (termed the ‘Discounting Principle’):

• If, in the Ownership element, a sub-minimum of 40% of the allocated to Net Value (i.e., 3.2 out of 8 points, meaning also at least 2 of the 5 points allocated to Economic Interest) is not scored, and
• If a sub-minimum of 40% is not obtained for either Skills Development (an overall 10 out of 25 points), or for each of the sub-categories in Enterprise & Supplier Development (totaling 12 out of 30 points).

• Preferential Procurement (15 points, and 5 points for procurement from 51%+ Black owned suppliers)
• Enterprise Development (5 points)
• Supplier Development (5 points)

• At least 25% of cost of sales excluding labour cost and depreciation must be procured from local producers or local suppliers in SA, for service industry labour cost are included but capped to 15%.
• Job creation- 50% of jobs created are for Black people provided that the number
• of Black employees since the immediate prior verified B-BBEE Measurement is maintained.
• At least 25% transformation of raw material / beneficiation which include local, manufacturing, production and /or assembly, and/or packaging.
• Skills transfer: at least spend 12 days per annum productively deployed in assisting Black EME and QSEs beneficiaries to increase their operation and financial capacity.

• A 100% Black owned QSE automatically qualifies for a Level One rating.
• A QSE that is at least 51% Black Owned qualifies for Level Two rating.

• Annual Total Revenue of between R10 and R50 million,
• Level of Black ownership. Please note that the above generic estimation is subject to individual charter compliance rules. For example , any company that falls within the construction sector score card has to have a valid Bee certificate. Its advisable to take professional advise to evaluate which sector charter , a company falls under. Construction charter includes suppliers of building materials etc.

As per our last newsletter, those economic sectors with their own B-BBEE Codes and Scorecards are required to be aligned with the amended DTI Codes by 30 April 2015. All charter codes have now been gazetted.

• A first in-depth client consultation to determine the sector charter, industry requirements and scorecard applicable to your business. Here we also establish your current BEE status or level of compliance, discuss strategic goals and possible future targets, and talk about other strategic goals which may be achieved in conjunction with BEE targets.
• A once off BEE strategy service which provides you with a BEE strategy document . This once off service includes an in-depth personal consultation to discuss the content and details of the BEE Plan.
• BEE clients, a follow up visits to assist with practical’s implementation of the final authorized BEE plan and with the achievement of the targets. Any amendments to the plan are made during this follow up visit.
• Our personal attendance and assistance during the onsite BEE verification and audit .
• Investigation of potential corporate Social investment beneficiaries and enterprise development beneficiaries to ensure they qualify on the BEE
• Through preparation of your business for the BEE verification and audit conducted by independant accredited rating agency. This includes correctly compiling the bundle of evidence and documents received from the business, submitting this to the rating agency and following up on the formal rating on your behalf,
• Amendments to the final BEE plan in the event that your business circumstance change.

• Meeting with clients to establish which elements the business will be measured against in order to validate the BEE claims.
• Validating the claim by:
• Interviewing black managers, shareholders, board members, directors and enterprise Development beneficiaries and employees who received skills development to confirm the validity of the claim and the companies BEE initiatives
• Inspecting all supporting documentation (e.g. pay slips, contract of appointment and salary slips) to rule out fronting or misleading facts which is now deemed as a criminal offence.
• Writing and submitting a motivational report to the BEE rating agency for approval
• Lodging an appeal on behalf of the client if a claim has been disqualified and constantly providing client with feed-back as to the results.