Maximise your BEE rating for your current financial year

As part of our BEE service to you, we draw your attention to the fact that the current Codes of Good Practice are only in place to 30 April 2015.  An entity is classified as detailed below based on the turnover as per the Annual Financial Statements for the financial year being verified. The classification of the entity determines the elements to be used to measure the entity.

As your next BEE verification will be based on this financial period, we strongly recommend that you apply the targets set from 1 May 2015 in terms of the amended Codes of Good Practice to maximise your rating.

  1. EME –  Turnover of R5million and below –  Automatic Level 4 (R10 million and below from 1 May 2015).
  2. QSE – Above R5million up to R35 million (R10 million up to R50 million from 1 May 2015) – Measured on a selected 4 of the 7 elements (5 of the 5 elements from 1 May 2015).
  3. Generic – Above R35 million (above R50 million from 1 May 2015) – Measured on all 7 elements (all 5 elements from 1 May 2015).

The elements as per the current Codes of Good Practice are as follows:

  • Ownership – Measures black shareholders, members, trustees at the time of the verification.
  • Management control – Measures black managers in both Senior Top Management as well as Other Top Management e.g. COO, CEO, CFO at the time of the verification.
  • Employment Equity – Based on the number of black employees in the entity at the time of the verification. Need to achieve a sub-minimum of 40% to score any points in this element.
  • Skills Development – Measures the training spend during the financial year under review on black employees both internally as well as externally and including black learnerships.
  • Preferential Procurement – Looks at supplier spend during the year under review (All invoices for the year excluding VAT) – Scorecards are required from the respective suppliers.
  • Enterprise Development (ED) – Quantifies donations to black owned enterprises (monetary, time, goods) in terms of an agreement.
  • Socio–Economic Development (SED) – Quantifies donations to organisations (monetary, time, goods) where the beneficiaries are black individuals.

From 1 May 2015, Employment Equity is incorporated into Management Control and Skills Development and Preferential Procurement and Enterprise Development are combined into one element.  Enterprise Development has also been expanded to include Supplier Development.

Please note that your ED and SED contributions must be made before the last day of your financial year or the contributions will not be included in your rating for that period in terms of the current Codes and Amended Codes.

The amended Codes have separated the ED contribution into two parts being Supplier Development and Enterprise Development.  Therefore, your current contribution of 2% (QSE) or 3% (Generic) of Net Profit After Tax (NPAT) must be allocated as follows:

  • Supplier Development (EME or QSE in your supply chain that is at least 51% black owned)                       2% x NPAT (Generic)                                                                                                                       1% x NPAT (QSE)
  • Enterprise Development (EME or QSE in your supply chain that is at least 51% black owned)                    1% x NPAT (Generic and QSE)

We currently recommend Mhangi Gingi as an excellent beneficiary for Enterprise Development (but would not qualify also for Supplier Development as below); see www.mhanigingi.co.za and Atlantic Hope for Socio-Economic Development; see www.atlantichope.co.za.

If you are unsure whether you have earned your maximum points for these two elements for your current financial year, please contact Fatima Bapukee or Alexis Sacks to ensure that you achieve the best possible rating for your business.

And don’t forget to take advantage of our other BEE value offerings that include:

  • Regular newsletter and blog updates of what you need to know to ensure that BEE works for your business
  • Free updates on new developments and trends that provide you with planning opportunities for your business
  • Free assistance with leveraging your B-BBEE status as a competitive advantage in the market.
  • Access to our Supplier database to save you time collating your supplier scorecards
  • Telephonic support and guidance from our qualified verification specialists for all your BEE queries
  • Training of your staff through the verification process as part of the BEE verification

We also have the following Value Offerings other than normal verification services:

  • B-BBEE Awareness and Training
  • B-BBEE Assessments and Scenario Developments to determine what you need to do to comply or better your score. We develop various scenarios and strategies to determine the best empowerment roadmap for successful transformation.
  • Professional advisory service on B-BBEE and technical support through the implementation of B-BBEE plans.
  • Provide comprehensive empowerment analyses that not only address the overall empowerment status of the organization, but also focuses on where your risks and opportunities lie.

As this is the first year of the amended Codes, and the amended requirements are far more onerous than the Current Codes, we urge you to contact us to assist you with planning for your next verification before the end of your financial period.

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