Significant Draft B-BBEE Legislation published for commentary

Apr 3, 2018 | B-BBEE Blog

The DTI has gazetted a significant piece of B-BBEE legislation for 60 day public commentary that will change the B-BBEE landscape if it is finally gazetted in its current form as follows:

  • It amends Code 000 (General Principles and the Generic Scorecard) and Code 300 (Skills Development)
  • The enhanced BEE recognition for Qualifying Small Enterprises (QSE’s) for 100% or 51% Black ownership must be calculated using the flow-through method and cannot benefit from the modified flow-through provisions.
  • The enhanced recognition provisions are extended to Generic Enterprises. A Generic Enterprise with 100% Black ownership is recognised as a BEE level 1 via a BEE Verification Certificate verifying the ownership element and a 51% Black owned entity is recognised as a BEE Level 2. In both cases, enhanced Black ownership to a BEE Level 1 or 2 cannot be achieved by the use of modified flow-through, the presence of private equity funds or mandated investments or through sale of assets or provisions catering for black sale or loss of shares (once empowered always empowered provisions)
  • The eligibility of Unincorporated Joint Ventures is detailed
  • BEE levels can be enhanced by QSE and Generic Enterprises that are compliant with their Priority Elements requirement by the use of the Youth Employment Service (Y.E.S.).  Exempted Micro Enterprises (EME’s) can also benefit from this provision.
  • The qualifiers applicable to Y.E.S entities include achieving the sub minimums of the priority elements, scoring full points a new sub-pillar on Skills Development targeting bursaries for Black students at higher education institutions and maintaining or improving the previous year’s BEE Status Level before participating in Y.E.S
  • Based on a headcount formula, Net Profit After Tax (NPAT) and Absorption rates and certain prerequisite conditions and if targets are met for the provision of jobs for black youth, the Enterprise’s BEE Recognition Level can be enhanced by one or two BEE Recognition Levels.
  • 50% of Informal Skills Development expenditure for Y.E.S. employees can be included under Category F and G in the Skills Development element.
  • Skills Development has been significantly changed as follows:
    • Points and targets for skills development expenditure have been reduced to 6 and 3.5% respectively
    • A new indicator measuring expenditure on bursaries for black students at higher education institutions has been added with 4 points and a 2.5% target. Demographic targets do not apply to these bursaries.
    • The limit on ancillary costs such as travel, catering and the cost of a skills development facilitator does not apply to expenditure under the new indicator for bursaries for black students.
    • Stipends of black students under the new indicator can be counted with the Category B, C and D salaries towards skills development expenditure targets
    • The targets for learnerships for previously employed and previously unemployed black people are now clearly separated and the points reduced to 3 each.

The limit for recognition of informal training is increased from 15% to 25%.

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