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Top 3 questions about B-BBEE asked by directors

by Innovative Consulting

Posted in November 2016

Will I be at the same B-BBEE level?

For some entities the new thresholds will make compliance easier. Under the amended codes, the annual total revenue threshold for Exempt Micro Enterprises (EMEs) has increased from R5 million to R10 million, and a Qualifying Small Enterprise (QSE) qualifies within the R10-R50 million bracket.  Generic companies are those with a turnover exceeding R50 million. EMEs (including start-ups) and QSEs could qualify for higher B-BBEE Status Levels, depending on their black ownership:

  • An EME or QSE with 100% black ownership qualifies at a Level One.
  • An EME or QSE with more than 51% black ownership qualifies at a Level Two.
  • If black ownership of an EME is below 51%, it qualifies at a Level Four.
  • If black ownership of a QSE is below 51%, it is required to be measured in terms of the QSE scorecard to confirm its B-BBEE Status Level.

What do the Amended Codes mean for my business?

If you are a Generic organization or a QSE with no black ownership, the points you need to achieve have increased and the difficulty and technicality of the elements have increased. The Amended Codes have introduced priority elements, these are ownership, skills development and enterprise and supplier development. These priority elements also hold a subminimum 40%. Failure to meet the requirements on the priority elements means a level drop for Generics. For QSEs, ownership plus either skills development OR enterprise and supplier development points must reach the subminimum in order to avoid the scorecard dropping one level. Ownership and management control/employment equity are measured based on the date of verification; skills development, enterprise and supplier development and socio-economic development are based on your financial period.

Ownership and management control/employment equity cannot be changed overnight, however, EE reporting must have been completed if you are a designated employer or no points will be awarded. To see if you qualify as a designated employer.

What can I do to score points now?

Skills Development – 20-25 points

The spend target has doubled to 6% of salary/wages bill, and can include people other than employees. For generics, there are specific targets per sub-race and gender group. For QSEs, the spend target is 3% of salary/wages bill.

In order to score any points under skills development, training in priority skills for black people must be evident, the following must be submitted to your SETA for approval for both QSE and Generic entities:

  • Workplace skills plan (WSP)
  • Annual training report (ATR)

Innovative Consulting is registered across all SETA’s and can provide assistance with WSP and ATR submissions.

Enterprise development – 5 points

1% net profit after tax (NPAT) to be spent on > 51% black owned companies with a turnover under R50 million, in order to increase their financial or operational capacity.

Supplier development – 10 points

For QSEs 1% NPAT and for Generics 2% NPAT to be spent on > 51% black owned companies (who are suppliers) with a turnover under R50 million, in order to increase their financial or operational capacity.

Socio economic development – 5 points

1% NPAT to be spent on qualifying beneficiaries and activities.

Innovative Consulting has been in the B-BBEE field for over 9 years, we can provide tailored B-BBEE solutions, depending on your industry and size of your business. Contact us today for a quotation.

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