2. The Evolution Of BEE
BEE Act
53 of
2003
COGP – 9 Feb.2007
BEE Amendment Act of 2013
RCGOP 1 May 2015
RCGOP 5 May 2015
Gazette Notices
3. Objective Of BBBEE
B-BBEE strives to ensure that equitable
economic opportunities are created and
offered to black South Africans in a
sustainable manner.
4. Major Amendments To The BBBEE Bill 2013
•Oversight and Advocacy
•Investigate complaints
relating to BBBEE
•Power To Subpoena
BEE
Commission
•Misrepresenting and/or
providing false BBBEE
information
•Failure to report/investigate
misrepresentations
•Engaging in fronting practice
Criminal
Offences
• Introduction of a
statutory right for
government and public
entities to cancel any
contract awarded due
to false BBBEE
information
Contract
Termination
5. Implications of Amended BBBEE Act of 2013
Offences
Government
Procurement
BBBEE Report
1. Individuals: Fine
and/or 10 years minimum
prison sentence
2. Companies: up to 10%
of annual turnover/Ban
from tendering for
government business
3. Oblige Government
and Public entities to take
codes into account in
procurement policies
4. Listed entities will be
obliged to provide the
BBBEE commission with a
compliance report
6. Classification Of Entities RCGOP
EME
QSE
Large
Enterprise
Exempted Micro- Enterprise
(Turnover ≤ R10m)
Turnover > R50m
Qualifying Small
Enterprises
(Turnover >
R10m≤R50m)
7. ** The Generic Scorecard
Enterprise & Supplier
Development
Skills Development
Ownership
Management
Control
Socio-
Economic
Development
Measures the extent to which
entities buy goods and services
from Empowering suppliers and
the extent to which enterprise
carry out enterprise and supplier
development
Measures the extent to
which employers carry
out initiatives designed
to develop the
competencies of Black
people internally and
externally
Measures the extent to which entities carry out initiatives that contribute towards
socio-economic Development or sector specific initiatives that promote access to the
economy for Black people
Measures the extent to
which employers carry
out initiatives designed
to develop the
competencies of Black
people
Measures the
effective control of
entities by Black
people
8. Amended Generic Scorecard
BEE ELEMENTS OLD WEIGHTINGS NEW WEIGHTINGS
OWNERSHIP 20 POINTS **25 POINTS
MANAGEMENT CONTROL
10 POINTS
(15) PLUS (4) BONUS
POINTS (19)15 POINTS
SKILLS DEVELOPMENT 15 POINTS **20 PLUS 5 BONUS
POINTS
ENTERPRISE AND SUPPLIER
DEVELOPMENT
20 POINTS **40 PLUS FOUR
BONUS POINTS
15 POINTS
SOCIO ECONOMIC
DEVELOPMENT
5 POINTS 5 POINTS
9. BBBEE Levels Of Compliance
BEE Level COGP RCGOP
Level 1 ≥100 points ≥100 points
Level 2 ≥85 but < 100 ≥95 but < 100
Level 3 ≥75 but < 85 ≥90 but < 95
Level 4 ≥65 but < 75 ≥80 but < 90
Level 5 ≥55 but < 65 ≥75 but < 80
Level 6 ≥45 but < 55 ≥70 but < 75
Level 7 ≥40 but < 45 ≥55 but < 70
Level 8 ≥30 but < 40 ≥40 but < 55
Non-Compliant <30 points <40 points
10. Generics must meet
40% subminimum
target for each of
these elements,
failure to do so will
result in the
discounting of the
measured entity by
one level per element
Priority Elements
Enterprise &
Supplier
Development
Skills Development
Ownership
WEIGHTING = 90 POINTS out of Possible 114
11. DTI May 2015 Gazette Notices.
Sector Codes
Further extension is provided to sector codes to align and have their sector codes gazetted under
section 9(1) of the B-BBEE Act by end October 2015. Failure to align by the sector code will result in
the old sector code being repealed.
Empowering Supplier Status
All current valid BEE certificates will be valid for the next 12 months (1 May 2015 to 30 April 2016)
and will be deemed as being Empowering Suppliers. All Exempt Micro Enterprises certificates
issued without Empowering Supplier status will be automatically deemed to be Empowering
Supplier for the next 12 months.
Ownership Schemes
The DTI also included a paragraph which was not submitted for public comment
regarding Broad-Based Ownership Schemes (BBOS) and Employee Ownership Schemes
(EOS), indicating that such schemes can only be scored under paragraph 2.2.3 of the
ownership scorecard (effectively limiting the contribution to ownership points of such
schemes to 3 points out of 25 with a target of 3%).
12. DTI May 2015 Gazette Notices.
Ownership Schemes
The implication of the amended ownership element of the codes, is significant and gives
rise to concern.
It will have several consequences as follows:
5.1.1. Almost all large companies included BBOS, EE schemes and individuals as part of
their ownership deals; they will in future lose recognition for new transactions for value
created in these schemes but they they will not have to restructure their current deals or
“top them up” as it only applies to deals done after 1 May 2015.
5.1.2. Employees will no longer be included in future ownership deals for BEE purposes.
5.1.3. Several investment companies, including ANC (Chancellor House) will not qualify as
a Black Owned investor as it is structured as a BBOS in future deals.
5.1.4. NGO’s who rely on BBOS as a source of income will in future no longer be able to
participate and it will limit their available funding.
13. Empowering Supplier Concept.
Job Creation
Skills Transfer
Beneficiation
Cost Sales
(Procurement)
85% Salaries
paid to South
Africans
(Services)
14. Empowering Supplier Concept.
All 25 points for procurement require that the suppliers are Empowering
Suppliers.
For B2B Procurement the B-BBEE Status level of the business will therefore mean
nothing unless it is also an Empowering Supplier.
Definition: Empowering Supplier
"B-BBEE compliant entity, which is a good citizen South African entity, comply with all regulatory requirements of the
country and should meet at least three if it is a large enterprise or one if it is a QSE of the following criteria:
(a) 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 at 15%.
(b) 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.
(c) At least 25% transformation of raw material/beneficiation which include local manufacturing, production and/or
assembly, and/or packaging.
(d) Skills transfer – at least spend 12 days per annum of productivity deployed in assisting black EMEs and QSEs
beneficiaries to increase their operation or financial capacity.”
All EME's automatically qualify as an Empowering Suppliers.
15. Economically Active Population Profile
- Management control and Skills Development to align with
National/Provincial EAP Profile
