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BBBEE - WHAT’S MORE IMPORTANT?

BEEFED UP OWNERSHIP OR A PERFECT BEE LEVEL

Black people are defined as African, Coloured, and Indian South African Citizens as defined in the Amended Codes of Good Practice 2013, Gazette No 36928


Ownership is measured based on the following three factors:

1. Voting rights – What % of shareholding is in the hands of Black People

2. Economic interest – What is the % of rights to economic benefit

3. Net Value- debt associated to the shares.


Targets set for Ownership in certain Sector Codes may differ, as in Construction sector code (CSCC) which requires 35% and the Information Communication Technology sector code (ICT) requires 30%.


Currently, the black ownership requirement is becoming progressively important because of numerous factors, including our government procurement policies that offer preference to black owned suppliers. In the past black ownership of 25,01% were acceptable but business is now opting to increase their black ownership participation component to 51% Black with 30% black women representation.


Being Black owned and having a turnover of less than R50 million, also gives you the benefit of being exempted from the strict SANAS B-BBEE verification process, and only requires a BEE affidavit to be completed. This can be a preferred method of achieving a B-BBEE Status which is very competitive in the market.


A Level 2, 51% black owned entity with 30% Black women representation, which qualifies for an affidavit, will also unlock multiple procurement points on the Preferential Procurement scorecard.


A maximum of 26 points can be achieved


Procurement scorecard:


On the same Preferential Procurement scorecard, a 26% black owned, level 1, Generic size entity will only contribute a total of 5,00 points on the procurement scorecard.


The essence of this matter is not achieving the Perfect BEE Level but to ensure there is a sufficient Beefed-up amount of Black Shareholding representing in the company, to be lucrative on the procurement scorecard or government tender.


Article By:

Edrich Linde: Executive Consultant - Compliance Hub



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