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10/11/2018 Presentation to the B Presentation to the B Presentation to the B Presentation to the B- - - -BBEE BBEE BBEE BBEE Codes of Good Practice Codes of Good Practice Codes of Good Practice Codes of Good Practice 10 October 2018

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10/11/2018 1 Presentation to the B Presentation to the B Presentation to the B Presentation to the B-

  • BBEE

BBEE BBEE BBEE Codes of Good Practice Codes of Good Practice Codes of Good Practice Codes of Good Practice 10 October 2018 10 October 2018 10 October 2018 10 October 2018

Background Background Background Background

2

  • In terms of section 9 of the B-BBEE Act, the Minister is

empowered to issue the Codes of Good Practice (the Codes).

  • We have the generic Codes and Sector Codes.
  • Instrument to drive transformation within the economy.
  • Applicable to both public and private sector.
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Code Series 000: Principles Code Series 000: Principles Code Series 000: Principles Code Series 000: Principles

3

  • The Codes measures 5 elements:

– Ownership : 25 points; – Management Control: 19 points; – Skills Development: 20 points; – Enterprise and Supplier Development: 40 points; and – Socio- Economic Development: 5 points.

  • Points achieved will result into a B-BBEE recognition

status.

  • There are eight recognition levels.

…Code Series 000: Principles …Code Series 000: Principles …Code Series 000: Principles …Code Series 000: Principles

4 B-BBEE Status Qualification B-BBEE Recognition Level One Contributor ≥100 points on the Generic Scorecard 135% Level Two Contributor ≥95 but <100 points on the Generic Scorecard 125% Level Three Contributor ≥90 but < 95 points on the Generic Scorecard 110% Level Four Contributor ≥80 but < 90 points on the Generic Scorecard 100% Level Five Contributor ≥75 but < 80 points on the Generic Scorecard 80% Level Six Contributor ≥70 but < 75 points on the Generic Scorecard 60% Level Seven Contributor ≥55 but < 70 points on the Generic Scorecard 50% Level Eight Contributor ≥40 but < 50 points on the Generic Scorecard 10% Non-compliant Contributor <40 points on the Generic Scorecard 0%

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…Code Series 000: Principles …Code Series 000: Principles …Code Series 000: Principles …Code Series 000: Principles

5

Classify Classify Classify Classify measured measured measured measured entities entities entities entities based based based based on

  • n
  • n
  • n annual

annual annual annual total total total total revenue, revenue, revenue, revenue, gross gross gross gross receipts receipts receipts receipts or

  • r
  • r
  • r allocated

allocated allocated allocated budget budget budget budget :

  • Exempted Micro Enterprises (EME): 0

0 – – – – R R R R10 10 10 10 million million million million – No verification requirements. – Sworn Affidavit or CIPC Certificate. – No more accounting officer letters. – Automatic B-BBEE level 4. – Enhanced recognition for 51% and 100% black

  • wned EMEs.

…Code Series 000: Principles …Code Series 000: Principles …Code Series 000: Principles …Code Series 000: Principles

6

… … … …Classify Classify Classify Classify measured measured measured measured entities entities entities entities based based based based on

  • n
  • n
  • n annual

annual annual annual total total total total revenue, revenue, revenue, revenue, gross gross gross gross receipts receipts receipts receipts or

  • r
  • r
  • r allocated

allocated allocated allocated budget budget budget budget :

  • Qualifying Small Enterprises (QSE): above

above above above R R R R10 10 10 10 million million million million but but but but less less less less R R R R50 50 50 50 million million million million. – Comply with the QSE scorecard – Only SANAS accredited verification professional/agency. – Enhanced recognition for 51% and 100% black owned

  • QSEs. Only use a sworn affidavit.
  • Large Enterprises: above

above above above R R R R 50 50 50 50 million million million million. – Only SANAS accredited verification professional/agency . NB NB NB NB: : : : As As As As of

  • f
  • f
  • f 1

1 1 1 January January January January 2017 2017 2017 2017, , , , IRBA IRBA IRBA IRBA auditors auditors auditors auditors ceased ceased ceased ceased to to to to issue issue issue issue B B B B-

  • BBEE

BBEE BBEE BBEE certificates certificates certificates certificates. . . .

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…Code Series 000: Principles …Code Series 000: Principles …Code Series 000: Principles …Code Series 000: Principles

7

  • Measured entities to comply with priority elements under

the following conditions: – QSE to comply with at least two of the priority elements:

  • Ownership is compulsory; and either
  • Enterprise & Supplier Development or Skills

Development. – Large enterprises to comply with all priority elements.

  • Measured entities who do not meet the thresholds in

priority elements, the overall score will be discounted

  • ne (1) level down.

…Code Series 000: Principles …Code Series 000: Principles …Code Series 000: Principles …Code Series 000: Principles

8

Also covers the following Statements:

  • Statement 003: Development of sector Codes.
  • Statement 004: Specialised entities.

– no ownership. – Granted automatic recognition levels based on a percentage of black beneficiaries.

  • Statement 005: Requirements for verification.
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Validity of B Validity of B Validity of B Validity of B-

  • BBEE Certificate

BBEE Certificate BBEE Certificate BBEE Certificate

9

  • B-BBEE Certificates/Sworn Affidavits/CIPC Certificates

are valid for 12 Months (i.e 19 June 2018 to 18 June 2019)

  • Reissued

Reissued Reissued Reissued B B B B-

  • BBEE

BBEE BBEE BBEE certificates certificates certificates certificates must must must must have have have have 3 3 3 3 dates dates dates dates: : : : – When? When there is a material change. – Does not change date of expiry. – Reflect, date of first issue, date of re-issue and expiry date.

  • Sworn

Sworn Sworn Sworn Affidavits Affidavits Affidavits Affidavits: – Deponent must select designation (Director, owner, member) – Indicate financial year (Date, Month and Year)

…Validity of B …Validity of B …Validity of B …Validity of B-

  • BBEE Certificate

BBEE Certificate BBEE Certificate BBEE Certificate

10

… … … …Sworn Sworn Sworn Sworn Affidavits Affidavits Affidavits Affidavits: – Choose between financial statements and management accounts. – Date of signature for deponent and commissioner of

  • ath must be the same.

– Person who has an interest cannot commission. – Obtainable at www.thedti.gov.za

  • CIPC

CIPC CIPC CIPC Certificate Certificate Certificate Certificate – Send to Mr Madidimalo Ramare at MRamare@beecommission.gov.za for verification.

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…Validity of B …Validity of B …Validity of B …Validity of B-

  • BBEE Certificate

BBEE Certificate BBEE Certificate BBEE Certificate

11

  • B

B B B-

  • BBEE

BBEE BBEE BBEE Certificate Certificate Certificate Certificate by by by by SANAS SANAS SANAS SANAS accredited accredited accredited accredited verification verification verification verification Professional Professional Professional Professional: : : : – Check accreditation status

  • n

SANAS website www.sanas.co.za – Can request confirmation from the verification professional. Their details available

  • n

SANAS website. – Conduct interviews with suppliers that stands a chance of being appointed to test ownership and management control.

  • NB

NB NB NB : : : : Build Build Build Build due due due due diligence diligence diligence diligence process process process process to to to to determine determine determine determine validity validity validity validity at at at at time time time time of

  • f
  • f
  • f contracting

contracting contracting contracting. . . .

Invalid B Invalid B Invalid B Invalid B-

  • BBEE Certificate

BBEE Certificate BBEE Certificate BBEE Certificate

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  • In terms of section

section section section 13 13 13 13O O O O ( ( ( (2 2 2 2) ) ) ) of the B-BBEE Act officials of

  • rgans of state and public entities have a responsibility

to report fronting, including an attempt to front.

  • Failure to report: 1 year imprisonment.
  • Invalid B-BBEE Certificate must also be reported to the

B-BBEE Commission.

  • Section

Section Section Section 13 13 13 13A A A A of the B-BBEE Act empowers organs of state and public entities to cancel a contract or award issued or granted based on misrepresentation.

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OWNERSHIP

Code Series 100: Code Series 100: Code Series 100: Code Series 100: OWNERSHIP OWNERSHIP OWNERSHIP OWNERSHIP

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  • Change ownership patterns of the economy.
  • Target of 25.1% Ownership.
  • Measure three aspects: exercisable voting rights,

economic interest, and net value.

  • The 40% sub-minimum is applicable on NET VALUE.
  • Designated groups included in the main scorecard.
  • Threshold for new entrants increased to R50 million.
  • Sale of asset/business qualify for ownership points.
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…Code Series 100: …Code Series 100: …Code Series 100: …Code Series 100: OWNERSHIP OWNERSHIP OWNERSHIP OWNERSHIP

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  • Alternative for multinational corporations – Equity

Equivalent Investment Programme: – Policy that do not sell equity in host country. – 25% of value of RSA operation or 4% of annual turnover from RSA operation. – Three focus areas: skills development, enterprise development, and research and development. – Duration of programme is linked to the investment amount . – To date the following programmes were approved: Microsoft, Hewlett Packard, Turner & Townsend, Liebherr, Hansen Transmission, IBM SA, Dell SA and Caterpillar.

…Code Series 100: …Code Series 100: …Code Series 100: …Code Series 100: OWNERSHIP OWNERSHIP OWNERSHIP OWNERSHIP

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B-BBEE Element Indicator Description Weighting Points Complianc e Target Ownership 2.1Voting Rights 2.1.1 Exercisable Voting Rights in the Entity in the hands

  • f Black people

4 25% + 1 vote 2.1.2Exercisable Voting Rights in the Entity in the hands of Black women 2 10% 2.2 Economic Interest 2.2.1 Economic Interest in the Entity to which Black people are entitled to 4 25% 2.2.2 Economic Interest in the Entity to which Black women are entitled to 2 10% 2.2.3. Economic Interest of any of the following Black natural people in the Measured Entity 2.2.3.1. Black designated groups; 2.2.3.2. Black participants in Employee Share Ownership programmes; 2.2.3.3. Black people in Broad- Based Ownership Schemes; 2.2.3.4. Black participants in Co- Operatives 3 3% 2.2.4. New Entrants 2 2% 2.3. Realisati

  • n

Points 2.3.1. Net Value 8 Refer to Annexure C

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10/11/2018 9

MANAGEMENT CONTROL

Code Series 200: Code Series 200: Code Series 200: Code Series 200: MANAGEMENT CONTROL MANAGEMENT CONTROL MANAGEMENT CONTROL MANAGEMENT CONTROL

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  • Increase

number of existing and new enterprises controlled and managed by black people.

  • Merged Management Control and Employment Equity

element.

  • The compliance targets for Management Control are

aligned with the Economically Active Population (EAP) targets as annually published by the Department

  • f Labour.
  • Entities apply National or Provincial EAP depending on

locality.

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…Code Series 200: …Code Series 200: …Code Series 200: …Code Series 200: MANAGEMENT CONTROL MANAGEMENT CONTROL MANAGEMENT CONTROL MANAGEMENT CONTROL

19 Measurement Category & Criteria Weighting points Compliance targets 2.1 Board participation: 2.1.1 Exercisable voting rights of black board members as a percentage of all board members 2 50% 2.1.2 Exercisable voting rights of black female board members as a percentage of all board members 1 25% 2.1.3 Executive black directors as a percentage of all executive directors 2 50% 2.1.4 Executive black female directors as a percentage of all executive directors 1 25% 2.2 Other Executive Management: 2.2.1 Black Executive Management as a percentage of all executive management 2 60% 2.2.2 Black female Executive Management as a percentage of all executive management 1 30% 2.3 Senior Management 2.3.1 Black employees in Senior Management as a percentage of all senior management 2 60% 2.3.2 Black female employees in Senior Management as a percentage of all senior management 1 30%

…Code Series 200: …Code Series 200: …Code Series 200: …Code Series 200: MANAGEMENT CONTROL MANAGEMENT CONTROL MANAGEMENT CONTROL MANAGEMENT CONTROL

20 2.4 Middle Management 2.4.1 Black employees in Middle Management as a percentage

  • f all middle management

2 75% 2.4.2 Black female employees in Middle Management as a percentage of all middle management 1 38% 2.5 Junior Management 2.5.1 Black employees in Junior Management as a percentage

  • f all junior management

1 88% 2.5.2 Black female employees in Junior Management as a percentage of all junior management 1 44% 2.6 Disabled Employees 2.6.1 Black disabled employees as a percentage of all employees 2 2%

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SKILLS DEVELOPMENT

Code Series 300: Code Series 300: Code Series 300: Code Series 300: SKILLS DEVELOPMENT SKILLS DEVELOPMENT SKILLS DEVELOPMENT SKILLS DEVELOPMENT

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  • Increase

investment towards human resource and skills development of black people.

  • The compliance target increased from 3% to 6% to

cover both employees and non-employees training expenditure.

  • 40% sub-minimum apply to total points (40% of 20

points).

  • Introduced a 15% cap for non-core training costs such

as accommodation, catering etc.

  • Introduced a 15% cap on Category F & G training

(informal training).

  • The compliance targets are based on EAP targets.
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…Code Series 300: …Code Series 300: …Code Series 300: …Code Series 300: SKILLS DEVELOPMENT SKILLS DEVELOPMENT SKILLS DEVELOPMENT SKILLS DEVELOPMENT

23 Category Skills Development Element Weighting points Compliance Target 2.1.1 Skills Development Expenditure on any programmes specified in Learning Programme Matrix for black people as a percentage

  • f Leviable Amount

2.1.1.1 Skills Development Expenditure on Learning Programmes specified in the Learning Programme Matrix for black people as a percentage of Leviable Amount 8 6 % 2.1.1.2 Skills Development Expenditure on Learning Programmes specified in the Learning Programme Matrix for black employees with disabilities as a percentage of Leviable Amount 4 0.3% 2.1.2Learnerships,Apprenticeships,and Internships: 2.1.2.1 Number of black people participating in Learnerships, Apprenticeships and Internships as a percentage of total employees 4 2.5% 2.1.2.2 Number of black unemployed people participating in training specified in the learning programme matrix as a percentage of number of employees 4 2.5% Bonus points: 2.1.3 Number of black people absorbed by the Measured and Industry Entity at the end of the Learnerships programme 5 100%

ENTERPRISE AND SUPPLIER DEVELOPMENT

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Code Series 400: Code Series 400: Code Series 400: Code Series 400: ENTERPRISE & SUPPLIER DEVELOPMENT ENTERPRISE & SUPPLIER DEVELOPMENT ENTERPRISE & SUPPLIER DEVELOPMENT ENTERPRISE & SUPPLIER DEVELOPMENT

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  • Promote procurement from B-BBEE compliant suppliers

and increase financial support towards black entities.

  • Measures

the following: preferential procurement, supplier development, and enterprise development.

  • The

aim is to strengthen local procurement and enhancing local supplier development programmes.

  • 40% sub-minimum apply to the total points of each

criteria.

  • Supplier to the ME must be an empowering supplier to

contribute towards ME procurement scorecard.

…Code Series 400: …Code Series 400: …Code Series 400: …Code Series 400: ENTERPRISE & SUPPLIER DEVELOPMENT ENTERPRISE & SUPPLIER DEVELOPMENT ENTERPRISE & SUPPLIER DEVELOPMENT ENTERPRISE & SUPPLIER DEVELOPMENT

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  • Beneficiaries of enterprise and supplier development are

EMEs or QSEs which are at least 51% black owned

  • r at least 51% black women owned.
  • ESD is aimed at developing SE and ensuring that they

grow into being suppliers.

  • ED beneficiary is any qualifying beneficiary not within

ME direct supply chain.

  • SD beneficiary is any qualifying beneficiary within the

ME direct supply chain.

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…Code Series 400: …Code Series 400: …Code Series 400: …Code Series 400: ENTERPRISE & SUPPLIER DEVELOPMENT ENTERPRISE & SUPPLIER DEVELOPMENT ENTERPRISE & SUPPLIER DEVELOPMENT ENTERPRISE & SUPPLIER DEVELOPMENT

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  • Not just a supplier, but an Empowering Supplier.
  • Means good South African entity who comply with all

regulatory requirements of the country: – 25% of cost of sales excluding labour cost and depreciation must be spent in RSA. – 85% labour costs in service industry. – 50% of job created must be for black people. – 25% of beneficiation of raw materials. – 12 days per annum of skills transfer to black EMEs and QSE.

…Code Series 400: …Code Series 400: …Code Series 400: …Code Series 400: ENTERPRISE & SUPPLIER DEVELOPMENT ENTERPRISE & SUPPLIER DEVELOPMENT ENTERPRISE & SUPPLIER DEVELOPMENT ENTERPRISE & SUPPLIER DEVELOPMENT

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  • Large enterprises must comply with at least three of the

criteria listed above and QSEs only one.

  • EMEs and Start-Ups are automatically recognised as

Empowering Suppliers.

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…Code Series 400: …Code Series 400: …Code Series 400: …Code Series 400: ENTERPRISE & SUPPLIER DEVELOPMENT ENTERPRISE & SUPPLIER DEVELOPMENT ENTERPRISE & SUPPLIER DEVELOPMENT ENTERPRISE & SUPPLIER DEVELOPMENT

29 Criteria Weighting points Compliance targets 2.1 PREFERENTIAL PROCUREMENT (25 points – 10 points) 2.1.1 B-BBEE Procurement Spend from all Empowering Suppliers based on the B- BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend 5 80% 2.1.2 B-BBEE Procurement Spend from all Empowering Suppliers that are Qualifying Small Enterprises based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend 3 15% 2.1.3 B-BBEE Procurement Spend from Exempted Micro-Enterprises based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend 4 15% 2.1.4 B-BBEE Procurement Spend from Empowering Suppliers that are at least 51% black owned based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend 9 40% 2.1.5 B-BBEE Procurement Spend from Empowering Suppliers that are at least 30% black women owned based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend 4 12% Bonus points B-BBEE Procurement Spend from Designated Group Suppliers that are at least 51% Black owned. 2 2%

…Code Series 400: …Code Series 400: …Code Series 400: …Code Series 400: ENTERPRISE & SUPPLIER DEVELOPMENT ENTERPRISE & SUPPLIER DEVELOPMENT ENTERPRISE & SUPPLIER DEVELOPMENT ENTERPRISE & SUPPLIER DEVELOPMENT

30 2.2 SUPPLIER DEVELOPMENT (10 points - 4 points) 2.2.1 Annual value of all Supplier Development Contributions made by the Measured Entity as a percentage of the target. 10 2% of NPAT / (0.2%) 2.3 ENTERPRISE DEVELOPMENT (5 points - 2 points) 2.3.1 Annual value of Enterprise Development Contributions and Sector Specific Programmes made by the Measured Entity as a percentage of the target. 5 1% of NPAT / (0.1%) 2.4 Bonus points 2.4.1 Bonus point for graduation of one or more Enterprise Development beneficiaries to graduate to the Supplier Development level. 1 2.4.2Bonus point for creating one or more jobs directly as a result of Supplier Development initiatives by the Measured Entity. 1

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SOCIO-ECONOMIC DEVELOPMENT

Code Series 500: Code Series 500: Code Series 500: Code Series 500: SOCIO SOCIO SOCIO SOCIO-

  • ECONOMIC DEVELOPMENT

ECONOMIC DEVELOPMENT ECONOMIC DEVELOPMENT ECONOMIC DEVELOPMENT

32

  • Measures

socio-economic contributions aimed at promoting access to mainstream economy for black people.

  • Targeting rural and under-developed areas.
  • 1% NPAT on annual basis.
  • 75% of beneficiaries must be black people.
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…Code Series 500: …Code Series 500: …Code Series 500: …Code Series 500: SOCIO SOCIO SOCIO SOCIO-

  • ECONOMIC DEVELOPMENT

ECONOMIC DEVELOPMENT ECONOMIC DEVELOPMENT ECONOMIC DEVELOPMENT

33 Criteria Weighting points Compliance targets Annual value

  • f

all Socio-economic development contributions by the measured entity as a percentage of the target. 5 1% NPAT / (0.1%)

Thank you