When you are a Qualifying Small Enterprise (QSE) or a Generic Company, you are normally required to spend a certain amount of money to obtain full points on specific elements on a scorecard (This excludes automatic BEE levels that you obtain because you have more than 51% black ownership).
It happens that companies spend a lot of money and still drop a level, which sometimes leads to a non-compliant certificate.
How does it work?
In the normal B-BBEE Codes of Good Practice, there are 3 priority elements namely:
- Skills development;
- Enterprise & Supplier development;
A Generic Company must obtain a sub-minimum of at least 40% for all three elements on the scorecard and a QSE must obtain at least 40% for two of the three elements, where one of the two elements must be Ownership, it is compulsory.
If a sub-minimum of 40% was not reached for one of the priority elements, the company is discounted with a level, if you do not reach the sub-minimum for all three elements, you still only drop with one level.
This could have an enormous impact on your business because even if you spend a lot of money to be compliant you can drop a level and become non-compliant. This will mean that all your spending for that measured year will be for nothing and might result in Monetary loss, where you could lose tenders and business for Non-compliance.
Different B-BBEE sectors have different scorecards, which needs to be complied with.
To get the best B-BBEE advice and to make sure your business doesn’t drop a level please contact our SEESA Offices.
About the Author:
Alri Nel is a BEE and Labour Legal Advisor at SEESA’s Kimberley office. She obtained her LLB law degree in 2015 and is an admitted attorney since 2018.
Amended Codes of Good Practice issued under section 9 (1) of B-BBEE Act No 53 of 2003 as Amended by Act No 46 of 2013