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:
- Ownership;
- 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.
Resources:
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