IT’S taken more
than two years, but the Broad Based Black Economic Empowerment (BBBEE)
Codes of Good Practise have finally been gazetted.
Do the issuing of the codes now give business owners clarity on
what is truly expected of them? Bignews takes a look at aspects
of the new codes and find out what they hold for owner-managed businesses.
The BBBEE Codes, which was released by the Department of Trade and
Industry (DTI) in January 2007, now exempts companies with an annual
turnover of less than R5 million from complying with the BEE codes.
These businesses, called Exempted Micro Enterprises (EME), are automatically
defined as a level four BEE contributor. They score 100% on the
procurement recognition list.
Qualifying Small Enterprises (QSEs), with an annual turnover of
between R5 million and R35 million, are allowed to choose any four
out of the seven elements on the QSE scorecard to prove their empowerment
credentials.
Keith Levenstein says the Employment Equity element of the QSE codes
is controversial in that companies must score at least 40% of available
points on each of the indicators in order to score any points under
this element.
He says the Enterprise Development element has introduced the benefit
matrix which allows businesses to easily determine the value of
certain enterprise development contributions to the company.
Ease of use
The codes have been simplified in that there are less indicators
than previously. However, Levenstein feels that this has not made
calculations easier.
“For example, the codes take two pages and use two algebra
formulas to explain a new adjustment for gender calculation.”
He says once grasped this calculation is easy to understand but,
at first glance, it will cause some confusion.
Agencies versus self-rating
One major change is with that of verification agencies. Verification
agencies are “auditing” firms that rate the BEE scores
of companies.
According to the codes, a rating agency may only rate, it may not
advise the organisation it rates on how to score higher BEE points.
This is the duty of BEE consultants. Levenstein says the DTI encourages
the use of rating agencies but they are not mandatory, and that
self-rating appears to be acceptable as long as the scorecard is
signed by the business fiduciary and an auditor or accountant.
Charters
The construction and financial services charters were both gazetted
in Section 12 of the BBBEE Act. This means that businesses in these
sectors must now use those charters instead of the codes. These
charters are quite different from the codes.
Levenstein says the construction charter defines a contracting exempted
micro enterprise or EME as one with a turnover of less than R1 million
(compared to the R5 million for the Codes of Good Practice).
A small enterprise is one with a turnover of less than R12 million
(compared to the Codes of Good Practice which is set at R35 million.
