Amendments to the B-BBEE Codes of Good Practice – part 2 of 2 – Code Series 400

This article is in addition to the article published on 03 July 2019.

On the 31st of May 2019, Amendments to the Codes of Good Practice were published via Government Gazette No 42496.

The fourth part of the gazette may be downloaded here:

Principles for Measuring Enterprise and Supplier Development – Code Series 400

This is a 24 page document listing the principles to be applied. The changes are extensive and the document must be read in full to understand the extent of amendments.

KEY MEASUREMENT PRINCIPLES

The Enterprise and Supplier Development Code consists of:

  • Preferential Procurement;
  • Enterprise Development; and
  • Supplier Development.

Enterprise Development and Supplier Development Contributions will be recognised as a percentage of annual Net Profit After Tax (NPAT).

The Net Profit After Tax (NPAT) or average target applies unless:

  • The company does not make a profit last year or on average over the last five years
  • The net profit margin is less than a quarter of the norm in the industry

If the Turnover is to be used, the target will be set at:

1% (ED) or 2% (SD) x Indicative Profit Margin (NPAT/Turnover) x Turnover

A Measured Entity must achieve a minimum of 40% of each of the total weighting points as set out under Code Series 000.

Non-compliance to one or more of the threshold targets will result in the overall achieved B-BBEE status level being discounted in accordance with Code Series 000.

This article is provided for information only and does not constitute the provision of professional advice of any kind.

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