B-BBEE and compliance report in terms of section 13G (1) and (2) of the B-BBEE Act

Reference documents and Acts

Section 13G compliance report
B-BBEE Act, as amended
Broad-Based Black Economic Empowerment Commission’s explanatory notice 01 of 2021 – Guidelines for completing the Compliance Matrix
Amended Codes of Good Practice

Section 13F(1)(g) of the B-BBEE Act requires the B-BBEE Commission to receive and analyse reports prescribed in section 13G, concerning broad-based black economic empowerment compliance by organs of state, public entities and private sector enterprises. Regulation 12 in Part 2 of the Regulations regulating the administration and implementation of the Broad-Based Black Economic Empowerment Act and the functions of the B-BBEE Commission (“B-BBEE Regulations”) has outlined the process for submitting B-BBEE compliance reports.

What is a B-BBEE Compliance Matrix as stated in Section 13G of the Act?

A compliance matrix is a comprehensive outlook on the indicators that contribute towards the B-BBEE points recognised by the measured entity as guided by requirements of the Codes of Good Practice. The main benefit of the compliance matrix is to enable the B-BBEE Commission to determine the extent of B-BBEE implementation to effectively measure the levels of transformation within the context of B-BBEE.

The format to be used in these reports may be found in the Explanatory Notice 01 of 2021 – Guidelines for completing the Compliance Matrix

Who must submit a compliance matrix?

In terms of Section 13G, read with regulation 12 of the B-BBEE Regulations, the following entities are required to submit a compliance report:

a) All spheres of government, public entities and organs of state must report on their compliance with broad-based black economic empowerment in their audited annual financial statements and annual reports required under the Public Finance Management Act, 1999 (Act No. 1 of 1999) within thirty (30) days post approval of such annual report and financial statements in a prescribed Form B-BBEE 1.

b) All public companies listed on the Johannesburg Stock Exchange (JSE) must in a prescribed Form B-BBEE 1 provide to the B-BBEE Commission, in such manner as may be prescribed, a report on their compliance with broad-based black economic empowerment within 30 days’ post approval of annual reports and financial statements or ninety (90) days after end of the financial year of the listed entity, irrespective of whether it is primary or secondary listing.

c) All Sectoral Education and Training Authorities contemplated in the Skills Development Act, 1998 (Act No. 97 of 1998), must report on skills development spending and programmes to the B-BBEE Commission 30 days’ post approval of annual reports and financial statements or 90 days after end of the financial year of the Sectoral Educating Training Authorities in a prescribed Form B-BBEE 2.

How to complete the compliance matrix?

All spheres of government, organ of state or public entity as well as entities listed on the JSE are required to provide the following information on their compliance matrix:

Ownership and Management Control Elements

(a) Race, gender and age indicators of the black shareholders and black directors as per the relevant scorecard. The information must further be broken down into race classification, gender, disability indication and geographical location.
(b) The information provided for management control, must be the same information submitted to the Department of Labour for employment equity reporting.
(c) Indicate dividends declared and method or formula of distribution.

Skills Development Element

(a) Value of the 6% or 3% of leviable amount identified for skills development of black people. This amount excludes the skills levy contributed to the Sectoral Education Training Authority through
the South African Revenue Services.

(b) Number of black persons trained per race classification, gender, geographical location, disability and value thereof against each person trained.

Enterprise and Supplier Development Element

(a) List of all B-BBEE compliant suppliers, type of enterprise, their B-BBEE Status, percentage of black ownership, percentage of black women ownership, nature of services or goods supplied and total spend with each supplier.
(b) Number of all black owned or black women owned EMEs or QSEs the measured entity supported under enterprise and supplier development and value thereof against each entity. The information must further be broken down in terms of geographical location, sector, and level of black ownership and black women ownership.

Socio Economic Development Element

(a) The value the measured entity has spent on socio-economic development.

(b) Number of black participants supported in terms of race classification, gender, geographical location and value thereof.

What to do if you do not have the required information?

In the event that a measured entity does not have the information required to categorise according to geographical location, youth, women or people with disabilities on the basis that it does not claim
recognition for such categories on its scorecard, it is advised to record zero under the applicable field.

However, where the categories in question have been claimed by the measured entity on its scorecard, the information must be provided as that information must be readily available as supporting evidence of the claims. Failure to do so will result in the compliance report not being acknowledged as submitted for compliance with section 13G, resulting in a contravention of the B-BBEE Act.

Author Craig Tonkin

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