Definitions and interpretations of the Amended B-BBEE Codes

On 31 May 2019, South Africa’s Department of Trade and Industry gazetted amendments to the Broad-Based Black Economic Empowerment Codes of Good Practice. These amendments became effective on 01 December 2019.

Within these amendments were a number of new definitions and interpretations. Below is a list.

Absorption
Now restricted to the securing of long term employment and no longer includes further education and training. This is a significant change affecting 5 Skills Development Bonus points.

Designated Group Supplier
This is a clarification and means a supplier that is at least 51% owned by black people defined under Black Designated Groups.

Long-term contract of employment
Means a legal agreement between an individual and an entity that would employ the individual until his or her mandatory date of retirement.

30% Black Women-Owned
Means an Entity in which: (a) Black women hold at least 30% of the exercisable voting rights as determined under Code series 100; Black women hold at least 30% of the economic interest as determined under Code series 100; and (c) has earned all the points for Net Value under statement 100.

Current Equity Interest Date
Replaces Net-Value Date with an amended wording that relates to the commencement of the Time-based Graduation Factor. It means the later of either the date of commencement of statement 100 or the date upon which the black ownership transaction became effective and unconditional.

Qualifying ESD Contributions
This amends the qualification of beneficiaries to 51% Black Owned or Black Women-owned QSEs or EMEs. Previously it included 30% Black Women-owned entities.

Revised Code 000, Statement 000: General Principles

  1. Priority Element Compliance now explicitly states that Skills Development excludes Bonus Points and specifies the sub-minimum points for the three categories under ESD.
  2. Priority Element Compliance confirms that 51% of Black Owned QSEs who benefit from Enhanced Recognition do not have to comply with either of the other two Priority Elements.
  3. The wording of the Priority Element Discounting for QSEs has been tightened.
  4. Enhanced B-BBEE Recognition for an EME or QSE that is 51% or 100% Black Owned leading to a Level 2 or Level 1 BEE Recognition Level must be measured using the flow-through principle and not modified flow-through.
  5. A new section Eligibility of Joint Ventures is included that gives guidance on how to calculate a consolidated BEE Certificate for a JV.
  6. A revised table for the B-BBEE Generic Scorecard corrects the old one that was incorrect and includes Bonus Points to achieve 118 points.

Author Craig Tonkin

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