Definitions and Interpretations used in the B-BBEE Act and Codes of Good Practice(part 2)

Generic Scorecard

means the scorecard used by the DTIC to measure the B-BBEE status of a Generic Enterprise.

Generic Enterprise (GE)

means as per the 2013 B-BBEE Codes Of Good Practice, a business with an annual turnover greater than R50 million is measured against the Generic B-BBEE Scorecard. Some sectors have a different value associated with a GE.

Global Practice

means a globally and uniformly applied practice of a Multinational, restricting alienation of equity in or the sale of businesses in its regional operations. The practice must have existed before the promulgation of the Act.

Good Practice

means a practice that is not only good, but a practice that has been proven to work well and produce good results.

Grant Contribution

means the monetary value of Qualifying Contributions made by the Measured Entity to a beneficiary in the form of grants, donations, discounts and other similar quantifiable benefits which are not recoverable by the Measured Entity.

Group Structure

means an ownership arrangement whereby one or more subsidiaries of another Measured Entity that would qualify as a holding company.

Higher Education Institution

means a higher education institution as defined under the Higher Education Act of 1997.

Internship

means an opportunity to integrate career related experience into an undergraduate education by participating in planned, supervised work.

Indicator Percentage

means the percentage compliance of the Associated Entity for all the indicators of the Associated Enterprises ownership Scorecard. The calculation of indicator Percentages follows the rules in statement 100 using the actual percentage compliance for each indicator and not the resulting scores.

Industry Specific Initiatives

The qualifying contributions that are unique to the industry in which enterprises operate. For the purposes of the Codes an industry may be grouped in major divisions in accordance with the Standard Industrial Classification Coding System used by Statistic South Africa.

Learnership

means a work-based route to a qualification. It is a workplace education and training programme comprising both structured practical workplace (on-the-job) experience and structured theoretical training.

Leviable amount

has the meaning as defined in the Skills Development Levies Act of 1999, as determined, using the Fourth Schedule to the Income Tax Act.

Management Control

means the extent to which black people are represented in a company’s management structure.

Management Fees

means the total economic interest received by a Broad- Based Ownership Scheme or Black participants in any year less the amounts distributed or applied to beneficiaries and the amounts reserved for future distribution or application.

Mandated Investments

means any investments made by or through any third party regulated by legislation on behalf of the actual owner of the funds, pursuant to a mandate given by the owner to a third party, which mandate is governed by that legislation. Some examples of domestic mandated investments and the portions of those investments subject to the exclusion principle are contained in Annexe 100A of the Codes.

Measured Entity

means an entity as well as an organ of state or public entity subject to measurement under the Codes.

Measurement period

means the financial period of the Measured Entity, subject to the following:

  1. The period of 12 consecutive calendar months;
  2. Where the Measured Entity amended its financial reporting period from one year to another the financial period may, for that particular year in question, must be 12 consecutive months. In such exceptional cases the Measured Entity may at its discretion elect to be measured for the amended financial period (however many months it may include) or the 12 months ending on the last day of the amended financial period. For the purposes of determining its classification as an EME, QSE or Generic Enterprise the Measured Entity must however, irrespective of the election it exercises above, do so with reference to the 12 months ending on the last day of the amended financial period. In the case where audited financial statements are not available for the Measurement Period, management accounts for the same period will be used.

Multinational Business

means a measured entity with a business in the Republic of South Africa and elsewhere which maintains its international headquarters outside the Republic.

Net Profit After Tax

means the operating profit of a measured entity after tax. It incorporates both the equity/loss figures and abnormal items, but excludes extra ordinary items as determined by GAAP (Generally Accepted Accounting Practices); now replaced by IFRS (International Financial Reporting Standards).

Net Profit Before Tax

means the operating profit of a measured entity before tax. It incorporates both the equity/loss figures and abnormal items, but excludes extra ordinary items as determined by (GAAP) Generally Accepted Accounting Practices now replaced by IFRS (International Financial Reporting Standards).

NPO

means a non-profit organisation registered under the Non-Profit Organisation Act of 1997.

Old codes

means the Codes of Good Practice published in 2007 but repealed and replaced by the Revised Codes of Good Practice that came into effect on 1 May 2015.

Priority Element

means an empowerment pillar of special importance whereby  40% of the target has to be achieved to avoid being discounted an empowerment level.

Private Equity Fund

means a third party fund through which investments are made on behalf of the actual owner of the funds pursuant to a mandate given by that person to the private equity fund.

QSE

means an entity that qualifies for measurement under the Qualifying Small Enterprise scorecard with a turnover of R10 million or more but less than R50 million. Some sectors have a different value associated with a QSE.

Qualifying Enterprise and Supplier Development Contributions

means a collective term describing Enterprise Development and Supplier Development Contributions targeting EME’s and QSE’s which are at least 51% black owned (previously included a requirement for at least 30% black women owned but was since amended in Gazette Number 42496 (May 2019), black youth in rural, and underdeveloped areas in the Enterprise and Supplier Development element.

Regulation

means a rule or directive made and maintained by an authority such as Government.

Related Enterprise

means an entity controlled by a Measured Entity whether directly or indirectly controlled by the natural persons who have direct or indirect control over that Measured Entity or the immediate family of those natural persons.

Rights of Ownership

is a collective term for the right to Economic Interest and the right to Exercisable Voting Rights.

Scarce Skills

means those skills identified as being scarce by any SETA.

Section 21 Company

means an association not for gain incorporated under section 21 of the Companies Act.

Sector Code

means a code in series 003 which is applicable to a particular sector.

Skills Development

is one of the pillars of the scorecard and it is a priority element. It measures the extent to which companies invest in their Black workers by improving their skills and competencies.

Skills Development Expenditure

is comprised of the money that a measured entity spends on Skills Development. It excludes the skills development levy payable by the Measured Entity under the Skills Development Levies Act of 1999.

Start-Up Enterprise

means a recently formed or incorporated entity that has been in operation for less than 1 year, and does not include any newly constituted enterprise which is merely a continuation of a pre-existing enterprise.

Socio-Economic Development Contributions

means monetary or non-monetary contribution implemented for communities, natural persons or groups of natural persons where at least 75% of the beneficiaries are black people. The objective of Socio-Economic Development Contributions is the promotion of sustainable access for the beneficiaries to the economy. SED Contributions commonly take the following forms:

  1. development programmes for women, youth, people with disabilities, people living in rural areas
  2. support of healthcare and HIV/AIDS programmes
  3. support for education programmes, resources and materials at primary, secondary and tertiary education level, as well as bursaries and scholarships
  4. community training, skills development for unemployed people and adult basic education and training, or
  5.  support of arts, cultural or sporting development programmes.

Target

means targets for the various elements in the Generic and QSE Scorecard.

Total Labour Cost

means the total amount of remuneration paid by an entity to its employees determined using section 3(4) of the Skills Development Levies Act of 1999 and the Forth Schedule of the Income Tax Act of 1962.

Total Revenue

means the total income of an Entity from its operations as determined by IFRS (International Financial Reporting Standards).

Transformation Charters

means the sectoral transformation charters referred to in section 12 of the B-BBEE Act.

Unemployed Learner

is a learner that was not in the employment of the employer party to the learnership agreement concerned when the agreement was concluded. The employer and learner must therefore enter into a contract of employment. Refer to the Skills Development Act.

Unincorporated Joint Venture

means a joint venture between two or more Measured Entities affected by agreement but without incorporation.

Verification

means the process and activities conducted by a B-BBEE Verification Professional to assess, verify and validate that the score awarded to a Measured Entity is a result of individual scorecard elements supplied by a Measured Entity, and to evaluate B-BBEE transactions in order to provide an indicative B-BBEE score and Certification based on the principles of the Broad-Based B-BBEE Codes of Good Practice.

Verification Certificate

is a certificate issued by the B-BBEE Verification Professional which reflects the overall B-BBEE Status of a Measured Entity and Scoring allocated for each Scorecard Element verified in respect of the Measured Entity.

Voting Rights

means a voting right attaching to an equity instrument owned by or held for a participant measured using the Flow Through Principle or the Control Principle.

Weighting

means the weightings applied to various elements in the Generic and QSE Scorecards.

51% Black owned

means an entity in which (a) black people hold at least 51% of the exercisable voting rights as determined under Code Series 100 (b) black people hold at least 51% of the economic interest as determined under Code Series 100; and (c) has earned all the points for the Net Value under Ownership element.

51% Black Women owned

means an entity which

  1. Black women hold at least 51% of the exercisable voting rights as determined under the Ownership element
  2. Black women hold at least 51% of the economic interest as determined under the Ownership element, and (c) has earned all the points for Net Value under the Ownership element.

Author Craig Tonkin

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