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Draft Amended Aviation Sector – Statement ASC400 – ENTERPRISE AND SUPPLIER DEVELOPMENT FOR SPECIALISED ENTERPRISES

This is part six of a series of articles summarizing the draft Aviation sub-sector code. This article discusses the Enterprise and Supplier Element of the Scorecard with respect to SPECIALISED ENTERPRISES.

What are the B-BBEE requirements for a Specialised Entity?

Specialised entities are classified into three categories, that is exempted micro-enterprise (EME), qualifying, small enterprise (QSE) and generic enterprise, based on the total annual revenue (where applicable) or allocated budget or gross receipts or discretionary spend.

The type of entities that must apply the Specialised Scorecard are those that are either state owned or by nature do not have ownership that is capable of meeting the requirements for measurement of black ownership, such as public benefit organisations. Therefore, organs of state, public entities and enterprises owned by organs of state, companies limited by guarantee, not for profit companies (formerly section 21 companies), public higher education institutions and not for profit organisations (NPOs) would fall under Statement 004 as specialised entities that are measured on the Specialised Scorecard.

  1. INDICATORS

The following table represents the indicators and methods for calculating a score for Enterprise and Supplier Development under this statement:



  1. KEY MEASUREMENT PRINCIPLES

2.1 The key measurement principles and sub-minimum requirements under statement ASC400 are applicable to this statement.
2.2 Any interpretation or calculation of a Specialised Entity’s score for Enterprise and Supplier Development must be made in accordance with statement ASC400.
2.3 Measurement principles required in evaluating Specialised Enterprise contributions are contained in Statement 004 of Code 000 of the codes of Good Practice.

Below is some basic information from the Code of Good Practice, as amended.

“Supplier Development Contributions” means monetary or non-monetary contributions carried out for the benefit of value-adding suppliers to the Measured Entity, with the objective of contributing to the development, sustainability and financial and operational independence of those beneficiaries:

(a) Supplier Development Contributions to suppliers that are Exempted Micro Enterprises or Qualifying Small Enterprises which are at least 51% black owned or at least 51% black
women owned;

Beneficiaries of Supplier Development or Enterprise Development are EMEs, QSEs or Generic Entities which are at least 51% Black Owned or at least 51% Black Women Owned utilizing the flow through principle.

  1. The Enterprise and Supplier Development element consists of:

3.1 Preferential Procurement;
3.2 Enterprise Development; and
3.3 Supplier Development.

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

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

3.5.1   The company does not make a profit last year or on average over the last five years

3.6 The net profit margin is less than a quarter of the norm in the industry.

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

3.7.1   1% (ED) or 2% (SD) x Indicative Profit Margin (NPAT/Turnover) x Turnover
  1. What is required to claim B-BBEE Points?

Every B-BBEE claim must be accompanied by relevant evidence in order for the organ of state or public entity to recognise points during a B-BBEE verification process. If evidence cannot be produced, the organ of state or public entity will not score any points and can be at the risk of receiving a non-compliant status or be discounted on its overall B-BBEE status.

  1. Examples of evidence required for Enterprise and Supplier Development

 B-BBEE certificate and sworn affidavits/CIPC certificates for all suppliers.
 Schedule of EMEs and black owned QSEs.
 Invoices from supplies and proof of payment.

 For Imports:

o List of imports excluded from total measured procurement spend.
o Affidavit from management confirming why the import should be excluded.
o For brand reasons: The company to prove that they have established a local supplier to replace this import going forward. All programmes and documents will be verified.
o For products not available in SA: the company must show that this product is not available in SA.
o SARS Value-Added Tax declaration in respect of imported goods / service.
o SARS Importer Registration Certificate or other confirmation from SARS confirming the import number of the Measured Entity.

 Supplier Development and enterprise development:

o Obtain a valid B-BBEE certificate or sworn affidavit.
o Supplier Development agreements and Enterprise Development agreements signed by both parties in line with B-BBEE approved criteria for supplier development and enterprise development spend.
o Supplier/enterprise development programme signed and dated must be within the financial year.
o Invoices and proof of payments of enterprise and supplier development funds to the beneficiary entity.
o Letters confirming receipt of the supplier/enterprisedevelopment support from beneficiary entity after implementation of the support.

A seventh article will deal with the element SOCIO ECONOMIC DEVELOPMENT.

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