In this article, we focus on the Amended Sector Code for the Tourism Sector which was gazetted on 27 September 2019 (Gazette Number 42725). In the Gazette the Tourism B-BBEE Charter Council has requested public feedback by no later than 30 November 2019.
Following the issuing of the amended Generic Codes of Good Practice on 9 April 2019, all Sector Charter Councils are required to align their sector-specific Codes to the DTI’s Amended Generic Codes of Good Practice. A transitional period of twelve (12) months, from 1 June 2019 to 30 May 2020 has been allocated for this process.
A few of the amendments are listed below however the number of amendments is far more than listed below:
• Paragraph 8.6 – When determining eligibility as an Exempted Micro-Enterprise, a Qualifying Small Enterprise or a Large Enterprise, only the Revenue of the Measured Entity will be considered, unless the Measured Entity is seeking a consolidated verification that includes its subsidiaries.
• Paragraph 13.2 – Start-Up enterprises are ordinarily regarded as Exempted Micro Enterprises unless tendering for a contract in excess of the threshold for EMEs, in which case the corresponding scorecard will apply.
• Paragraph 14.3.1 – Despite paragraph 14.2, a QSE which is 100% Black Owned measured using the flow-through principle qualifies for elevation to B-BBEE level one contributor having a B-BBEE recognition level of 135%. A QSE which is 100% Black Owned qualifies for Level One BBBEE recognition.
• Paragraph 14.3.2 – Despite paragraph 14.2, a QSE which is 51% Black Owned measured using the flow-through principle qualifies for elevation to B-BBEE level one contributor having a B-BBEE recognition level of 125. A QSE which is at least 51% Black Owned qualifies for a Level Two B-BBEE recognition level. This recognition level of 125 may well be an error in the Amended Code as a Level One contributor usually has recognition of 135.
• Clause 16.1 ELIGIBILITY OF JOINT VENTURES AND START-UP ENTERPRISES has additional criteria added as below.
• Paragraph 16.1.1 – Unincorporated Joint Ventures are required to compile a consolidated verification certificate. A consolidated verification will consolidate the verified compliance data of joint venture partners in accordance with paragraph 16.2 below as if those measured entities were a single measured entity.
• Paragraph 16.2 – The consolidation of compliance data shall be based on weighting in accordance with the joint venture agreement relevant to the specific joint venture. Therefore, should two companies enter into an Unincorporated Joint Venture their respective scores in terms of the Amended Tourism B-BBEE Sector Code will be weighted according to their proportionate share in the joint venture and added together for a combined score out of 100.
• Paragraph 16.2.4 – The JV B-BBEE Certificate is valid for 12 months and only applicable to a specific project.
• Paragraph 16.2.5 – Notwithstanding the B-BBEE Status Level attributed to the JV in terms of the above mechanism the Black Ownership of the respective partners may be flowed through to the JV in proportion to the respective JV partners’ economic interest and voting rights as determined by the JV agreement.
• Paragraph 21.2 – The Tourism B-BBEE Charter Council will issue practice notes on how B-BBEE verification certificates, verification reports, and sworn affidavits should be submitted to the Council.
• The Tourism B-BBEE Sector Code is effective from the date of the gazette, and thus there is no transitional period.
This article is provided for information only and does not constitute the provision of professional advice of any kind.
Source: DTi, Tourism B-BBEE Charter Council, Gazette Number 42725.