Frequently asked questions related to COVID-19 and B-BBEE

During these tumultuous COVID-19 times what happens to B-BBEE in South Africa? Below are some Frequently Asked Questions (FAQs) and their answers.

  1. Will there be any exemptions in place for certain aspects related to skills development training?

Short answer: NO

The B-BBEE measurement is based on evidence provided by the measured entity in relation to its implementation of the B-BBEE Act on an annual basis.

We are all aware that the annual plans and extent of performance of some measured entities in relation to performance against the elements on the scorecard will be affected due to the lockdown and the restrictions placed on business activities.

Measured entities should adjust their training plans and where possible continue to implement the initiatives towards achieving their annual targets.

A measured entity will be measured on the basis of initiatives that have been implemented during the measurement period in compliance with the B-BBEE requirements.

In essence, the B-BBEE Commission is not authorized by the B-BBEE Act to grant any exemption relating to the implementation of B-BBEE initiatives affected by the national COVID-19 lockdown.

  1. Will contributions to the Solidarity Fund be recognised for measured entities?

Short answer: NO; the fund was not developed for B-BBEE purposes.

The requirements for recognition of any specific contribution in respect of each element are set out in the Codes of Good Practice. These requirements are linked to the objectives of the B-BBEE Act in section 2 of the B-BBEE Act. Any contribution made by a measured entity must be for a B-BBEE initiative or for B-BBEE purposes. The Solidarity Fund is established to respond to the current COVID-19 pandemic and not for B-BBEE purposes, although it is granted that some of its beneficiaries may be black people based on the demographics in South Africa.

Everyone is encouraged to contribute to the Solidarity Fund to enhance the fight against COVID-19, however, these contributions cannot be claimed for B-BBEE.

  1. Will entities be exempt from implementing or complying with B-BBEE?

Short answer: NO

We know that COVID-19 has and will have a negative impact on the South African economy at large, including performance towards B-BBEE.

The measures to address economic consequences of the pandemic are done within the rule of law and adherence to the prescripts of the Constitution of South Africa. All entities that are required to implement B-BBEE as outlined in Statement 000 of the Codes of Good Practice are required to implement the B-BBEE Act.

  1. Is there a verification cost-relief in place during COVID-19 for small entities?

Short answer: no relief is necessary as EMEs only require a sworn affidavit at zero cost.

Exempted Micro Enterprises (EMEs), which are entities with the annual turnover of R0 to R10 million, are already exempted from the verification process and qualify for an
automatic level.

EMEs are only required to use a B-BBEE sworn affidavit or a certificate issued by the Companies and Intellectual Property (CIPC) confirming their turnover and level of black ownership at no cost.

All EMEs qualify for a B-BBEE level 4, whilst EMEs that are 51% and 100% black owned would qualify for a B-BBEE level 2 and 1 respectively.

  1. When can Section 13G type entities submit their 13G compliance reports?

All JSE listed entities, organs of state and public entities, and SETAs that are required to submit compliance reports any time from 26 March 2020 to 30 April 2020 may
submit their compliance reports within 30 calendar days following the end of the lockdown period. This was expected to commence on 30 April 2020 when the initial lockdown phase was to end. As the offices of the BEE Commission opened on 04 May 2020 submission of reports commenced since then.

These reports are crucial for performance of the mandate under section 13F(1)(g) of the B-BBEE Act. The requirement to publish a BEE annual compliance report is only applicable to primary listed issuers that have a reporting obligation in terms of the BBBEE Amendment Act.

  1. When should major B-BBEE transactions concluded close to or during the initial lockdown phase be registered?

The usual timeline for filing major B-BBEE transactions is within 15 days of the conclusion of the major B-BBEE transaction.

Parties that concluded a major B-BBEE transactions from 11 March 2020 to 30 April 2020 were given a minor extension to file the major B-BBEE transaction for registration within 30 calendar days following the end of the lockdown period, that is 30 days from 4 May 2020. These transactions and any subsequent transaction are due past due if not yet done. These reports are crucial for performance of the mandate under section 13F(1)(f) of the B-BBEE Act.

Sources: BEE Commission and the JSE

Author Craig Tonkin

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