BEE Amended Codes of Good Practice
BEE Act, as amended
Gazette 38766 dated 06 May 2015 – Statement 004: scorecards for specialised enterprises
In this article we discuss the basics of Specialised Scorecards and Entities.
The objectives of statement 004 listed in Gazette 38766 are to:
Provide guidance about the treatment of Ownership for Specialised Enterprises for Broad Based Black Economic Empowerment (B-BBEE) purposes, of:
Companies limited by guarantee;
Higher Education Institutions;
Public entities and other Enterprises exclusively owned by organs of State; and
Public Benefit Schemes or Public Benefit Organisations
A Specialised Enterprise must apply the relevant Code and provide a B-BBEE Certificate when:
Determining the qualification criteria for the issuing of licences, concessions or other authorisations in respect of economic activity in terms of any law;
Developing and implementing Preferential Procurement policies;
Determining qualification criteria for the sale of state-owned enterprises;
Developing criteria for entering into partnerships with the private sector; and
Defining criteria for the awarding of incentives, grants and investment schemes in support of B-BBEE.
Series Code 100 outlines which entities are incapable of measuring their ‘Black’ Ownership. Entities qualifying for measurement on a Specialised Scorecard include:
Public Entities – independent bodies partially or wholly owned by the Government. They perform specific functions and operate in accordance with a particular Act;
Organs-of-state – three primary divisions of a state’s sovereignty, namely the executive, the legislature, or the judiciary. The powers of these entities are divided and balanced in accordance with the political principle of the separation of powers;
Higher Education Institutions – the term means all learning programmes which lead to a qualification;
Companies Limited by Guarantee, ‘Public Benefit Organisations’ and ‘Non-Profit Organisations’ – entities prohibited from distributing their profits by way of dividends. In terms of section 21 of the Companies Act, the purpose is not to make a profit.
Higher Education Institutions are not public entities under the Public Finance Management Act of 1999. They are incapable of evaluation of black ownership under Code series 100.
Companies limited by guarantee and Non-Profit Companies have no shareholding. They are not capable of evaluation of black ownership under Code series 100. This does not imply that companies limited by guarantee and Non-Profit Companies sharing in the ownership of other enterprises cannot contribute towards black ownership to such enterprises as provided for in Statement 100.
Non-Profit Companies and Public Benefit Organisations generally do not have any beneficial ownership and are incapable of evaluation of black ownership under Code series 100. This does not imply that Non-Profit Companies and Public Benefit Organisations sharing in the ownership of other enterprises as broad-based ownership schemes cannot contribute towards black ownership to such enterprises as provided for in Statement 100.
Wherever any of the entities listed above require evidence of their own B-BBEE compliance, they will use the Specialised Generic Scorecard. If those entities are also Qualifying Small Enterprises, they will use the Specialised Qualifying Small Enterprises Scorecard.
Entities that are Exempted Micro Enterprises (EME) under this statement are deemed to have a B-BBEE status of “level four”, having a B-BBEE recognition level of 100%.
A B-BBEE Certificate or Affidavit is invalid if any entity that qualifies to be measured on a Specialised Enterprise Scorecard presents their B-BBEE Certificate or Affidavit on a Generic Scorecard.
Priority Elements, Sub-minimum requirements and the Discounting Principle apply. The financial thresholds for Specialised Enterprises align with those set out in the Generic Codes:
Exempt Micro Enterprises (EME) Total revenue allocated budget or gross receipt of under R10m.
Qualifying Small Enterprises (QSE) Total revenue allocated budget or gross receipt of between R10m and R50m.
Large Enterprises Total revenue allocated budget or gross receipt of more than R50m.
Under the statement for Specialised Enterprises, Exempted Micro Enterprises (EMEs) are a B-BBEE status Level 4. However, provision has been made for an enhanced B-BBEE Level for both EMEs and Qualifying Small Enterprises (QSEs), with at least 51% and 75% ‘Black’ beneficiaries respectively. The Enhanced Recognition Status Levels are
EME & QSE >/= 75% ‘Black’ Beneficiaries Level 1
EME & QSE >/= 51% ‘Black’ Beneficiaries Level 2
EME < 51% ‘Black’ Beneficiaries Level 4
A QSE with less than 51% ‘Black’ beneficiaries must comply with the QSE Scorecard for Specialised Enterprises.
The Generic Specialised Scorecard under the ‘Generic Codes’ is as follows:
Management Control 20 points
Skills Development 25 points and a priority element
Enterprise and Supplier Development 50 points and a priority element
Socio-Economic Development 5 points
The QSE Specialised Scorecard under the ’Generic Codes’ is as follows:
Management Control 25 points
Skills Development 30 points and a priority element
Enterprise and Supplier Development 30 points and a priority element
Socio-Economic Development 15 points
Consult Gazette 38766 for further detail of the criteria to be used in all elements of the scorecard.
Author Craig Tonkin