B-BBEE Credentials Consistency is Key

Practice Guide 1 of 2018 was issued as a guide, purely to assist organisations with

interpreting and testing the validity of B-BBEE Credentials presented to them. It does not

in any way constitute a legal document or ruling by the B-BBEE Commission. The purpose

of this Practice Guide is to provide consistency as to what is accepted as valid B-BBEE

Credentials.

Only a SANAS accredited B-BBEE Certificate, an Affidavit or a B-BBEE Certificate issued by the ‘Companies

and Intellectual Property Commission’ (CIPC) serve as valid B-BBEE Credentials. An organisation presented with

B-BBEE Credentials may, as part of their due diligence process, request further relevant information or documents to

substantiate the information contained in B-BBEE Credentials submitted.

First and foremost, it is illegal for an organisation to trade with invalid, inconclusive or incorrect B-BBEE Credentials. The consequence of an

organisation accepting invalid B-BBEE Credentials is that the procurement spend with that organisation will not be recognised. It is, therefore

critical to determine the validity of B-BBEE Credentials at the time of engaging with a supplier.

An Affidavit

A sworn written statement of facts voluntarily made by a person,

or deponent, under oath or affirmation administered by a person

authorised to do so by law, is the definition of an Affidavit.

A provision in the Codes allows EMEs and QSEs with more than

51% ‘Black’ Ownership to present an Affidavit to confirm their level

of B-BBEE compliance, ownership and annual turnover. The core

aim of introducing the Affidavit to establish B-BBEE Credentials

was to reduce the cost of compliance and the regulatory burden

for these organisations. A template is available to ensure the

uniformed structure of an Affidavit, which is available for download

on the website of the Department of Trade and Industry (DTI)1

.

Therefore, if an EME or QSE that has more than 51% ‘Black’

Ownership presents a SANAS accredited B-BBEE Certificate,

it is invalid, as it must be in the form of an Affidavit. The only

instance where an EME can be verified by a SANAS accredited

verification agency is if it opts to maximise its B-BBEE points to

move to a higher B-BBEE recognition level, by being measured on

a QSE Scorecard.

The only exception to this is the Transport Sector, as the Amended

Transport Sector Code has not been published as yet. Until such

a time as the Amended Transport Sector Code is published,

EMEs representing this sector can choose to obtain a letter from

an accounting officer or be verified and issued with a SANAS

accredited B-BBEE Certificate

The Construction Sector Code provides for EMEs, whose annual

turnover is less than R1.8m for Built Environment Professionals

and less than R3m for Contractors, to have automatic recognition

levels. Those qualifying as such do not need to undergo a

verification process unless they elect to enhance their Status Level.

In such circumstances, an EME must meet the 40% Sub-minimum

requirements for Skills Development and obtain a B-BBEE

Certificate issued by a SANAS accredited verification agency.

Organisations measured on the Financial Services Sector

Code that are more than 51% ‘Black’-owned QSEs may opt to

undergo a verification process by a SANAS accredited verification

professional or agency instead of presenting an Affidavit. However,

for consistent application, EMEs in the Financial Services Sector

need only submit an Affidavit.

Start-ups are categorised as EMEs. This threshold is applied to an

organisation during its first 12-months of incorporation. However, if

a Start-up opts to tender for contracts between R10m and R50m,

they must be verified using the QSE scorecard. In the case of

tenders valued above R50m, a Start-up must be verified using the

Large Enterprise scorecard.

The following pointers are key in determining the validity of

an Affidavit:

> Full name or names of the deponent as it appears in an identity

document, including the identity number.

> The designation of the deponent as a Director, Owner or

Member must be included to indicate that the deponent is duly

authorised to depose an Affidavit on behalf of the organisation.

> Name of the organisation as per the registration documents

issued by the CIPC.

> Full business address.

> Percentage of ‘Black’ Ownership, ‘Black’ Women Ownership

or that of Designated Group must be indicated. In the case of

Specialised Enterprises as per Statement 004, the percentage of

‘Black’ Beneficiaries must reflect.

> Total revenue for the year under review to include whether

the outcome is based on audited financial statements or

management accounts.

> Financial year-end, as per the CIPC registration documents,

which were used to determine the total revenue.

> The Status Level and corresponding Preferential Procurement

Recognition level. Note, an organisation can only have one

Status Level.

> Empowering Supplier status must be indicated. For QSEs,

the deponent must select the basis for the Empowering

Supplier status. Note, the DTI suspended the 2014 criteria for

‘Empowering Supplier’ status until further notice. Therefore,

any organisation with a valid B-BBEE Certificate is considered

an ‘Empowering Supplier’ until otherwise gazetted.

> The date on which the deponent has signed the Affidavit must

coincide with that of the Commissioner of Oaths.

> A Commissioner of Oaths cannot be an employee or ex officio of the

deponent of the Affidavit, as by law a person cannot commission an

Affidavit in which they have an interest.

B-BBEE Certificate issued by the CIPC

To reduce costs for start-ups and EMEs, on 6th May 2015 the DTI

issued Gazette # 38765. This provided a mandate for the CIPC to

issue B-BBEE Certificates that hold the same status as an Affidavit.

Subsequently, the CIPC issued a Customer Notice indicating that

B-BBEE Certificates can be applied for via e-services on the CIPC

website, or at Self Service Terminals when registering or filing Annual

Returns.

The following conditions apply when an enterprise uses the CIPC to

obtain a valid B-BBEE certificate:

> Only Directors of an organisation or Member of a close corporation

can apply for a B-BBEE Certificate;

> Only organisations and close corporations with a turnover of less than

R10m can apply through the CIPC;

> The status of the company must state ‘In Business’;

> All ‘Annual Return’ filings for the relevant organisation or close

corporation must be up to date;

> Application for a B-BBEE Certificate can be made at any time - not

only when registering an organisation or filing returns. This is,

however, on the provision that an application for a certificate is valid.

> Applicant must agree to the B-BBEE terms and conditions; and

> A Director or Member amendment must be filed if the Director or

Member’s email address or telephone is not correct or up to date2

.

A CIPC certificate may be submitted to the B-BBEE Commission

for validation that it was generated from the CIPC system3

.

However, on face value, the following information must appear on

the certificate:

> Name of organisation, registration number and business

address.

> Date of issue and expiry equal to 12 months, for example,

9th June 2019 to 8th June 2020.

> Percentage of total ‘Black’ Ownership, ‘Black’ Woman

Ownership, as well as total ‘White’ Ownership, must reflect.

> The certificate number.

> The barcode with a tracking number, as well as the unique

number allocated to a specific organisation, must appear.

> The Status Level and allocated Preferential Procurement

Recognition level must be displayed.

> The DTI logo must appear on the top left corner.

> The CIPC logo must appear on the top right corner.

> The CIPC watermark must be visible.

Determine the validity of B-BBEE

Credentials at the time of engagement.”

Elements that constitute a valid SANAS

accredited B-BBEE Certificate:

Verification is the process and activities performed by a verification

agency or professional to assess, verify and validate evidence to

determine the overall score awarded to an organisation and to ensure

that it is the true outcome of a verification process. It must reflect

individual scorecard evidence supplied by an organisation.

The process is to evaluate B-BBEE transactions per element over a

specified period to provide an indicative score and certification based

on the Code on which an organisation is qualified to be measured.

A verification process is an assurance that an organisation has

achieved what is reflecting on its B-BBEE Certificate. By issuing a

B-BBEE Certificate, a verification agency or professional

confirms that the information on which the certificate was issued is,

in fact, acceptable, has been independently verified and is

free from misstatements.

Therefore, the role of a verification agency or professional is to

independently assess, verify and validate both disclosed and

undisclosed B-BBEE related information provided by the

organisation at the time of verification. Taking this into account, a

verification should be performed in line with the principles contained

in the B-BBEE Act (The Act) and relevant Code. It confirms that

verification methodologies outlined in the Framework for accreditation

were applied. This includes alignment with the expectations of the

verification manual and the Accreditation of B-BBEE Verification

Agencies document issued by SANAS – otherwise referred to

as the R47-02.

Important to note is that a verification agency or professional may not

provide clarity or opinions on interpretations in any B-BBEE matter.

Any such clarification must be sought from the B-BBEE Commission3

.

A SANAS accredited B-BBEE Certificate must incorporate the

following non-negotiable information:

> Name and business address of the organisation as per registration

documents issued by the CIPC.

> Value-added Tax number, where applicable.

> The B-BBEE Scorecard against which the certificate was issued.

It must further indicate all elements and scores achieved for each

component. The actual score achieved must be linked to the total

points as per the relevant Code.

> The Status Level of an organisation to include the corresponding

Preferential Procurement Recognition level.

> The relevant Code used to issue the B-BBEE Certificate.

> Date of issue and expiry, for example, 9th June 2019 to

8th June 2020.

> Reference as to whether an organisation was subject to a

re-verification process due to material changes. In this case, a

re-issued Certificate must reflect the initial date of issue and expiry

and include the date of re-issue and expiry. A re-verification does

not extend the lifespan of a B-BBEE Certificate.

> The financial period that was used to issue the B-BBEE Certificate.

> The unique identification number allocated to an accredited

B-BBEE verification agency or professional. This information can

be cross-referenced on the SANAS website4

.

> The name, logo and/or mark of the B-BBEE verification agency

or professional.

> The full name and signature of the Technical Signatory that signed

off the certificate at the bottom of the certificate. The details of all

authorised technical signatories are available on the SANAS

website4

. Only a Technical Signatory is authorised to sign off a

B-BBEE Certificate.

> The SANAS logo must feature.

Upon being presented with a SANAS accredited B-BBEE Certificate,

the recipient is entitled to request confirmation of its issuance.

Another point of reference is the SANAS website for verifying the

accreditation status, accreditation period and scope of accreditation

relevant to a verification agency or professional. The SANAS

website further provides a list of verification agencies or professionals

whose accreditation status has been withdrawn or suspended.

Any verification agency or professional is unauthorised to issue a

B-BBEE Certificate if their accreditation status has expired, been

revoked or suspended.

Penalties for circumventing The Act

Trading with invalid or fraudulent B-BBEE Credentials may constitute an offence in terms of Section 13O (1) (a) of The Act, which states:

Section 13A of The Act has empowered organs-of-state and public entities to cancel any contract or authorisation awarded on account

of false information knowingly furnished by or on behalf of an organisation in respect of its B-BBEE status.

If an organisation is found to have violated The Act, a fine of up to 10% of an organisation’s annual turnover may be imposed.

Furthermore, individuals involved in any misrepresentation risk imprisonment for up to 10 years.

In terms of section 13O(2), a verification professional, procurement officer or any official of an organ-of-state or public entity who

becomes aware of the commission of, or attempt to commit, any offence referred to under section 13O (1) and fails to report it, is guilty of

an offence.