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Under Statement 300 of the Amended General B-BBEE Codes of Good Practice , clause 6 lists various Legitimate Recognisable Training Expenses under the element of Skills Development.   Clause 6 states the following:   6. LEGITIMATE RECOGNISABLE TRAINING EXPENSES   6.1.1 costs of training materials; 6.1.2 costs of trainers; 6.1.3 costs of training facilities including costs of catering; 6.1.4 scholarships and bursaries; 6.1.5 course fees; 6.1.6 accommodation and travel; and 6.1.7 Administration costs such as the organization of training including, where appropriate, the cost to the Measured Entity of employing a Skills Development facilitator or a training manager.   Skills Development Services  are available to assist members to ensure that they claim all Legitimate Recognisable Training Expenses under the element of Skills Development.

Schedule 1  defines a ‘Voting Right’ as a Voting Right attaching to an Equity Instrument owned by or held for a participant, measured using the Flow-through Principle or the Control Principle. An ‘Exercisable Voting Right’ is a Voting Right of a Participant that is not subject to any limit.   Therefore, an ‘Exercisable Voting Right’ is not a ‘Voting Right.’ The difference between the definitions is that ‘Exercisable Voting Rights’ refer to ‘Voting Rights’ that are not subject to any limitations.   Technical Compliance Services  are available to help members understand the difference between ‘Voting Right’ & ‘Exercisable Voting Right’ under B-BBEE legislation.

The most significant risk to an organisation meeting its Preferential Procurement targets is fraudulent B-BBEE Credentials. They not only go against the spirit of B-BBEE, but they put an organisation at risk, as fraudulent B-BBEE Credentials generally only reveal themselves at the time of an organisation’s B-BBEE Verification.   The B-BBEE Commission's website contains a list  of known fraudulent / invalid B-BBEE Credentials currently in circulation.   If any Members have suspicions about B-BBEE Credentials currently on file, Certificate Collection Services  is on hand to assist with validation of their authenticity.

As per Schedule 1 of the Amended General B-BBEE Codes of Good Practice , a “Start-up Enterprise” means a recently formed or incorporated Entity that has been in operation for less than 1 year.  A start-up enterprise does not include any newly constituted enterprise which merely a continuation of a pre-existing enterprise.   Further rules applicable to Start- Up Enterprises include:   Start-up Enterprises are deemed to have qualifying B-BBEE Status in accordance with the principles of paragraph 4 of Statement 000 of the Amended General B-BBEE Codes of Good Practice. a Start-up Enterprise may be measured in terms of the QSE scorecard, or the Generic scorecard should they choose to. a Start-up Enterprise must submit a QSE scorecard when tendering for any contract, or seeking any other economic activity covered by Section 10 of the Act, with a value higher than R10 million but less than R50 million. For contracts of R50 million or more they should submit the Generic scorecard. The preparation of such scorecards must use annualised data.   Technical Services  are on hand to assist with the understanding the requirements of Start-Up Enterprises.

A QSE that is more than 51% Black Owned qualifies for Enhanced Recognition, which means that an Affidavit is the only B-BBEE Credential they have to present. Paragraph 5 of Statement 000 published in Gazette #42496  makes the following allowance for Enhanced Recognition:   ELIGIBILITY AS A QUALIFYING SMALL ENTERPRISE (QSE)   5.1  A Measured Entity with an annual Total Revenue of between R10 million and R50 million qualifies as a Qualifying Small Enterprise.   5.2  A QSE must comply with all of the elements of B-BBEE for the purposes of measurement.   5.3  Enhanced B-BBEE recognition level for QSE: 5.3.1      Despite paragraph 5.2 above, a Qualifying Small Enterprise which is 100% Black Owned, measured using the flow-through principle, qualifies for elevation to a “B-BBEE Level One Contributor” having a B-BBEE recognition level of 135%. 5.3.2      Despite paragraph 5.2 above, a Qualifying Small Enterprise which is at least 51% Black Owned, measured using the flow-through principle, qualifies for elevation to a “B-BBEE Level Two Contributor” having a B-BBEE recognition level of 125%. 5.3.3      A Black Owned QSE in terms of paragraph 5.3. above, is only required to obtain a sworn affidavit on an annual basis, confirming the following: 5.3.3.1 Annual Total Revenue of between R10 million and R50 million; and 5.3.3.2 Level of Black ownership.   5.4  Despite paragraph 5.3 a black-owned QSE may be measured in terms of the QSE scorecard should it so choose.   5.5  Any misrepresentation in terms of Para 5.3 above constitutes a criminal offence as set out in the B-BBEE Act as amended.   QSE Services  are available to members with any queries relating to the above.

Here are three tips for avoiding the common conflict that many organisations face regarding what version of a B-BBEE Code of Good Practice is applicable to them:   Organisations must comply with the requirements of the B-BBEE Code of Good Practice they qualify to be measured against. For example, an organisation that does not earn 50% of its annual revenue from a sector that has a B-BBEE Sector Code issued in terms of Section 9 (1) of the B-BBEE Act must revert to be measured on the Amended General B-BBEE Codes of Good Practice. In 2019 there were amendments to the Amended General B-BBEE Codes of Good Practice, namely in Statement 000, Statement 300, Statement 400 and Schedule 1 – Interpretations & Definitions. These amendments only apply to those measured on the Amended General B-BBEE Codes of Good Practice. As to date none of the Sector Codes have been amended to incorporate these amendments, they do not apply to those measured on a B-BBEE Sector Code. The Transport Sector Code has not been amended since it was introduced in 2009. Subsequently, an organisation falling into this ambit is still measured against the requirements of the initial B-BBEE Codes of Good Practice implemented in 2007.   Consequently, an organisation measured on the Transport Sector Code has not yet faced the consequences of not meeting sub-minimum requirements of the Priority Elements or the Discounting Principle. However, the Y.E.S initiative is applicable to the Transport Sector based on a Clarification Statement issued in February 2020.   Lastly, if a Sector Code, either amended or not, is silent on an issue, an organisation must revert to the requirements held within the Amended General B-BBEE Codes of Good Practice.   It is, however, vital to know the difference between Silence vs Conflict in the context of B-BBEE Legislation to avoid any issues.    Technical Compliance Services  are available to help members understand the difference between Silence VS Conflict under B-BBEE legislation.

The core aim of Socio-Economic Project Contributions is to support income generation. Therefore, any contributions must pass the income generation test at the time of an organisation’s B-BBEE Verification.   Schedule 1  of the Amended General Codes of Good Practice defines Socio-Economic Project Contributions, which must be pre-approved by organs of state or a sector as:   “Socio-Economic Project Contributions means monetary or non-monetary contributions carried out for the benefit of any projects approved for this purpose by any organ of state or sectors including without limitation:   o   Projects focusing on environmental conservation, awareness, education and waste management; and o   Projects targeting infrastructural development or reconstruction in underdeveloped areas; rural communities or geographic areas identified in the government’s integrated sustainable rural development or urban renewal programmes; o   New projects promoting beneficiation.”   Socio-Economic Development Services   are available to Members to assist meeting requirements under the element of Socio-Economic Development.

Virtual informal learning, otherwise referred to as distance training, has become the norm over the past few years.  Providing evidence of a training intervention according to the Skills Development requirements, includes an attendance register or certificate of attendance (not limited to). However, virtual learning or distance training sometimes poses a challenge in terms of producing an attendance register.   Some Members have arranged for an attendance register to be shared via email or on a document sharing platform at the end of the training initiative which records the attendees for each session allowing the learners to sign once for all sessions.   There is no official clarity on how an Entity should record attendance for a virtual learning or distance training intervention, but it would be important to provide evidence in some form that indicates that the training initiative has taken place.   Skills Development Services   are available to Members in assisting with collating evidence for virtual learning or distance training.

Intra-group procurement spend is a normal part of spending, especially for groups of vertically connected companies, which in many cases is a sizeable amount. Internal procurement between holding companies and their subsidiaries must be included in an organisation’s Total Measured Procurement Spend as per Statement 400 of the Amended General B-BBEE Codes of Good Practice.   Paragraph 5.1.2 states: Intra-group procurement: all goods and services procured from subsidiaries or holding companies of a Measured Entity (BEE Credentials of the entity supplying goods and/or services must be confirmed in the way of a BEE Certificate).     Requirements for Consolidated B-BBEE Verifications amongst a group of Entities will have an impact on the above.   Enterprise & Supplier Development Services   are available to Members to assist in understanding the Intra-Group Procurement spend.

A successful vendor application is what allows a customer to purchase goods or services and pay their supplier with pre-conditions.  However, to get to the stage where business flows between a supplier and a customer, due diligence is essential to protect the customer and the supplier.   Part and parcel of due diligence of a vendor application is requesting documentation which confirms that the applicant is a good corporate citizen with good financial standing. However, many organisations request documentation that is not relevant or in a prescribed format and which will cost the applicant time and money.    The following is a non-exhaustive list of relevant information that could put an organisation applying to be a supplier into a favourable position. This list, however, excludes additional legislative expectations as set out by institutional bodies such as bargaining councils:   o   Trading name of organisation and registration details; Require - organisation’s registration documents. o   How an organisation was registered, whether as a Close Corporation, Proprietary Limited or Sole Trader; Require - organisation’s registration documents. o   Shareholder information; Require - share certificates, Company Share Register and certified identity documents. o   VAT statement; Require - VAT Registration Certificate. o   Tax Clearance; Require - SARS Tax Clearance Certificate. o   Contact information; In most cases, this information only needs to be provided and not evidenced. Necessary information would include physical and postal addresses, telephone, cell phone and fax numbers, website address and, where possible, two contact email addresses. o   Banking information;  Require - A certified letter from the bank to confirm account details, or a cancelled cheque. o   B-BBEE threshold indicated by annual total revenue; Require - B-BBEE Certificate, CIPC EME Certificate or an Affidavit. o   ‘Black’ Ownership and ‘Black’ Women Ownership Status; Require - B-BBEE Certificate, CIPC B-BBEE EME Certificate, Affidavit, share certificates and identity documents. o   Confirmation of safety and compliance standards, for example, NOSA certification; issued certificate. o   Declaration of any ‘Conflict of Interest’. o   Acceptance of an organisation’s terms and conditions. Enterprise & Supplier Development Services  are available to assist Members with understanding these requirements.

The liquidity of an Enterprise Development Beneficiary matters. A long-term Enterprise & Supplier Development Strategy more often than not incorporates future Bonus Points for elevating a Beneficiary from Enterprise Development status to that of Supplier Development.   However, core to successfully claiming these points is that the Enterprise or Supplier Development Beneficiary remains in business. In other words, claims only qualify if an Enterprise or Supplier Development Beneficiary’s business is liquid and actively trading.   Therefore, organisations must put measures in place to track the performance of their Beneficiaries.   Enterprise & Supplier Development Services  are available to Members to assist with crafting sustainable Enterprise & Supplier Development strategies.

Skills Development is an intrinsic part of building a transforming economy. It incentivises organisations to use 6% of their payroll annually for Skills Development interventions. The core aim is to facilitate development to create sustainable employment, thus inviting more people to participate in the economy.   Some organisations invest what they can afford, whilst others aim to fund the complete 6% for Skills Development. However, due to a disconnect on where the spend would be most effective and how a meaningful investment in higher education, training or learnerships, internships or apprenticeships could lead to absorption, they only meet the sub-minimum requirements.   It Is encouraged that Members develop and maintain a sustainable Skills Development strategy.   Skills Development Services   are available to assist members in developing Skills Development strategies.