Proposed amendments to BEE Codes drive business with 51 per cent Black ownership

On March 29 and June 15, 2018, the Department of Trade and Industry (DTI) released two draft amendments to the BEE Codes. Amongst other changes, there is a clear focus by the DTI on prioritisation of companies owned by at least 51 per cent Black people, including Black women.

In addition to general amendments, the proposed amendments include that:

Generic enterprises (being entities with a turnover of more than R50 million) will be entitled to the following automatic BEE levels:

• an automatic BEE level 2 should the generic enterprise have at least 51 per cent Black ownership; and
• an automatic BEE level 1 should the generic enterprise have 100 per cent Black ownership.

• In the Enterprise and Supplier Development scorecard, procurement spend on exempted micro enterprises (being entities with a turnover of less than R10 million) (EMEs) and qualifying small enterprises (being entities with a turnover of between R10 million and R50 million (QSEs) are collapsed into one sub-element, and combined to 5 points and a target of 25 per cent from a combined target of 7 points and 30 per cent;
• also, procurement from generic enterprises that are at least 51 per cent Black Owned or at least 51 per cent Black Women Owned can now always be recognised as procurement from EME and QSE;
• procurement spend on 51 per cent Black owned companies increased from 9 points and 40 per cent target, to 11 points and a 50 per cent target; and
• procurement spend with a company that is at least 51 per cent Black Owned or 51 Black Women Owned (no restriction on size of the entity) can be multiplied by a factor of 2.

• The beneficiaries of enterprise development and supplier development contributions is expanded to include generic enterprises provided that they are at least 51 per cent Black Owned or Black Women owned utilising the flow through principle; and
• an enterprise development beneficiary cannot be within the measured entity’s supply chain.

Please let us know if you require any further information on how these amendments may impact on your shareholding structures, procurement arrangements and enterprise development and supplier development arrangements.