B-BBEE AMENDED CODES EXPLAINED - BEE Online

1 AT THE BENCH MARK OF EMPOWERMENT B-BBEE AMENDED CODES EXPLAINED *BEE (Black Economic Empowerment) or Broad-Based Black Economic Empowerment (BBBEE) as it is technically known is an initiative by the South African government to address historical imbalances of the country by facilitating the participation of black people in the mainstream economy. Black people refer to African, Coloured and Indian who are South African citizens by birth or by descent, or who were naturalised prior to the commencement of the interim constitution in 1993, or who those would have been able to acquire citizenship by naturalization prior to 27 April 1994 had it not been for the presence of the Apartheid policy.

2 BBBEE is governed by the Broad Based Black Economic Empowerment (BBBEE) Act No. 53 of 2003 and the BBBEE CODES of Good Practice gazetted in February 2007 and the AMENDED CODES of 2013. Who needs to comply / participate Public Sector Procurement Anyone who supplies government or the State-owned Enterprises (Eskom, Transnet etc.) or is in a direct line to any of their suppliers Money from government Anyone trying to become involved in Public-Private Partnerships Anyone attempting to purchase state-owned assets Further broadening of BEE net to include govt.

3 Grants etc. Regulated Industries & Concessions Anyone seeking a license or concession from government (Banks, mines, petrochemical companies, telecommunications companies, gambling institutions, import / export companies, etc.) Public Perception (Social License) National BEE Database BEE score is public domain info. National BEE Label for consumer products & services and retailers Shareholder Activism What does a BEE Scorecard Mean Your score counts towards your customer sscore Your supplier s score counts towards yourscoreBEE is not a compliance is a competitivenessissue.

4 *What does the OLD Scorecard focus on Gender empowerment Disabilities Support for the youth, rural and elderly Increasing local production and value-adding Supporting small businesses Sectorial issues Pro-active investment in business development Community projects Massive Skills Development What else does the AMENDED Scorecard focus on Ownership Mandatory rating for all business Disabilities Support for the youth, rural and elderly Increasing local production Supporting small businesses Pro-active investment Enterprise and Supplier Development Massive increase in Skills Development emphasis Targets have Doubled The seven elements of the BEE scorecard have been reduced to five elements: Ownership Mandatory Management Control Now includes Employment Equity Skills Development Enterprise Supplier Development Merged Preferential Procurement and Enterprise Development Socio Economic Development NEW CODES .

5 KEY CHANGES Enterprise Turnover Exempted Micro Enterprise Less than R10m Qualifying Small Enterprise More than R10m but less than R50m Large Enterprise More than R50m REVISED CODES : Thresholds Element CODES of Good Practice 2007 AMENDED CODES of Good Practice 2013 Weighting points Target Weighting points Target Ownership 20 25% + 1 Vote 25 25% + 1 Vote Management & Control 10 50% 19 50% Employment Equity 15 80% - - Skills Development 15 3% of Payroll 20 6% of Payroll Preferential Procurement 20 70% - - Enterprise Development 15 3% - - Enterprise & Supplier Development - - 40 80% Socio-Economic Development 5 1% 5 1% Total 100 109 2007 AND 2013 SCORECARD COMPARED B-BBEE Status Current Qualification Revised Qualification B-BBEE

6 Recognition Level Level 1 100 points 100 points 135% Level 2 85 but <100 points 95 but <100 points 125% Level 3 75 but <85 points 90 but <95 points 110% Level 4 65 but <75 points 80 but <90 points 100% Level 5 55 but <65 points 75 but <80 points 80% Level 6 45 but <55points 70 but <75 points 60% Level 7 40 but <45 points 55 but <70points 50% Level 8 30 but <40 points 40but <55points 10% Non-Compliant <30 points <40 points 0% REVISED CODES : Recognition Levels A New Requirement : Priority Elements (Based on % of target) 40% on ownership s net value 40% of the skills development score 40% of each of the targets in the 3 categories within the Enterprise and Supplier Development element, namely: Preferential Procurement (25 point weighting) Supplier Development (10 point weighting) Enterprise Development (5 point weighting) Failure to meet any of these subminimum targets , results in the discounting of 1 level !

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