Government Gazette Staatskoerant - B-BBEE Website

1 305094 A36928 1 AIDS HELPLINE: 0800-0123-22 Prevention is the cureGovernment GazetteStaatskoerantREPUBLIC OF SOUTH AFRICAREPUBLIEK VAN SUID-AFRIKAVol. 580 Pretoria,11 OctoberOktober2013No. The Government Printing Works willnot be held responsible for the quality of Hard Copies or Electronic Files submitted for publication purposes2No. 36928 Government Gazette , 11 OCTOBER 2013 This Gazette is also available free online at INHOUDGENERAL NOTICET rade and Industry, Department ofGeneral Notice1019 Broad-Based Black Economic Empowerment Act (53/2003): Issue of Codes of Good Practice .. NOTICEThe Government Printing Works will not be held responsible for faxed documents not received dueto errors on the fax machine or faxes received which are unclear or incomplete. Please be advisedthat an OK slip, received from a fax machine, will not be accepted as proof that documents werereceived by the GPW for printing. If documents are faxed to the GPW it will be the sender s respon-sibility to phone and confirm that the documents were received in good the Government Printing Works will also not be held responsible for cancellations andamendments which have not been done on original documents received from OF TRADE AND INDUSTRYI, Dr Rob Davies, Minister of Trade and Industry, hereby:(a)Issue the following Codes of Good Practice (the codes) under section 9(1) of the Broad-Based Black Economic Empowerment Act, 2003 (Act of 2003); and(b)Determine that these Codes will come into operation within twelve (12)months from date of this ROB D VIES, MPMINISTE OF TRADE AND INDUSTRYDATED /1.

2 020131 Staatskoerant , 11 OKTOBER 2013No. 369283 This Gazette is also available free online at 1019 OF 2013 AMENDED CODE SERIES 000: FRAMEWORK FOR MEASURING BROAD-BASED BLACK ECONOMIC EMPOWERMENTSTATEMENT 000: GENERAL PRINCIPLES AND THE GENERIC SCORECARDI ssued under section 9 of the Broad-Based Black Economic Empowerment Actof 2003 Arrangement of this statement:Para SubjectPage1 Objectives of this statement22 Key principles23 Application of the Codes34 Eligibility as an exempted micro Enterprise45 Eligibility as a Qualifying Small Enterprise56 Start-up enterprises57 The Element of B-BBEE in terms of Generic Scorecard68 Generic Scorecard79 Enhanced recognition for certain categories of Black People810 Transitional Period811 Adjustment of Threshold912 Duration of the Codes9 2013 Department of Trade and IndustryStatement 000-14No. 36928 Government Gazette , 11 OCTOBER 2013 This Gazette is also available free online at OF THIS ofBroad-BasedBlackEconomicEmpowerment(B- bbee ); the application of the Codes and the basis for measurement under theCodes; the qualifying thresholds for Measured Entity to qualify as ExemptedMicro-Enterprises (EME) or Qualifying Small Enterprises (QSE); the method of measuring Start-Up Enterprises; the elements of B-BBEE measurable under the Generic Scorecard andQualifying Small Enterprises; the basis for determining compliance by Entities with the Codes.

3 For the Transitional Period before the compulsory use of the Genericand Qualifying Small Enterprise Scorecard fundamental principle for measuring B-BBEE compliance is that substancetakes precedence over legal the provisions of the Codes any reasonable interpretationconsistent with the objectives of the B-BBEE Act as amended and the B-BBEES trategy must take basis for measuring B-BBEE initiatives under the Codes is the B-BBEE compliance of the Measured Entity at the Date of Any misrepresentation or attempt to misrepresent a Measured Entity's true B-BBEE Status will be dealt with in accordance with the provisions as set out inthe B-BBEE Act as amended, and may lead to the disqualification of the entirescorecard of the entities concerned. 2013 Department of Trade and IndustryStatement 000-2 Staatskoerant , 11 OKTOBER 2013No. 369285 This Gazette is also available free online at which split, separate or divide a Measured Entity as a means ofensuringeligibility as an exempted micro -Enterprise, a Qualifying SmallEnterprise or a Start-Up Enterprise may constitute an offence and will be dealtwithin accordance with the provisions as set out in the B-BBEE Act representation made by an Entity about its B-BBEE compliance must besupported by suitable evidence or documentation.

4 A Measured Entity that doesnot provide evidence or documentation supporting any initiative must notreceive any recognition for that a Standard Valuation Method applies to measuring an indicator, thesame standard should apply, as far as reasonably possible, consistently in allother applicable calculations in this OF THE following Entities are measurable under the all Organs of State and Public Entities; all Measured Entities that undertake any economic activity with all Organs ofState and Public Entities; any other Measured Entity that undertakes any economic activity, whetherdirectorindirect,withany other MeasuredEntitythatissubjecttomeasurement under paragraph to and which is seeking to establishits own B-BBEE basis for measuring the B-BBEE compliance of an Entity in terms ofparagraph Paragraph 4, in the case of an exempted micro -Enterprise; The Generic Scorecard and QSE Scorecard, in the case of other MeasuredEntities. 2013 Department of Trade and IndustryStatement 000-36No.

5 36928 Government Gazette , 11 OCTOBER 2013 This Gazette is also available free online at Measured Entity in a sector in respect of which a sector code has beenissued in terms of Section 9 of the BBBEE Act as amended, may only bemeasured for compliance in accordance with that ELEMENTS, SUBMINIMUM AND DISCOUNTING The Priority Elements are as sub-minimum requirement for Ownership is 40% of Net Value(40%of the 8 points) based on the Time Based Graduation Factor as providedin Annexe 100 (E). Development:The sub-minimum requirement for Skills Development is 40% of the totalweighting points for Skills and Supplier Development:The sub-minimum requirement for Enterprise and Supplier Developmentis 40% for each of the three categories, within the Enterprise andSupplierDevelopmentelement,namely preferentialprocurement;Supplier development and Enterprise COMPLIANCE TO PRIORITY Large Enterprise is required to comply with all the Priority Elements; Qualifying Small Enterprise is required to comply with Ownership as acompulsory element, and either Skills Development or Enterprise andSupplier DISCOUNTING PRINCIPLE with the 40% sub-minimum requirements of any of thepriority elements, as per paragraph above, willresultin thefollowing outcomes for both Large Enterprises and Qualifying SmallEnterprises: 2013 Department of Trade and IndustryStatement 000-4 Staatskoerant , 11 OKTOBER 2013No.

6 369287 This Gazette is also available free online at The actual points scored by the Measured Entity and the consequentlevel that the Measured Entity would have achieved were it not for non-compliance with the 40% sub-minimum requirements will be recognisedby the Verification Agency ("the Recognition Level"); Notwithstanding the , the MeasuredEntity's B-BBEE status level will be discounted by one level down untilthe next applicable verification period in which the Measured Entity candemonstrate compliance with the 40% sub-minimum requirements, atwhich point the Recorded Level will become the applicable ratings levelfor that Measured Entity in that verification requirement to submit data to the Department of Labour under theEmployment Equity Act 55 of 1998 is only applicable to 'designated employers'who employ 50 or more employees. However, for the purpose of measurementfor both Generic and Qualifying Small Entities that employ less than 50employees are required to submit sufficient evidence for verification AS AN exempted micro ENTERPRISE (EME) enterprise with an annual Total Revenue of R10 Million or less qualifies asan exempted An exempted micro -Enterprise is deemed to have a B-BBEE Status of "LevelFour Contributor" having a B-BBEE recognition level of 100% under B-BBEE recognition level for an exempted micro - Despite paragraphs an EME which is 100% Black owned qualifies forelevation to "Level One Contributor" having a B-BBEE recognition level of135%.

7 2013 Department of Trade and IndustryStatement 000-58No. 36928 Government Gazette , 11 OCTOBER 2013 This Gazette is also available free online at Despite paragraph and , an EME which is at least 51%Black ownedqualifies for elevation to "Level Two Contributor" having a B-BBEE recognitionlevel of 125%. paragraphs and , an EME is allowed to be measured in terms ofthe QSE scorecard should they wish to maximise their points and move to ahigher B-BBEE recognition An EME is only required to obtain an sworn affidaviton an annual basis,confirming the Total Revenue of R10 million or less; Level of Black Any misrepresentation in terms of Para above constitutes a criminal offenceas set out in the B-BBEE Act as AS A QUALIFIFYING SMALL ENTERPRISES (QSE) Measured Entity with an annual Total Revenue of between R10 million andR50 million qualifies as a Qualifying Small A QSE must comply with all of the elements of B-BBEE for the purposes B-BBEE recognition level for Qualifying Small Enterprise which is 100% Black owned qualifies for a LevelOne B-BBEE QSE which is at least 51% Black owned qualifies for Level Two B-BBEE recognition QSE is only required to obtain an sworn affidaviton an annual basis,confirming the Total Revenue of R50 million or less; of Black ownership.

8 2013 Department of Trade and IndustryStatement 000-6 Staatskoerant , 11 OKTOBER 2013No. 369289305094 BThis Gazette is also available free online at misrepresentation in terms of Para above constitutes a criminal offenceas set out in the B-BBEE Act as Enterprise must be measured as an exempted micro -Enterprise underthis statement for the first year following their formation or incorporation. Thisprovision applies regardless of the expected total revenue of the Enterpriseis deemed to have the qualifying B-BBEE Statusinaccordance with the principles of paragraph 4 of this order to qualify as a Start-up Enterprise, the enterprise must provide anindependent confirmation of its status in accordance with paragraph paragraph and , a Start-up Enterprise must submit a QSEscorecard when tendering for any contract, or seeking any other economicactivity covered by Section 10 of the Act, with a value higher than R10 millionbut less than R50 million.

9 For contracts of R50 million or more they shouldsubmit the Generic scorecard. The preparation of such scorecards must useannualised GENERIC Ownership Element, as set out in Code series 100, measures effectiveownership of entities by Black Management Control element, as set out in Code series 200, measuresthe effective control of entities by Black Skills Development element, as set out in Code series 300, measures theextent to which employers carry out initiatives designed to develop thecompetencies of Black employees and Black people internally and externally.(e) 2013 Department of Trade and IndustryStatement 000-710No. 36928 Government Gazette , 11 OCTOBER 2013 This Gazette is also available free online at Enterprise and Supplier Development element, as set out in Code Series400, measures the extent to which entities buy goods and services fromEmpowering Suppliers with strong B-BBEE recognition levels. This elementalso measures the extent to which enterprises carry out supplier developmentand enterprise development initiatives intended to assist and accelerate thegrowth and sustainability of black Socio-Economic Development and Sector Specific Contributions element,as set out in Code series 500, measures the extent to which entities carry outinitiatives that contribute towards Socio-Economic Development or SectorSpecific initiatives that promote access to the economy for Black B-BBEE GENERIC following table represents the B-BBEE Generic ScorecardElementWeightingCodeseriesrefer enceOwnership25 points100 Management Control15 points200 Skills Development20 points300 EnterpriseandSupplierDevelopment40 points400 Socio-Economic Development5 RECOGNITION Based on the overall performance of a Measured Entity using the GenericScorecard and Qualifying Scorecard Enterprise Scorecard.

10 The Measured Entitywill receive one of the following B-BBEE Status uses with the corresponding B-BBEE recognition level: 2013 Department of Trade and IndustryStatement 000-8 Staatskoerant , 11 OKTOBER 2013No. 3692811 This Gazette is also available free online at StatusQualificationB- bbee recognitionlevelLevel One Contributor*100pointsontheGeneric Scorecard135%Level Two Contributor95 but <100 points ontheGenericScorecard125%LevelThreeContr ibutor90 but <95 points on theGeneric Scorecard110%Level Four Contributor?_80 but <90 points on theGeneric Scorecard100%Level Five Contributor?_75 but <80 points on theGeneric Scorecard80%Level Six but <75 points on theGeneric Scorecard60%LevelSevenContributor55 but <70 points on theGeneric Scorecard50% but <55 points on theGeneric Scorecard10%Non-CompliantContributor<40 points on the GenericScorecard0% RECOGNITION FOR CERTAIN CATEGORIES OF the Codes, various criteria appear which advance the interests ofcertain categories of Black people.