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Quick notes for business owners on the Amended Codes of Good Practice

Quick notes for business owners on the Amended Codes of Good Practice

The Amended Codes of Good Practice has shown several changes to Broad-Based Black Economic Empowerment (B-BBEE) elements for businesses.

Supplier Development and Enterprise Development has been introduced as sub-indicators together with Preferential Procurement under the element Enterprise and Supplier Development. This is one of the five elements a Qualifying Small Enterprise (QSE) and Generic Entity should comply with. It is also a priority element to which these entities should comply with.

Socio-Economic Development stayed an element on its own, and is the fifth element that both Qualifying Small Enterprises and Generic Entities should adhere to.

A very important change under the amendments, is that a business may no longer adhere to Supplier Development, Enterprise Development or Socio-Economic Development out of the financial year they will be rated on. If a business is being rated on their March 2015 – February 2016 statements, the procuring from- and contributions towards a 51% black-owned entity for Supplier Development, and the contributions towards Enterprise Development and Socio-Economic Development has to be made within that financial year. Any contributions outside that financial year may not be used as part of the rating.

The target for Supplier Development is 2% of the businesses’s Net Profit After Tax (NPAT) for Generic Entities and 1% of the clients NPAT for QSEs. Only 1% should be contributed by both entities in case of Enterprise Development and Socio-Economic Development. The beneficiaries of both Supplier Development and Enterprise Development must either be an Exempt Micro Enterprise (EME) or a QSE. A Generic Entity will not count in this instance.

Businesses need to monitor the entity’s NPAT and turnover during the financial year to ensure that contributions are made within the relevant timeframe. Businesses can earn easy points on their B-BBEE scorecards on these indicators to ensure better ratings.

 ABOUT THE AUTHOR

Dominique van Deventer is a SEESA BEE Legal Advisor at the Bloemfontein office. She obtained her LLB degree from the University of the Free State.

 

 

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