On 1 December 2017, the Amended Construction Sector Code was published in terms of Government Gazette number 41287. This Sector Code makes provision for Supplier Development Programs on the Generic Construction Sector Code Scorecard.
Generic Enterprises are Contractors with an annual turnover above 50 million Rand and BEP’s (Built Environmental Professionals) with an annual turnover above 25 million Rand.
What is a Supplier Development Program?
A Supplier Development Program is a program where the Measured Entity provides structured cooperation and assistance to Qualifying Beneficiaries as Qualifying Supplier Development Contributions.
The Supplier Development Program must comply with the following additional criteria:
- The Measured Entity may not hold more than 20%, calculated in terms of the normal flow-through principle, of the Qualifying Beneficiary Entity’s equity;
- The Qualifying Beneficiary Entity must employ a minimum of three permanent employees;
- The Qualifying Beneficiary Entity must have a valid tax clearance certificate;
- The Qualifying Beneficiary Entity must have a sworn affidavit (where applicable) or B-BBEE certificate that was valid at the date of entering into the agreement.
There must also be a written Supplier Development Agreement between the Measured Entity and the Qualifying Beneficiaries, which complies with the criteria as set out in the Construction Sector Codes.
It is essential that the Measured Entity must be able to provide the relevant information in support of the claim; otherwise, the points for this element will not be awarded.
How do you determine the number of beneficiaries and what are the criteria for qualifying beneficiaries?
TAs set out in the Construction Sector Codes, the turnover thresholds will determine the amount of Supplier Development Program beneficiaries that need to be assisted within the financial period of the Measured Entity.
The turnover thresholds, as set out in the Construction Sector Codes, will determine the maximum and minimum annual turnovers the beneficiaries must fall between.
Individual beneficiaries of Qualifying Supplier Development Contributions are Entities:
- That are at least 51% Black Owned who qualify as either an Exempted Micro Enterprise or a Qualifying Small Enterprise;
- Whose total annual revenue, for its latest completed financial period, did not exceed 30% of the Measured Entities’ total annual revenue for the Measurement Period.
Conclusion
It is clear from the information above that it is technical to comply with the Supplier Development Program in terms of the Construction Sector Code and that professional advice and guidance are required to ensure that the measured entity adheres to the requirements.
Want to know more about the Supplier Development Program? Contact your nearest SEESA BEE Legal Advisor for expert advice, Alternatively, leave your details on our website and a SEESA representative will contact you.
About The Author:
Stephen Strydom is currently a B-BBEE legal advisor at our Cape Town Branch. He is an admitted attorney who has obtained his B.Com (Law) as well as his LLB degree from the University of Pretoria.
Resources:
- Amended Construction Sector Code 2017.