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More BEE Changes… New Sector Codes Gazetted – EconoBEE Newsletter – 18 June 2012

EconoBEE - BEE Points = Business
More BEE Changes… New Sector Codes Gazetted

In a surprise move the minister of trade and industry, Dr Rob Davies has gazetted the final ICT BEE Charter and the Property BEE charter as sector codes. The surprise was not the contents of the charters, but the timing of the gazette.

The draft ICT code was published exactly a year ago. Since then there have been reports that there was in-fighting, and then at the end of last year that the ICT Charter would be finalized. Nothing happened for six months other than regular reports that the sector code would be gazetted.  The draft Property Charter was published two years ago.

The DTI released the B-BBEE Amendment Bill in December 2011 and it is currently at NEDLAC prior to parliament and a new set of Codes, which is presumably going to make some substantial changes and fix many errors in the current codes. One of the clauses in the B-BBEE Amendment bill is to move SANAS accredited agencies to IRBA. However by gazetting two new sector codes it will force SANAS agencies to apply for an extension of scope. IRBA approved agencies do not require an extension of scope to issue sector codes.

Summary of ICT Sector Code

The finalized ICT charter is quite similar to the draft issued last year. It applies to any company operating in the ICT (information communication technology) sphere – as from the date of gazetting.

There are a fair amount of differences between the sector code and the codes of good practice. The biggest differences are the weighting and targets put onto each element and indicator.

Summary of the major differences:

  • Ownership targets have increased to 30%, from 25% for the codes.
  • Management targets and weighting remain the same
  • Employment Equity drops from 18 points to 13 (including bonus points), and uses the new targets for employment equity
  • Skills development goes up to 17 points from 15
  • Preferential Procurement has an extra 6 bonus points making 26 points in total, increased from 20.
  • Enterprise Development targets have increased from 3% of NPAT to 5% of NPAT and the points to be earned have decreased from 15 to 11.
  • Socio Economic Development weighting have increased from 1% of NPAT to 1.5% of NPAT. The points to be earned have increased from 5 to 12.

The changes from the codes of practice are quite dramatic and will require a change in strategy in order to most effectively maximize your B-BBEE scorecard. It is quite a problem to many that the codes apply as of the date of gazetting. This implies if you are in the ICT sector, you will be rated in terms of the ICT charter on your next verification. This gives you very little, or possibly no time to react to the changes.

EconoBEE will be holding a breakfast session at Monte Casino on Friday 6th July. During the session we will go through the ICT code in detail, and cover strategies needed to optimize your ICT sector code scorecard. We will cover the many problems we see with the sector code and some of the detail that you need to know, such as the new requirement of free float and maximum investments required for listed ICT companies.

Summary of Property Sector Code

The minister has gazetted the Property Charter as a sector code. All businesses in the property sector will now follow this code as from the date it was published, i.e. 1st June 2012.

Salient features of the Property Sector Code
EMEs are defined as businesses with a turnover of less than R5 million, but for estate agencies and brokers this is R2.5 million. For property asset owning businesses it uses an asset threshold of less than R30 million for EMEs.

QSEs are similarly defined: Turnover threshold of above R5 million to R35 million, but for estate agencies and brokers this is R2.5 million to R35 million, and for asset owning businesses the QSE threshold is between R30 million and R280 million.

The Property Sector code has added in an 8th element – economic development which measures values of disposal off assets and development in under-resourced areas.

The sector code also recognizes the peculiarities of the complex property industry:  property unit trusts, property loan stock, asset management, property management services and even estate agencies handles each category differently. This makes the sector code itself difficult to read and use, but each property business will have no difficulty in identifying with and supporting the property charter.

Who is affected by the Property Sector Code?

Commercial activities in the following industries:

  • Houses
  • Community schemes
  • Land zoned for development
  • Commercial office development
    • Office property
    • Industrial property
    • Leisure property
    • Retail property
    • Land zoned for development
  • Other property services
    • Property ownership
    • Property letting
    • Property management
    • Property sales
    • Property valuation

The Property Sector Council has clearly defined its roles and duties including overseeing and monitoring the implementation of the code. It also promises to issue guidance notes as to the interpretation and application of the sector code.

Overall comment: The Property sector code is well written, and shows deep thought has been put into it. There are problems and complications, but we hope that the sector council will be proactive in solving them.

To assist our clients in the property sector we will be holding a breakfast training session on the Property Sector code explaining how the sector code works, what strategies to implement and how to become complaint. We will cover the existing elements, but also the new economic development element, and we will discuss in detail the differences between the codes and the sector code.

Understanding the BEE Requirements

In a turbulent world where BEE requirements are ever changing and the importance of BEE success grows as more and more businesses require compliance from their suppliers. Producing a BEE scorecard is an important task but since it is a “grudge purchase” staff don’t particularly like doing the work. As much as the work needs to be done it also needs to be done in-time and regularly which most choose not to do. The less preparation work the higher the chances of going through a failed verification and having unhappy customers. It becomes essential to maintain a good relationship with knowledgeable and capable consultants to ensure BEE success.

EconoBEE is hosting a series of very useful events to share knowledge and give our clients an advantage by getting a higher BEE status that requires less company resources.

Prepare for your next BEE Verification

A successful BEE verification is the key to business success. With the emphasis that is now placed on having a good BEE status the question has changed from “do I need a BEE status” to “what level is required or will my clients accept this”. This fundamental mindset shift from “do I” to “how good” has now virtually guaranteed that a good level of compliance directly impacts on the amount of business a company is awarded.

On the other hand ensuring that your company is successful during it’s BEE verification can be stressful and time consuming. Dedicated staff members should be involved heavily in this process. They need a good understanding of B-BBEE and of the verification process. In-particular considering how often interpretations within the legislation change, how different agencies have vastly differing interpretations and that when errors are made, ensuring that the correct procedures are followed.

EconoBEE is proud to announce the fourth annual EconoBEE Conference – How to prepare for a B-BBEE Verification. EconoBEE is an expert BEE consultancy who assists companies work through and implement BEE properly while earning maximum points and spending minimum amounts of time. Make your booking early and qualify for our early bird special.

Date:30 August 2012 – JHB – Gallagher Estate
14 August 2012 – CPT – Belmont Conference Centre
21 August 2012 – DBN – Makaranga Garden Lodge
Time:8:30 for 9:00 – 17:00
Price:R3500 excl VAT (R3990 incl VAT)
Booking Details:Download our brochure and fax to 011 483 1195 or fill in our online form
Email info@econobee.co.za
Contact 011 483 1190
Early bird special – EconoBEE V3 worth R3500 if booked and paid for two weeks prior to the event you are attending.

ICT Breakfast Training session
EconoBEE is holding a morning event to explain the new ICT sector code, and how it impacts on your business and your B-BBEE rating.
ICT (information communication technology) is a big industry covering computer hardware, software, internet, communication, telecommunications, broadcasting, electronics.

Who should attend:
All CEOs, MDs, FDs, transformation people involved in the ICT industry;

Topics Covered:

  • The ICT sector code
  • The scorecard
  • Differences between ICT and Codes of Good Practice
  • Strategies around ICT

Venue: Monte Casino
Date and time: Friday 6th July 7:00 for 7:30 to 12:00 – breakfast will be served
Cost: R1500 plus VAT
Booking: Please contact 011 483 1190 or info@econobee.co.za.

What you get:
Detailed course manual, including copy of the ICT charter.
CD containing available information relating to acts, codes, charters.

Property Sector Codes Breakfast Training session
EconoBEE is holding a morning event to explain the new Property sector code, and how it impacts on your business and your B-BBEE rating.
The property sector covers all aspects of property: development, ownership, estate agencies and brokers, commercial , renting, management.

Who should attend:
All CEOs, MDs, FDs, transformation people involved in the Property industry;

Topics Covered:

  • The Property sector code
  • The scorecard
  • Differences between the Property Sector code and the Codes of Good Practice
  • Strategies around the property sector

Venue: To be announced
Date and time: To be announced – 7:00 for 7:30 to 12:00 – breakfast will be served
Cost: R1500 plus VAT
Booking: Please contact 011 483 1190 or info@econobee.co.za.

What you get:
Detailed course manual, including copy of the property charter.
CD containing available information relating to acts, codes, charters

Manage your BEE process better
EconoBEE’s complete managed service is designed to help you earn more BEE points, be less admin intensive and ultimately less costly. Contact 011 483 1190 or visit www.econobee.co.za for more info.

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Want us to manage your BEE Process – Managed Service.

Turnover below R5 million – find out how to get your BEE Exemption.

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Need a scorecard – produce one yourself – EconoBEE V3.

EconoBEE Newsletter
18 June 2012

In this issue

  • More BEE Changes… New Sector Codes Gazetted
  • Understanding the BEE Requirements

In other news

About EconoBEE

EconoBEE is an expert BEE consultancy. EconoBEE helps businesses Become BEE Compliant, prepare for verification, earn maximum BEE Points and ensure that they achieve the BEE Level they need to get more business.

Our services include BEE Management Systems, Training, EME Pack, Complete Managed Services; consulting and advisory and Procurement Solutions.

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Fax: 011 483 1195
Email: info@econobee.co.za
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Executive summary of B-BBEE

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