More BEE Changes!
The Chartered Accountancy Charter has been gazetted in draft for 60 days public comment. The scope of the charter affects all companies who employ South African Institute of Chartered Accountants trainees and members who offer SAICA training programmes. The various bodies and stakeholders to the CA Charter includes IRBA, AAT, ICB, ICSA. The charter targets black professionals’ development within the profession, as well as areas of development and promotion into management positions.
The CA sector code has the same points to level table as the Codes of Good Practice, which is great as the ICT codes are far more stringent. As with the ICT codes and Construction sector code, we see an increase in the targets on ownership to 32.5% as compared to the COGP, and we welcome the proposed change of requiring 20% black ownership of Chartered Accountants. The management control element is primarily the same as the COGP, however skills development has some interesting changes. By default, the required spend for SD is drastically higher as in addition to the 6% spend, there is now a target of 4% of NPAT or 0,5% of turnover to be spent on bursaries with the Thuhuka Education Upliftment Fund. Another interesting observation is that companies can earn more points by absorbing Coloured and African learners at the end of the learnership i.e. excluding Indian learners. Universities, and therefore spend with Universities, have always tended to fall under Skills Development however the CA sector code awards spend with Historically Disadvantaged Universities as Supplier Development. Slight changes to procurement and SED complete the whole scorecard.
Our CEO, Lianne Friedman, is going to be interviewed on Classic Fm (102.7 MHz) with Michael Avery in May discussing the CA Charter. She will also personally be facilitating the upcoming Full Day BEE Workshop’s as mentioned below.
Ownership Schemes and Fronting
As previously emphasised in a “breaking news” newsletter sent out by EconoBEE last week, the BEE commission has spoken publicly about dodgy ownership schemes and the fronting risk. Ownership is a priority element when it comes to B-BBEE. Due to ownership carrying so many points, possibly some businesses then think they can use ownership structures and schemes as loopholes or shortcuts to gain those points and therefore circumvent the substance of the B-BBEE process. This forms a huge fronting indicator which the BEE commission have addressed in the latest news article on 23 April 2019.
The individuals and/or entities responsible for or influenced by these fronting ownership schemes, regardless of their titles, will face the full brunt of the law and pay the consequences through the penalties imposed by the law as expressed by the BEE Act.
Ignorance of the law is no excuse and the same goes for these illegitimate ownership schemes that will not be excused in BEE practises. Every single ownership deal, scheme, transaction, employee share ownership scheme or programme must qualify as such based on the provisions, rules and regulations of the codes of good practice and the BEE act. It is therefore of utmost importance to ensure as a foundational starting ground to all ownership deals that Voting rights and economic interest and not just dividends should be legitimised. This means that ownership structures that appoint black individuals should comply with formal, allocated representation level participation and there MUST be voting rights, economic interest and net value given to black people in their ownership deals.
Ownership deals and activities implemented from other BEE elements should not be implemented just for the sake of doing so but it should be implemented with a valid purpose and intention of transformation, equity and equality for the greater good of the business, its employees and the economy at large.
Being one of the oldest BEE consultancies in the country, and with the most experience, we are perfectly positioned to assist our clients evaluate and implement BEE in their company. We offer training courses on all the elements, country wide, as well as offer specialised BEE consulting to make sure our valuable clients are implementing BEE in the best possible way.
Join us for our upcoming BEE workshops:
Title: Full Day BEE Workshop including the Proposed Amendments to B-BBEE Codes
Date: 30 May (JHB), 27 August (DBN), 09 October (CT)
Duration: 09h00 to 17h00
Price: R3 913.04 Excl VAT (50% discount for BEE Managed Service Clients)
Venue: Johannesburg – 435 Rugby Avenue, Ferndale, Randburg, Durban – The Circle, Douglas Drive, Ballito, Cape Town – TBC
To book please email us on email@example.com or call us on 011 483 1190
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