fears about new codes
07 Dec

7th December 2006

We are still awaiting confirmed details of the final codes, but reports are the following:

1) EMEs – The threshold has been increased to R5 million per annum. If your business has a turnover of less than R5 million you will automatically be exempted from all forms of BEE. This is a change from the  previous threshold of R300 000 per annum, and probably includes 50% of all businesses in South Africa.

2) QSEs – The threshold has been increased to R35 million (though it may depend on your industry). QSEs may choose any 4 of the 7 elements. Previously QSEs could choose any 5 elements. This is a major change to the codes and will make it easier for QSEs to achieve higher scores

How to react: 

If your turnover is less than R5 million per annum, you are exempt from all forms of BEE (depending on your industry).
You should tell your customer or government (only if they ask for your BEE rating):

“We are a company whose turnover is less than R5 million per annum. In terms of the final  codes of good practice, approved by cabinet on 6th December, we are an EME (exempt micro enterprise), and therefore are a level 4 compliant BEE contributor.

If your turnover is more than R5 million and less than R35 million per annum, you may be a QSE (qualifying small enterprise. Until this is clarified, you should state:

“We are a company whose turnover is more than than R5 million and less than R35 million per annum. In terms of the final  codes of good practice, approved by cabinet on 6th December, we may be a QSE, and we will base our BEE strategy and scorecard on the QSE codes as soon as they are released”.

NB. It is still advisable to wait for clarity before making any BEE decisions about your business.