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The DTI Issues Clarification – or does it? – EconoBEE Newsletter – 06 May 2015

EconoBEE - BEE Points = Business

 

The DTI Issues Clarification – or does it?

The dti published a gazette euphemistically called Notice of Clarification.

NOTICE 396 OF 2015

By virtue of the powers vested in me in terms of sections 9(1) and 14 (2) of the Broad-Based Black Economic Empowerment Act, 2013 (Act No. 46 of 2013), I Dr Rob Davies, Minister of Trade and Industry, hereby:

(a) Confirm that the Amended Codes of Good Practice, gazette No 36928 will come into effect on the 1st May 2015. Clarify that all B-BBEE verifications conducted using the financial year ending before 30 April 2015 can be verified using the old Codes of Good Practice, gazette No 29617 and all B-BBEE verifications conducted using the financial year ending after the 1st May 2015 must be verified using the Amended Codes of Good Practice, with the exception of the Sector Codes.

(b) Further extend the transitional period for the alignment of Sector Codes to the end of October 2015. From the 1st November 2015 Sector Codes that are aligned shall be effective in accordance with section (a) above of this Notice. Sector Codes not aligned and ready for gazette by the end of October 2015, a consideration shall be made for them to be repealed.

(c) Determine that for the inaugural year of the Amended Codes of Good Practice, all valid B-BBEE certificates issued under the old Codes of Good Practice gazette No 29617, as well as the relevant Sector Codes should remain valid and should therefore be accepted and should be treated as empowering suppliers.

For all EME (Exempted Micro Enterprises) certificates issued without Empowering Supplier Status, the interpretation stated in the Amended Codes of Good Practice clause 3.3.1, Amended Code Series 400 Gazette No 36928 will be applied, which state that “Exempted Micro Enterprises and Start-Ups are automatically recognised as Empowering Suppliers.”
(d) Black participants in Broad-Based Ownership Schemes and Employee Share Ownership Programmes holding rights of Ownership in a Measured Entity must only score points under paragraph 2.2.3 under the Ownership scorecard.

2. The amendments embodied in this Notice will become effective on the date of publication of this Notice.
M Lindiwe Zulu, MP
Acting Minister of Trade and Industry
April 2015

Comment:
The minister is saying that if your financial year is prior to 30 April 2015 then you must be verified using the old codes. If your financial year is after 1st May you must be verified using the new codes. All those companies that rushed to be verified before 30th April have wasted their time – they could have delayed for another year or more and could have been verified next year. Those who tried to be proactive are being punished. Those companies who did beat the deadline will now feel quite irritated that others, who were late can still get verified. In our case we ensured that hundreds of clients achieved verification before 30th April – even to the extent of us working weekends and late hours – all to no avail. It would have been very nice of the dti to inform the public that the codes were going to be delayed. In the event they only informed us on 5th May that the deadline that expired on 30th April would be extended for year ends prior to 30th April. They deliberately have not used the phrase “codes delayed”, but this is what has happened. The Amended codes state that the old codes can be used up until the end of the transitional period – originally October 2014, then extended to April 2015. This notice does extend the usage of the old codes. We know that some companies take over a year to obtain their audited financial statements and only thereafter do they ask to be verified. It is quite probable that many companies will still want to be verified in December 2016 or even January of February 2017 using their financial results of February 2015.

If you have not yet been verified on your previous financial year, then there is obviously time to do so – the date of 30th April is no longer relevant. You can use the old codes for your next verification, even up to next year – as long as you use a financial year prior to 30th April 2015.

We always knew that the sector codes were not included in the amended codes and that the old sector codes would continue. It of course flies in the face of logic to have sector codes using completely different points to levels table to the generics. Once again it would have been good of the dti to have given the market this information more timeously. The wording on this notice is also problematic: There was never a transitional period for sector codes, so where the minister gets to describe a “transitional period for sector codes”, only the dti knows.

An issue that also worried most commentators was the concept of empowering suppliers. The dti has now decided that all verifications using the old codes will be defined as empowering. This helps, but does not clear up the problematical issues around empowering suppliers for the new codes.

By a strange quirk of fate, SANAS, one of the regulators has awarded accreditation to all agencies who applied to be able to verify using the amended codes. This notwithstanding the lack of verification manual which is prescribed. Unfortunately in this comedy of errors, SANAS has taken away agencies’ accreditation for the old codes! To be strictly accurate – which is what the law demands, SANAS agencies are no longer allowed to issue old verification certificates.

By far the most serious error is point 1(d) in the minister’s announcement and the one that urgently needs a retraction. It says “Black participants in Broad-Based Ownership Schemes and Employee Share Ownership Programmes holding rights of Ownership in a Measured Entity must only score points under paragraph 2.2.3 under the Ownership scorecard.” This means that a company that is 100% or 25% owned by a broad-based or employee ownership scheme will not earn points under any other indicator on the scorecard than “2.2.3 Participants in broad-based schemes” which is worth 1 point on the old codes, and 3 on the new. This very clear statement implies that no other points for economic interest or voting rights may be earned. Economic interest is the indicator to help calculate net value, so no entity will achieve any net value score.

We have been complaining for some time now about fronting using suspect broad-based schemes, but there are some very good, genuine schemes that do deserve to be rewarded. Is the minister really saying those really good broad-based ownership schemes which previously gave most large businesses full points for ownership will now give them only 1 point? On the new codes the priority element kicks in and entities with employee or broad-based ownership schemes will drop another level. This is obviously a mistake that needs to be rectified.

It is easy to get around this: Simply don’t define your scheme as a broad-based or employee ownership scheme – lose a couple of points to get 21 (on the old codes and 3 out of 25 on the new codes)! We know there is a serious issue with fronting using broad-based schemes, but the dti has thrown the baby out with the bathwater!

Summary:
The new codes are coming, despite the frustrating delay. Plan ahead so you can be compliant next year. We wish that BEE were not so complex – and the dti would not make so many mistakes – but either way we can be at your side, lobbying govt, as we are doing right now, helping you understand the codes, and how they will change and evolve. Call us, or better still visit us to attend one of our free executive summary sessions.

 


The DTI Media Statement

The dti has also released a media statement entitled “No confusion regarding the implementation of the Broad-Based Black Economic Empowerment Act“. It claims there is no confusion around the amended codes, and states that the QSE codes, specialised enterprises and other codes, but not sector codes will be released on Thursday. This is good news and we will give more information to our readers and clients once it has been seen. We will also be offering training on these new codes. Watch this space for details


Strategic Executive Overview of the Amended B-BBEE Codes


Changes to the legislation will cause most businesses scores to drop substantially which will substantially limit their competitiveness in the market place. Alternative activities to earn points such as changing suppliers might require a radical directional change in business thinking and processes. Identifying points scoring activities while simultaneously eliminating weaknesses is essential to maintaining a satisfactory scorecard.

Topics Discussed:

  • High risk elements
  • Significant differences and interpretations
  • Key performance indicators

Who should attend:

  • Transformation managers
  • Executives

Date:
  • 7th May 2015 – JHB – 435 Rugby Avenue, Ferndale
  • 14th  May 2015 – JHB – 435 Rugby Avenue, Ferndale
  • 21st  May 2015 – JHB – 435 Rugby Avenue, Ferndale
  • 28th  May 2015 – JHB – 435 Rugby Avenue, Ferndale

We will be hosting additional events based on demand.

Time:07:30 for 8:00 – 10:00
Price:No Cost. Booking is essential as seating is limited.
Booking Details:Email info@econobee.co.za
Contact 011 483 1190
Book online or download our brochure.

 

 

 

 

 

 


Supplier Day


The procurement indicators in the Amended Codes allocate 9 points for black owned businesses, 4 points for black female owned business and 7 points for businesses with a turnover below R50 million per annum. Many larger businesses had done well on the procurement element in the past. However with the significant changes to the legislation their procurement score will drop substantially. This presents a major opportunity for alternative suppliers to begin supplying those business.

Our session is designed to help black owned suppliers understand the requirements while also connecting purchasing decision makers to our delegates. We will store company details and product and service offerings to enable businesses requiring alternative suppliers to source them from our database.

Topics Discussed:

  • Business Opportunities as a highly compliant supplier
  • Meeting quality and service expectations
  • Growth through Supplier Development
  • Investment potential

Who should attend:

  • Black owned businesses
  • Supply chain managers
  • Procurement officers

Date:
  • 8th May 2015 – JHB – 435 Rugby Avenue, Ferndale
  • 13th  May 2015 – JHB – 435 Rugby Avenue, Ferndale
  • 20th  May 2015 – JHB – 435 Rugby Avenue, Ferndale
  • 27th  May 2015 – JHB – 435 Rugby Avenue, Ferndale

We will be hosting additional events based on demand.

Time:07:30 for 8:00 – 10:00
Price:No Cost. Booking is essential as seating is limited.
Booking Details:Email info@econobee.co.za
Contact 011 483 1190
Book online or download our brochure.

 

 

 

 

 

 

 

 


BEE Scorecard Workshop


We cover very briefly the theory of BBBEE, and then go straight into a practical workshop on how each of the components of the scorecard operates. We explain each element and indicator, and make it completely applicable to your business. During our workshop we will cover the Amended B-BBEE Codes of Good Practice in great detail.

You will leave the workshop:

  • With a better understanding of BBBEE.
  • With an actual scorecard of your business
  • With a strategy of how to proceed to improve your company’s scorecard.
  • Knowing how to respond to your customers’ requests for your BEE status
  • AND feeling a lot more comfortable about implementing BBBEE in your organisation

Date:
  • Weekly on Tuesday mornings

We will be hosting additional events based on demand. In-house presentations available on request to a minimum of 10 delegates.

Time:8:30 for 9:00 – 13:00
Price:R1500 excl VAT (R1710 incl VAT)
Booking Details:Email info@econobee.co.za
Contact 011 483 1190
Book online or download our brochure.

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Let our consultants save you time on B-BBEE.

Preferential Procurement – Save Time by using the BEE Procured database containing over 60 000 BEE Certificates. Managed Service: Our consultants can phone your suppliers for a BEE certificate – Managed Service.
 


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While there is demand for a B-BBEE Scorecard someone will be taking advantage, shouldn’t that someone be you…


Want us to manage your BEE Process – Managed Service.

Turnover below R10 million – find out how to get your BEE Exemption.

Is BEE procurement a pain? Sort it out quick and easy – BEE Procured.

Need a scorecard – produce one yourself – EconoBEE V3

 
EconoBEE Newsletter
 06 May 2015

In this issue

  • Notice of Clarification
  • The DTI Media Statement
  • Strategic Executive Overview of the Amended B-BBEE Codes
  • Supplier Day
  • BEE Scorecard Workshop

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.

As leaders in the industry we are driven to help maintain and develop knowledge in the BEE industry.


Already have a BEE Certificate

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Contact Us

Tel: 011 483 1190
Fax: 011 483 1195
Email: info@econobee.co.za
Web: www.econobee.co.za


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Remember
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Regards
Gavin and the EconoBEE Team
 

  
Executive summary of B-BBEE

Turnover below R10 million per annum – automatic BEE status

 

Turnover above R10 million per annum – you need a BEE Scorecard. Our workshops, scorecard tools, procurement manager or a complete managed services will be best for you.

 

Your time on your business, our time on your BEE status

Tip:

Amended Codes preparation needs to begin immediately. Through our managed service prepare early and gain a competitive advantage.

 

10 Strategic Steps to B-BBEE!
 We have prepared an easy to follow guide “B-BBEE in 5 Minutes” and “Crash Course to BEE Verification” which explains BEE in a simple step by step approach.

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