BBBEE Amendments – looking at the key focus areas

The amended Codes of Good Practice to the Broad-Based Black Economic Empowerment Act 46 of 2013 as amended were issued in October 2013 and became effective in May 2015. On 29 March 2018, the Department of Trade and Industry issued two draft statements which deals with certain amendments to the Codes, specifically related to statement 000 to code series 000 (which are the General Principles) and statement 300 to code series 300 which deals with Skills Development. These amendments have been issued for comment.

It should be noted that these proposed amendments to the current Codes will have a big impact on larger businesses (i.e. businesses with an annual turnover of more than R 50 million) in particular.

Companies that qualify as generic enterprises should consider the amendments in light of having to adopt same into their current structure.

These amendments will afford generic companies the opportunity to obtain an automatic BBBEE recognition as level 1 or 2, as is currently the case with EME (Exempt Micro Enterprises) and QSE (Qualifying Small Enterprises) companies. This means that a generic company with 51% or more black ownership will achieve an automatic level 2 BBBEE status and a 100% black owned company will achieve an automatic level 1 BBBEE status.

Considering the compliance issues and costs companies face when implementing the current codes, this is a big advantage for generic companies, as they will merely need to verify ownership to obtain aforementioned recognition levels and thus will not need to comply with the other elements of the generic BBBEE scorecard.

We can presume that the planned result of these amendments will be a general increase in the incentive of large companies to increase their ownership to more than 51% black shareholding to leverage the benefits of such automatic recognition.

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