Government and Public Entities and B-BBEE Legislation
According to Finance Minister Enoch Godongwana “There is no basis to say we are doing away with B-BBEE.” Ever wondered about the Government’s need to comply with B-BBEE legislation? According to the Codes of Good Practice all state and public entities are seen as measured entities, which means that they are required to implement the B-BBEE codes.
State and public entities must comply with 4 of the 5 B-BBEE elements namely management control, skills development, enterprise and supplier development and socio-economic development elements, ownership is not relevant to Government entities for obvious reasons. One can imagine the level of failure of many state and public entities to comply with B-BBEE requirements. According to the BEE Commission there is a lack of understanding when it comes to record-keeping and paperwork.
Entities are classified into three categories, exempted micro-enterprise (EME), qualifying small enterprise (QSE), and generic enterprise, based on the total annual revenue (where applicable) or allocated budget or gross receipts or discretionary spending.
An EME (R10 million and less) qualifies for automatic level 4 B-BBEE Status. However, where it has 51% of black people as its beneficiaries, it will be enhanced to level 2 B-BBEE status. If it has 75% of black people as beneficiaries, the entity will be enhanced to level 1 B-BBEE Status. Specialised EMEs are only required to obtain a B-BBEE affidavit.
A QSE (between R10 million and R50 Million) has to be verified and audited by an accredited verification agency or professional to obtain a B-BBEE certificate. If the entity has 51% black people beneficiaries, it will automatically be enhanced to a level 2 B-BBEE status and where it has 75% black people as beneficiaries, it will automatically receive a level 1 B-BBEE status. Specialised QSEs with automatic levels 1 and 2 BBBEE status are only required to obtain an affidavit.
A Generic Enterprise (R50 million and above) must be verified by an accredited verification agency or professional to obtain a B-BBEE certificate.
