Business awaits ‘devil in detail’ of BEE codes

The new Broad-Based BEE Codes of Good Practice for business would be gazetted this Friday, the Department of Trade and Industry confirmed at the conclusion of its broad-based BEE summit in Joburg last Friday.

This comes almost a year since amendments to the Broad-Based BEE Act and new draft codes were first put out for public comment, which drew much criticism. One of the most notable issues was that it called for companies not to benefit from BEE points through corporate social investments into charities that might have white beneficiaries.

Following the outcry the proposal was scrapped, but the business sector will be keenly looking out for the changes in the new BEE codes.

Brigitte Brun, chief operations officer of Durban-based BEE verification agency AQRate KZN, said the new BEE codes needed to be issued and then thoroughly examined and reviewed, before she could comment in detail.

“I think these new codes, linked with the amendments to the Broad-based BEE Act, will introduce a very different empowerment ethos. The devil will be in the detail, so we are waiting to see what it says,” she said, adding that, based on the information released at the summit, the elements of ownership, skills development and supplier and enterprise development would be priority requirements in the new empowerment laws.

Failure to comply would result in a reduction of one level on the BEE scorecard. There was expected to be a 12-month transitional period for the roll-out of the new requirements.

Wade van Rooyen, managing director of Grant Thornton Verification Services, said: “The draft codes which we’ve reviewed had provisions which were really onerous and they had the potential to seriously challenge companies if they had been passed into law in their previous forms. However, the summit highlighted that the previously harsh provisions have been diluted.”

He said this meant that the new BEE codes would be less onerous for businesses than originally anticipated.

Among the changes set to be implemented, small businesses and enterprises would be exempt from paying thousands of rand to acquire B-BBEE verification certificates.

“At the summit it was announced that the Exempt Micro Enterprise (EME) threshold increased from a maximum of R5 million to R10m turnover a year. This is good news because it gives the smaller enterprises a further competitive advantage,” said Van Rooyen.

“It was also announced that 100 percent black-owned EMEs will automatically receive a level 1 recognition and EMEs which are 51 percent black owned will automatically receive a level 2 recognition. This is an excellent incentive and we applaud the Department of Trade and Industry for making these significant amendments,” he said.

However, he said there was “cause for concern” in relation to concessions for Qualifying Small Enterprises (QSE). Van Rooyen said despite the QSE threshold being moved from a maximum of R35m to a much higher amount of R50m, there was still not enough clarity for this important segment of business.

Andrew Layman, chief executive of the Durban Chamber of Commerce and Industry, said: “We had quite a number of serious concerns about the originally proposed changes some time ago and will be very interested in the contents of the new codes.”