New BEE codes out for comment

Trade and Industry Minister Rob Davies has announced the revised Codes of Good Practice, which are aimed at strengthening broad-based black economic empowerment (BEE).

He said BEE was not just a social and political imperative.

“We need to make sure that in the country’s economy, control, ownership and leadership are reflective of the demographics of society in the same way the political space does,” Davies said.

“That’s why we are saying BEE remains an economic imperative. We cannot expect to grow and develop as a country if the leadership of the economy is still in the hands of only a small minority of society.”

The revised codes will be open for public comment from tomorrow for 60 days.

Davies said the revised codes sought to amend the secondary legislation arising from Broad- based BEE Act to make sure people were truly and broadly empowered in South Africa and genuine broad-based BEE took place.

He said the amendment of the act and the revision of the codes would go a long way in plugging the gaps that businesses had taken advantage of, such as fronting, “tick box” compliance and the exorbitant amounts of money that small enterprises have to pay for consultants to prove they were BEE compliant.

Davies said: “The current generic scorecard contains seven elements and these have been reduced to five in order to align the elements more closely with the trajectory of economic growth and development in the country, with a total of 105 points assigned for the five elements.”

These are ownership, skills development, and enterprise and supplier development.

Safiyya Patel, a partner and BEE expert at corporate law firm Webber Wentzel, said if the amendments were processed in their current form, companies would be required to achieve a minimum compliance of 40 percent of the targets for the priority elements.

She said: “If they do not achieve the minimum compliance for any of the priority elements, their overall contributor status will be reduced by two levels if they are large entities or by one level if they are qualifying small enterprises.”