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DTI Minister gazettes significant changes to BEE Codes

Johannesburg, April 3 2018: Last week, the Department of Trade & Industry gazetted today (for 60 day public commentary), a significant changes to the Amended B-BBEE Codes.  It is a reflection of what has been going on in the political landscape in the past 24 months and a drive to push towards radical transformation in the economy.  According NPI CEO, Israel Noko, “Like it or hate it, it is our view that transformation need to be done properly otherwise the wrath of the BEE Commissioner will proceed with criminal sanctions to those offenders”.

Some of proposed changes are as follows:

  1. Automatic enhanced Level 1 or Level 2 status for QSEs with 100% or 51% Black ownership must be calculated using flow-through and cannot benefit from the modified flow-through provisions.
  2. The Enhanced recognition provisions are extended to Generic entities in that a Generic entity with 100% Black ownership is recognised as a BEE level 1 via a BEE Verification Certificate verifying the ownership element.  Likewise a 51% Black owned entity is recognised as a BEE Level 2. It is important to note that there are expections to this and companies structuring any BEE ownership with need to be conservative with their approach (ie “once empowered always empowered” will not guarantee enhanced recognition).
  3. The rules governing Unincorporated Joint Ventures are clearly outlined and are project specific only.
  4. BEE levels can be enhanced by the use of the Youth Employment Service (Y.E.S.) by QSE and Generic entities who are compliant with their Priority Elements requirement.  EMEs can also benefit from this provision.
  5. 50% of Informal Skills Development expenditure for Y.E.S. employees can be included under Cat F & G in the Skills Development scorecard.

In the spirit of supporting the “Fees must fall” campaign, the following changes around Skills Development have been introduced:

  1. Points and targets for skills development expenditure have been reduced to 6 and 3.5% respectively. Probably a relieve for companies struggling with this type of expenditure.
  2. A new indicator is included measuring expenditure on bursaries for black students at higher education institutions has been added with 4 points and a 2.5% target.
  3. The 15% limit on Ancillary costs such as travel, catering and the cost of a skills development facilitator does not apply to expenditure under the new indicator for bursaries for black students.
  4. Stipends of black students under the new indicator can be counted alongside Category B, C & D salaries towards skills development expenditure targets.
  5. The targets for Learnerships for previously employed and previously unemployed black people are now clearly separated and the points reduced to 3 each.
  6. The limit for recognition of Informal training is increased from 15% to 25%.

 

About NPI Governance Consulting

NPI Governance Consulting (ISO9001 accredited) has provided B-BBEE advisory services and solutions to Private and Public Sector organisations, handling small and large-scale projects across a number of sectors. Our differentiator is in the level of Project Management provided to support Management in successful implementation of projects and programmes, and this is supported by a multidisciplinary delivery team, extensive reporting and accessibility to our on-site team.  For further informa
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Email: info@npiconsulting.co.za

URL: www.npiconsulting.co.za

Tel: (+27) 011 259 4018

 

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