Dear Valued Client

It’s that time of the year again! A time, we feel, has snuck up on us rather quickly.

Published by AQRate KZN

Most companies are currently having their final verifications performed on the Original Codes of Good Practice before the more stringent Amended Codes come into effect on the 1st May 2015. One can understand this when one sees that 65 points on the old system achieved a Level 4 (B-BBEE) status but would now only achieve a Level 7 status. Let’s not forget the impact of the discounting principle and not meeting any of these sub-minimums would mean one more level down –

As communicated to the sectoral councils, the Revised Codes will no longer become effective on 11 October 2014 but on 30 April 2015. This means that businesses will be able to apply the existing Codes up until 30 April 2015. Thereafter measurement will be only in terms of the Revised Codes. The extension has been granted in an effort to allow the sectoral councils sufficient time to align their sector codes with the revised codes.

For those of you that have not yet familiarised yourselves with the content of these codes we suggest that you use this extension to do so urgently as they represent a significant departure from the set of rules that you are used to.

What are the 10 most important things you need to know about the new codes and how they will affect you?

1. The introduction of Priority Elements and the Discounting Principle.
2. There are 3 Priority elements for Large Enterprises and 2 for Medium Size Enterprises.
3. The Threshold Levels have changed and it now requires 80 points to achieve a Level 4 B-BBEE status.
4. Management Control incorporates the Employment Equity element and is now measured as per percentage of Economically Active sub-race group and gender (Black further divided into African, Indian and Coloured).
5. Skills Development target increased to 6% of leviable amount and now includes both employees and non-employees.
6. Procurement targets have increased and the EME and QSE categories have been further divided.
7. Suppliers have to be deemed Empowering Suppliers for their B-BBEE Status to be deemed valid for calculation purposes.
8. The Codes now require that 2% of Net Profit after Tax (NPAT) is spent on Supplier development and 1% on Enterprise Development.
9. Socio-Economic Development is now calculated annually and not cumulatively and you will need to monitor the NPAT to ensure full points are scored.
10. A Black owned and controlled business is now one that has at least 51% black voting rights and economic interest compared to 50.1% in the previous Codes.