Strategic + Transformational + Transactional = BBBEE Excellence

Strategic + Transformational + Transactional = BBBEE Excellence

Your company needs to be B-BBEE compliant to operate competitively in today’s robust market. Your B-BBEE approach must be a best-of-breed model that incorporates the STRATEGIC (supports the business’ long-term core objectives i.e. sustainability) + TRANSFORMATIONAL (diversity and inclusion focused) + TRANSACTIONAL (focused on scorecard points in the short-term) into a workable plan with clear objectives, priority interventions, key milestones, performance indicators, etc. For help with shaping B-BBEE into your competitive advantage and brand edge, contact us today on 011 039 7578 or nsebati@murason.co.za

You are smart. You would not perform major surgery on yourself. You would not build your dream home without expert advice. So why attempt to optimize your B-BBEE compliance without professional support?

#B-BBEE #Murason #Transformation.

The R50 Million B-BBEE Question

The R50 Million B-BBEE Question

The R50 million B-BBEE question is: If an EME were to get a formal B-BBEE certificate, instead of a sworn affidavit, would it be acceptable?

The Amended B-BBEE Codes states that “An EME is only required to obtain a sworn affidavit…” and “a QSE is only required to obtain a sworn affidavit” if 51% or more black owned. Majority white owned QSE must be verified according to Government Gazette

It Is important to note that ALL EMEs are exempt from B-BBEE verification and implementation. Previously they were only exempt from implementation, but still had to get verified.

The intention is to save small businesses from the costs of getting a verified certificate. The DTI minister Rob Davies once mentioned that cost savings were up to R40 000.00.

The word “only” in the codes could be interpreted to imply that nothing more is necessary, i.e. a certificate. Some people see it referring to “solely”, i.e. no other method such as a verified certificate is acceptable.

In August 2016, the BEE Commission put out a practice guide stating that “an EME is merely required to issue a sworn affidavit”. “Merely” implies that nothing more is required, but a certificate is not absolutely wrong to supply. However, the same practice guide states that no BEE professional will be allowed to issue EME certificates. Read More

Understanding The Modified Flow Through Principle

Understanding The Modified Flow Through Principle

What is it?
Let’s start with the flow through principle. It says, for example, if a company (A) is 24% black owned and it owns 10% of another company (B), then Company B is 2.4% black owned. (24% times 10%.)  If Company A is 100% black owned and it owns 25% of Company B, then Company B is 25% black owned (100% times 25%). There is no controversy over the use of the flow through principle, but the modified flow through is different!

The codes state the following;
3.4    MODIFIED FLOW-THROUGH PRINCIPLE
3.4.1    A Measured Entity applying this Modified Flow-Through Principle cannot benefit from the Exclusion Principle.
3.4.2    The Modified Flow-Through Principle applies to B-BBEE owned or controlled company in the Ownership of the Measured Entity.
3.4.3    In calculating Exercisable Voting Rights under paragraph 2.1.1, and Economic Interest under paragraph 2.2.1 of the Ownership scorecard the following applies:
3.4.3.1   Where in the chain of Ownership, Black people have a flow-through level of participation of at least 51%, and then only once in the entire ownership structure of the Measured Entity, such Black participation may be treated as if it were 100% Black.
3.4.4      The Modified Flow-Through Principle may only be applied in the calculation of the indicators in paragraphs 2.1.1 and 2.2.1 of the Ownership scorecard. In all other instances, the Flow-Through Principle applies.

What the codes are saying is there is an extra benefit to a black owned (at least 51% black owned and controlled company) in having shares in your company. That benefit will manifest itself in the calculations of certain indicators on the ownership scorecard. Read More

B-BBEE Practice Guide 02 of 2016 With Regards To Certificates For Exempt Micro Enterprises and Qualifying Small Enterprises

B-BBEE Practice Guide 02 of 2016 With Regards To Certificates For Exempt Micro Enterprises and Qualifying Small Enterprises

This practice note was 1st issued by the B-BBEE Commission and is published here with their acknowledgement.

The Broad Based Black Economic Empowerment Commission (“B-BBEE Commission”) is an entity established by the Broad-Based Black Economic Empowerment Act 53 of 2003 as amended by Act 46 of 2013 (“the Act”), to oversee the implementation of the Act, which includes provision of explanatory notices, non-binding advisory opinions and clarification services to improve the understanding of the Act.

This Practice Guide is issued as a non-binding guide purely to assist with the interpretation to ensure consistency in the application of the Act. This Practice Guide does not constitute a legal document or a ruling of the B-BBEE Commission on the issue concerned. Further, although this Practice Guide is not binding on the B-BBEE Commission, it does set out the approach in terms of the B-BBEE Act and implementation thereof by the B-BBEE Commission on any matter relating to the issuance of the B-BBEE certificates to Exempted Micro Enterprises (EMEs) and Qualifying Small Enterprises (QSEs). Read More

Empowering Supplier VS Value-Adding Supplier

Empowering Supplier VS Value-Adding Supplier

Empowering Supplier VS Value-Adding Supplier

The Amended Codes of Good Practice, Gazette No.36928 introduces criteria to qualify as an Empowering Supplier and no longer includes the Value Adding status that was included in the previous Codes of Good Practice, Gazette No. 29617.

What exactly do these terms mean and what do they mean to your business?

Read More

Featured SMMEs – Enterprise Supplier and Development (ESD) Beneficiaries

With over 10 years’ experience in the B-BBEE and Empowerment Advisory industry my position is that although there are a lot of SMMEs that qualify for ESD contributions, good quality ESD beneficiaries with the requisite qualifications, skills, experience and strategic fit continue to be in short supply. I have therefore provided brief summaries of 08 ESD beneficiaries that I have interacted with and consider to be value adding ESD beneficiaries: Read More

BBBEE And The Board Of Directors

BBBEE And The Board Of Directors

This Practice Note was first published by the Institute of Directors in Southern Africa (IoDSA) in October 2010. It is published here with their acknowledgement. Copyright by the Institute of Directors in Southern Africa.

Broad-Based Black Economic Empowerment (B-BBEE)

Introduction

In South Africa, where social and economic imbalances existed for many decades, transformation is a constitutional, business and social imperative. It is critical for the sustainability of a healthy society and business environment.The empowerment and advancement of previously disadvantaged individuals and in particular, black women, youth, workers and people with disabilities (hereinafter collectively referred to as black people) should be based on the premise that they are equal partners in the corporate sphere and that their contribution is potentially valuable.

Integrating sustainability and social transformation in a strategic and coherent manner will give rise to greater opportunities, efficiencies, and benefits, for both the company and society.

The critical onus on the business sector is to uphold the law in a manner that goes beyond a mere “tickbox” approach to compliance, towards a commitment to the underlying objectives with an overall guideline of substance over form. Read More

What Is Supplier Diversity And Why Is It Important?

What Is Supplier Diversity And Why Is It Important?

Supplier Diversity is a business strategy that ensures a diverse supplier base in the procurement of goods and services for any business or organization. Supplier Diversity emphasizes the creation of a diverse supply chain that ensures the inclusion of diverse groups in the procurement plans for government, not-for-profits and private industry. Statistics show that companies who embrace diversity are more profitable than companies who don’t.

“The reason diversity works is that on almost every measure, greater racially, ethnically, and culturally diverse workplace teams function more effectively than more homogenous teams.  Members from diverse backgrounds, experiences, and perspectives avoid “groupthink,” whereas non-diverse teams get mired in it. …In short, the business case for diversity is overwhelming.” Read More

How The South African Government Is Planning To Uplift Entrepreneurship In 2015

How The South African Government Is Planning To Uplift Entrepreneurship In 2015

By Stephen Timm

The Department of Small Business Development in South Africa may have to cut some of its planned projects to support small businesses, after the National Treasury last month effectively slashed a third off its requested allocation from the fiscus. What can we expect to see in the coming year then?

Finance Minister Nhlanhla Nene revealed during his 2015 Budget Speech last month that the department would be allocated R3.5-billion between 2015/16 and 2017/18.

The department had wanted more. It asked for an allocation of R5.2-billion, when it presented its 2014-2019 strategic plan to Parliament’s small business development portfolio committee in October last year. Read More

BBBEE Fronting

BBBEE Fronting

The Broad-Based Black Economic Empowerment Act 53 of 2003 (2003 Act) together with the generic codes of good practice and the sector codes, provide the legislative framework for Broad-Based Black Economic Empowerment (BEE) in South Africa.

The Broad-Based Black Economic Empowerment Amendment Act, 46 of 2013 (the Amendment Act) which brings about significant changes to BEE, came into effect on 24 October 2014.

Read More

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