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Time is running out …

30 Mar 2015

San-Reece RoelfWith the Amended Codes of Good Practice coming into effect on 1 May, time is running out for those not making preparations to comply with this new set of strict rules.

Through the Amended Codes, the Department of Trade and Industry is sending a clear message to everyone in the Black Economic Empowerment field. The Codes will inter alia introduce priority elements, the discounting principle and sub-minimum requirements. If this is not enough, the elements have been reduced to 5, which require a higher score to maintain certain levels. Until now 65 points would have secured a Level 4 contributor status. From 1 May the benchmark will be increased to 80 points.

Although minor changes to the Codes are expected, BEE professionals and specialists believe that implementation of the Amended Codes will not be postponed again. They are, however, concerned that the Qualifying Small Enterprise Scorecard, released in October last year for public comment, has not yet been gazetted.

Enterprises that fall within the turnover threshold of R10 million to R50 million, will face the same strict rules as their large counterparts. Although the rules for qualifying small enterprises are somewhat less strict than those for large entities, the aim and focus of the Amended Codes are clear.

Businesses all over the country have scheduled verifications to renew their BEE certificates before the implementation date of 1 May 2015, buying them time to implement strategies that will help them comply with the Amended Codes.

There is much confusion amongst the entities that fall within the scope of the Sector Codes gazetted under Section 9 of the Broad-based Black Economic Empowerment Act. The Amended Codes suggest that these Sector Codes should also be aligned by 1 May 2015, making the rules similar to that of the Amended Codes.

Aligning the Sector Codes with the Amended Codes in such a short period seems like an impossible task and has given rise to speculations that additional time will be granted to allow the Sector Codes to be aligned or, failing that, that the Codes will be repealed. However, recent (unofficial) communication with one of the representatives of the BEE Unit at the Department of Trade and Industry has confirmed that the Sector Codes are expected to be aligned by 1 May 2015.

Those enterprises whose verifications were done recently and who have started working on their strategies to comply with the Amended Codes, have an advantage. Whether complying with the current Codes of Good Practice or any Sector Code, latecomers should get the verifications done as soon as possible.

Contact San-reece Roelf, Senior Manager: B-BBEE at Exceed Tax and Advisory Services (Pty) Ltd, for more information and assistance with BEE-related services. Tel 021 882 8140 and san-reece@exceed.co.za

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