Post on 11-Aug-2015
EVOLUTION OF B-BBEEFROM OCGP - RCGOP
F2014/2015 & F2015/2016
The Evolution Of BEE
BEE Act53 of2003
COGP – 9 Feb.2007
BEE Amendment Act of 2013
RCGOP 1 May 2015RCGOP 5 May 2015Gazette Notices
Objective Of BBBEE
B-BBEE strives to ensure that equitableeconomic opportunities are created andoffered to black South Africans in asustainable manner.
Major Amendments To The BBBEE Bill 2013
•Oversight and Advocacy•Investigate complaints
relating to BBBEE•Power To Subpoena
BEECommission
•Misrepresenting and/orproviding false BBBEEinformation
•Failure to report/investigatemisrepresentations
•Engaging in fronting practice
CriminalOffences • Introduction of a
statutory right forgovernment and publicentities to cancel anycontract awarded dueto false BBBEEinformation
ContractTermination
Implications of Amended BBBEE Act of 2013
Offences
GovernmentProcurement
BBBEE Report
1. Individuals: Fineand/or 10 years minimumprison sentence
2. Companies: up to 10%of annual turnover/Banfrom tendering forgovernment business
3. Oblige Governmentand Public entities to takecodes into account inprocurement policies
4. Listed entities will beobliged to provide theBBBEE commission with acompliance report
Classification Of Entities RCGOP
EME
QSE
LargeEnterprise
Exempted Micro- Enterprise(Turnover ≤ R10m)
Turnover > R50m
Qualifying SmallEnterprises(Turnover >R10m≤R50m)
** The Generic Scorecard
Enterprise & SupplierDevelopment
Skills Development
Ownership
ManagementControl
Socio-Economic
Development
Measures the extent to whichentities buy goods and servicesfrom Empowering suppliers andthe extent to which enterprisecarry out enterprise and supplierdevelopment
Measures the extent towhich employers carryout initiatives designedto develop thecompetencies of Blackpeople internally andexternally
Measures the extent to which entities carry out initiatives that contribute towardssocio-economic Development or sector specific initiatives that promote access to theeconomy for Black people
Measures the extent towhich employers carryout initiatives designedto develop thecompetencies of Blackpeople
Measures theeffective control ofentities by Blackpeople
Amended Generic Scorecard
BEE ELEMENTS OLD WEIGHTINGS NEW WEIGHTINGS
OWNERSHIP 20 POINTS **25 POINTS
MANAGEMENT CONTROL
10 POINTS(15) PLUS (4) BONUSPOINTS (19)15 POINTS
SKILLS DEVELOPMENT 15 POINTS **20 PLUS 5 BONUSPOINTS
ENTERPRISE AND SUPPLIERDEVELOPMENT
20 POINTS **40 PLUS FOURBONUS POINTS
15 POINTS
SOCIO ECONOMICDEVELOPMENT
5 POINTS 5 POINTS
BBBEE Levels Of Compliance
BEE Level COGP RCGOP
Level 1 ≥100 points ≥100 points
Level 2 ≥85 but < 100 ≥95 but < 100
Level 3 ≥75 but < 85 ≥90 but < 95
Level 4 ≥65 but < 75 ≥80 but < 90
Level 5 ≥55 but < 65 ≥75 but < 80
Level 6 ≥45 but < 55 ≥70 but < 75
Level 7 ≥40 but < 45 ≥55 but < 70
Level 8 ≥30 but < 40 ≥40 but < 55
Non-Compliant <30 points <40 points
Generics must meet40% subminimumtarget for each ofthese elements,failure to do so willresult in thediscounting of themeasured entity byone level per element
Priority Elements
Enterprise &Supplier
Development
Skills Development
Ownership
WEIGHTING = 90 POINTS out of Possible 114
DTI May 2015 Gazette Notices.
Sector CodesFurther extension is provided to sector codes to align and have their sector codes gazetted undersection 9(1) of the B-BBEE Act by end October 2015. Failure to align by the sector code will result inthe old sector code being repealed.
Empowering Supplier StatusAll current valid BEE certificates will be valid for the next 12 months (1 May 2015 to 30 April 2016)and will be deemed as being Empowering Suppliers. All Exempt Micro Enterprises certificatesissued without Empowering Supplier status will be automatically deemed to be EmpoweringSupplier for the next 12 months.
Ownership SchemesThe DTI also included a paragraph which was not submitted for public commentregarding Broad-Based Ownership Schemes (BBOS) and Employee Ownership Schemes(EOS), indicating that such schemes can only be scored under paragraph 2.2.3 of theownership scorecard (effectively limiting the contribution to ownership points of suchschemes to 3 points out of 25 with a target of 3%).
DTI May 2015 Gazette Notices.
Ownership SchemesThe implication of the amended ownership element of the codes, is significant and givesrise to concern.
It will have several consequences as follows:
5.1.1. Almost all large companies included BBOS, EE schemes and individuals as part oftheir ownership deals; they will in future lose recognition for new transactions for valuecreated in these schemes but they they will not have to restructure their current deals or“top them up” as it only applies to deals done after 1 May 2015.
5.1.2. Employees will no longer be included in future ownership deals for BEE purposes.
5.1.3. Several investment companies, including ANC (Chancellor House) will not qualify asa Black Owned investor as it is structured as a BBOS in future deals.
5.1.4. NGO’s who rely on BBOS as a source of income will in future no longer be able toparticipate and it will limit their available funding.
Empowering Supplier Concept.
Job Creation
Skills Transfer
Beneficiation
Cost Sales(Procurement)
85% Salariespaid to South
Africans(Services)
Empowering Supplier Concept.
All 25 points for procurement require that the suppliers are EmpoweringSuppliers.
For B2B Procurement the B-BBEE Status level of the business will therefore meannothing unless it is also an Empowering Supplier.
Definition: Empowering Supplier
"B-BBEE compliant entity, which is a good citizen South African entity, comply with all regulatory requirements of thecountry and should meet at least three if it is a large enterprise or one if it is a QSE of the following criteria:
(a) At least 25% of cost of sales excluding labour cost and depreciation must be procured from local producers orlocal suppliers in SA, for service industry labour cost are included but capped at 15%.
(b) Job creation – 50% of jobs created are for Black People provided that the number of black employees since theimmediate prior verified B-BBEE Measurement is maintained.
(c) At least 25% transformation of raw material/beneficiation which include local manufacturing, production and/orassembly, and/or packaging.
(d) Skills transfer – at least spend 12 days per annum of productivity deployed in assisting black EMEs and QSEsbeneficiaries to increase their operation or financial capacity.”
All EME's automatically qualify as an Empowering Suppliers.
Economically Active Population Profile
- Management control and Skills Development to align withNational/Provincial EAP Profile
Thank you for your time.A Merck Presentation