Until recently South African enterprises have been subjected to a myriad of Black Economic Empowerment (BEE) compliance requirements, particularly daunting because those requirements are being set at the discretion of their customers and business associates.
The long awaited Broad Based Black Economic Empowerment Codes ('the BBBEE Codes') were published on 9 February 2007. They are intended to bring clarity and uniformity to compliance targets and the measurement methodology.
BBBEE rests on seven 'pillars' of participation which can be measured within an enterprise. These pillars are:
- ownership (equity) in the entity by black persons;
- management control of entities by black persons;
- employment equity targets;
- skills development and the transfer of skills to black employees;
- preferential procurement from black owned entities;
- enterprise development of black enterprises; and
- socio - economic development investments.
This measurement across seven aspects of an enterprise distinguishes BBBEE (i.e. the focus being on "broad based") from BEE which had hitherto focussed on the narrow concept of the extent of black 'ownership' in an enterprise.
Entities which seek to do business with the government, or are dependent on governmental licenses or concessions for the conduct of their business must demonstrate their level of BBBEE compliance as calculated in terms of the scorecard contained in the BBBEE Codes. Most other enterprises will need to comply because their customers will want to improve their own BBBEE points by procuring goods and services from empowered enterprises.
As transactional attorneys, Webber Wentzel has advised on the largest and most complex BBBEE transactions done in South Africa to date. In addition to advice on the structuring of transactions to derive maximum BBBEE benefit, we also provide regulatory and compliance advice on issues such as:
- the interaction between the BBBEE Codes and various charters which govern enterprises within specific sectors; and
- the interpretation of the BBBEE Codes and scorecard, the calculation of an enterprise's 'points' and the structuring of an enterprise to improve its BBBEE profile.
For a PDF copy of the BEE Codes of Good Practice from the South African Department of Trade and Industry, please click here.
For more information please see the section on Broad-based Black Economic Empowerment in Investing in South Africa.
