How to become BEE certified
South African law states that companies have to be BEE certified or compliant.
BEE or Broad-Based Black Employment Equity (B-BBEE) means that your company has to have a certain number of Black, Coloured, Indian or Chinese employees, stakeholders or senior members.
This may sound complicated, but the process of becoming BEE certified can be simplified into steps, as outlined below.
You can also contact reputable companies to help you along, such as Proud Afrique Human Capital.
These companies help you along the process but the steps outlined below will help to prepare you for what lies ahead.
Select your company’s annual turnover
This is the first and most important step, as it will help to gauge what level of BEE your company will need to achieve. The different levels are as follows:
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Exempted micro enterprises (EMEs): These are enterprises which have an annual turnover of less than R10 million. This is a new amendment to the law, as previously EMEs were businesses that earned less than R300 000 per annum with less than five employees.
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Qualifying small enterprises (QSEs): These are businesses or enterprises with an annual turnover of R10 to R50 million who have more than five employees.
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Medium to large enterprises (M&Ls): These businesses have a turnover of more than R50 million per annum and usually over five employees.
Once you have calculated your company’s annual turnover, you can move onto the next step of the process. Be sure that you are completely honest with this step, as dishonesty can lead to serious legal repercussions.
Match your turnover to the relevant scorecard
The BEE scorecard needs to match your turnover, which means that you will have to comply with at least all five elements of the BEE Scorecard. EMEs are exempt, however, and will receive a level associated with its percentage of black ownership.
If you are a QSE or an M&L company, you will have to comply with all five levels of the revised BEE Scorecard, which include ownership, management control, skills development, enterprise and supplier development and socio-economic development. The scorecard is a points-based system with maximums of 100 points for M&Ls and 175 points for QSEs.
Follow the pillars of the BEE scorecard
The five pillars of a BEE scorecard are as follows.
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Ownership (direct empowerment)
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Management Control (indirect empowerment)
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Skills development
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Enterprise development
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Socio-Economic development
In order to achieve maximum points in any of these pillars, you should aim to reach the set out targets. Ownership should be more than 25%, management control should be at least 19%, 2% of the company’s budget should be spent on skills development and contributions should be made to a beneficiary in order to meet some of the pillar requirements.
Select pillars that need work in your company
Each of the pillars carries a certain weight, according to its contribution to a BEE or B-BBEE certificate. Ownership carries a weight of 25%, management is 19%, skills development is 20%, enterprise development carries the most weight at 40% and socio-economic development comes in at 5%.
If you are trying to decide what area needs the most work in your company to become BEE compliant, you should note that ownership, skills development and enterprise development are considered to be priority pillars. A minimum of 40% is needed to achieve Level 1 compliance.
Why should I become BEE compliant?
Becoming BEE compliant has many benefits for any company, some of which include the following.
You can deal with the government easily
If your company becomes 100% BEE compliant, you will be able to interact with the government for issues such as tenders, purchase a state-owned asset and enter a public-private partnership.
Larger businesses are incentivised to do business with you
Once you have become BEE compliant, you are able to engage in business with other private companies. Because of your BEE status, you are more likely to receive preferential procurement and larger businesses will choose to deal with you as it improves their own score.
You will not miss out on opportunities
Many companies now choose to deal only with BEE compliant businesses, which means that you will not miss out on these business opportunities. You may also gain business from non-compliant companies.
Becoming BEE compliant weighs heavily in your favour when performing business-to-business transactions or when dealing with the government. It is wise to start the process of becoming compliant as soon as possible. Following the steps outlined above will help you on the way to a positive rating.