The Black Economic Empowerment Codes of Good Practice (“BEE Codes”) published in 2013, introduced three priority elements, each with a sub-minimum requirement to be attained by measured entities. If not attained in any one of the priority elements, the measured entity’s BEE contribution is reduced with one level (“Discounting Penalty”). The priority elements are Ownership; Skills Development; and Enterprise and Supplier Development.
The BEE Codes prescribe a number of statutory guidelines for verification agencies to determine whether the sub-minimum target for the priority elements have been attained. The sub-minimum target for priority elements is 40%. However, the methodology to determine whether the sub-minimum target have been attained differs for each priority element. The prescribed methodologies for each priority element can be described, in brief terms, as follows:
Ownership - The subminimum is 40% of the ‘Net Value’ (described in the Ownership score card as 8 points of the available 25 points), constituting at least 3.2 points (i.e. 40% of 8). The Net Value is calculated as prescribed by the BEE Codes. The bottom line is that the measured entity must have at least 10.04% black ownership and if there are any acquisition debts / unpaid shares linked to black ownership, it must be settled in accordance with the ‘Time Based Graduation Factor’ as per the BEE Codes.
Skills Development - The subminimum is 40% of the total weighting score card points available, namely 8 out of 20 points.
Enterprise and Supplier Development - The subminimum is 40% for each of the three sub- categories in the score card, namely Preferential Procurement constituting 10 out of 25 points; Supplier Development constituting 4 out of 10 points; and Enterprise Development constituting 2 out of 5 points.