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Has the bell-tolled for broad-based BEE?
BEE June 2018

“My business is reliant on a good BEE certificate and I try and keep my ear to
the ground about changes that may affect my business. Recently there seems
to have been quite an active debate about the proposed new amendments
to the BEE Codes. I must say, many of them seem quite positive. So, what is all
the fuss about?”

On 29 March and 15 June 2018 respectively, the Minister of Trade and Industry
issued proposed amendments to the General Principles, the Definitions, the
Enterprise and Supplier Development Statements and Skills Development
Statements of the Codes of Good Practice on Broad Based Black Economic
Empowerment of 2013 (“Proposed Amendments”) and requested public
comment thereon. The proposed amendments have been met with a mixed
response and have resulted in the public debate you have alluded to.

Some of the most important (and possibly controversial) suggested
amendments are summarised below:
Proposed amendments to the General Principles Statement

51% black owned and 100% black owned Exempt Micro Enterprises and
Qualifying Small Enterprises that seek to benefit from the enhanced recognition
principles through which it can be recognised as automatic Level 2 or Level 1
contributors to BEE, can no longer utilise the modified flow through principle to
do so.
Generic Enterprises (enterprises with an annual total revenue of R50 million
or more) that are 100% black owned (measured using only the flow-through
principle) and large enterprises that are at least 51% black owned (measured
using only the flow-through principle) can gain enhanced recognition to Level 1
and Level 2 contributors respectively. Such large enterprises will only be required
to obtain a BEE verification certificate which verifies their ownership.
Enhanced BEE recognition can be gained where participating entities could
move up one or even two BEE levels on the generic scorecard, if they achieve
targets in respect of the so-called YES Initiative, which is aimed at creating jobs
for black youth (ages 18 to 35). In order for a measured entity to be eligible
for enhanced BEE recognition through the YES Initiative it must meet certain
qualification criteria, such as, in the case of a large enterprise, achieving the
sub-minimum for each priority element or an average of 50% across all three
priority elements and ensuring that it maintains or improves its BEE status level. A
further criterion which required an enterprise to also achieve full points under a
specific sub-element of the skills development element has now been dropped
by the Department of Trade and Industry (“DTI”) due to resistance and criticism

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