In an effort to allay fears by business that newly reworked black economic-empowerment (BEE) legislation would stifle growth and introduce further bureaucratic convolution, the Department of Trade and Industry (DTI) has assured the private sector that the amended Broad-Based BEE (BBBEE) Codes of Good Practice seek to provide opportunity to the previously economically marginalised rather than to penalise traditionally white-owned and -controlled industries.

Noting that the BBBEE legislative framework had been revised to drive supplier development, localisation, job creation and skills development, DTI BEE unit acting chief director Liso Steto told a recent gathering of business owners, BEE verification agencies and the media that the amended codes were “more focused and constructive”, while strengthening the consequences for noncompliance and deficient reporting.

The BBBEE Act, as amended by the BBBEE Amendment Act, came into effect in October last year, ushering in significant changes in the areas of compliance, monitoring, enforcement and implementation, and was followed by the introduction of the BBBEE Codes of Good Practice in May.

“The DTI will do its best to provide clarity to facilitate the process of adherence to the revised codes, which have been sculpted through inputs from business, labour and civil society.

“They are a reflection of what we’ve been told is required to make a shift [in terms of empowerment and transformation]. There are, however, certain things that can be misunderstood, which is the purpose of our ongoing engagement with the private sector,” he said.

Outlining the key changes contained within the amended codes, Steto noted that the new codes would allow greater alignment with the BBBEE Act and would reduce the seven compliance categories to five, merging employment equity with management control, and enterprise development with preferential procurement, while retaining ownership, skills development and socio- economic development.

Emphasis had also shifted from ownership to include the priority elements of enterprise, supplier and skills development. Of the 109 available points on the scorecard, 25 were for ownership, 20 for skills development and 40 for enterprise and supplier development.

Measured entities were required to meet 40% of each of the priority elements or have their overall BBBEE recognition level discounted one level down.

The thresholds for exempted microenterprises (EMEs) had, meanwhile, been increased from yearly revenue of R5-million to R10-million, while the threshold for qualifying small enterprises (QSEs) had been lifted to a yearly turnover of between R10-million and R50-million.

Large entities would be considered those earning upwards of R50-million a year, he added.

EMEs and QSEs that were 50% black-owned automatically qualified for Level 2 status, while those that were 100% black-owned were considered Level 1 contributors.

“The codes also enhance the recognition of black-owned EMEs and QSEs . . . and all companies, except for EMEs, will have to comply with all five of the compliance elements.

“In this way, we’ve sought to relieve the pressure on smaller, family-owned businesses,” he commented.

The amended legislation also contained a new addition – the so-called “trump clause” – which was a provision under the interpretation clause that stated that the BBBEE Act trumped any law in force prior to commencement of the Act if conflict arose between the two in relation to any aspect that was dealt with within the ambit of the BBBEE Act.

“This could pertain to [conflicting] provisions in the National Treasury, the Department of Energy, the Department of Transport, the Department of Public Enterprises and the Department of Mineral Resources.

We want to align our approach so that there is no confusion about what we expect from industry,” he said, noting that this provision would come into effect in October 2016, following a 12-month transition phase.

The amended legislation would further result in the formation of a BEE Commission, which would complement the functions of the DTI’s BEE unit and report to the department’s accounting office.

Its mandate would be to oversee, supervise and promote adherence to the BBBEE Act; receive and investigate complaints relating to BBBEE; investigate any matter relating to BBBEE; promote advocacy and educational programmes relating to BBBEE legislation; maintain a registry of major BBBEE transactions; and receive and analyse prescribed reports concerning compliance.