Company Announcement - “Government fails to recognise and respond to the outcry of business that the Amended Codes, as gazetted in 2013, will be hugely detrimental and damaging to doing business in South Africa,” says, Tony Balshaw, Managing Partner, Mazars East London. After months of ‘deafening’ silence and speculation the Minister of Trade and Industry has issued, by way of a belated gazetted notice of clarification (see attached Gazette #38764) dated 5 May 2015, set out how the B-BBEE Codes OF Good Practice can be applied. The notice states that all B-BBEE verifications conducted using the financial year ending before 30 April 2015 can be verified using the old Codes of Good Practice.

It goes on to state that all B-BBEE verifications conducted using the financial year ending after 1 May 2015 must be verified using the Amended Codes of Good Practice, with the exception of the Sector Codes. The transition period for the alignment of the Sector Codes has been extended to 31 October 2015. If Sector Codes are not aligned by 1 November 2015 then “a consideration shall be made for them to be repealed”.

For the first year of the Amended Codes of Good Practice, all valid B-BBEE certificates issued under the old Codes, as well as the relevant Sector Codes, remain valid and should be treated as empowering suppliers. Exempted Micro Enterprises and Start-Ups are automatically recognised as Empowering Suppliers.

Balshaw says that, a further devastating aspect to this notice is the amendment which states that Black participants in Broad-Based Ownership Schemes and Employee Share Ownership Programmes (ESOP) holding rights of Ownership in a Measured Entity must only score the three (3) points under paragraph 2.2.3 under the Ownership scorecard. Watch this space as those that have done ESOP and broad-based ownership schemes expecting the full 25 points only receive 3 points; not in the least the unions.

“It is sad that the government has failed to recognise and respond to the outcry of business that the Amended Codes, as gazetted in 2013, will be hugely detrimental and damaging to doing business in South Africa and, one assumes, not considered the unintended consequences; which include reduced contributions to socio-economic development (CSI) as businesses walk away from complying voluntarily with the draconian Amended Codes. The above notice will simply delay the inevitable effects by a further twelve months. It is noteworthy that the largess of business drove the voluntary compliance by businesses with the original Codes, almost five years before the Codes were applied in the government’s procurement policies and practice,” says Balshaw.