The new BBBEE codes

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A2Traditionally your BBBEE status was measured predominantly on your final Status Level as determined across all element of the Scorecard. Your level would be anything from 1 to 8 and carry BBBEE procurement recognition of 135% to 10% accordingly.

Ownership has always been an important element with the targets set at 25.1% black ownership. The “new” BBBEE codes established the Ownership element as a priority element, which further strengthen its importance. This means that should certain minimum points in Ownership not be achieved the final Status Level will be discounted by 1 level, for failure to comply. As a result ownership remains a critical element in BBBEE planning.

Further to this emphasis is placed on ownership of black women, and the codes make it impossible to achieve full ownership points without the required black women ownership. It is therefore advantageous that all ownership transactions take cognisance of this requirement.

Once you have maximised ownership points in terms of the Ownership element, and scored on the balance of the elements in the scorecard, subject to all the other conditions in the Codes, the result is a Status Level. Your status level will determine the BBBEE procurement recognition your customers will receive, however the extent of points that your recognition achieves, will be based on the black ownership structure of your company. If you have only achieved 25.1% black ownership the points you can contribute to, in your customer’s procurement element of their scorecard, are limited to the first sub category. Should you have achieved 51% black ownership your Status Level qualifies for recognition in an additional bigger sub category of procurement, and then again if you have 30% black women ownership you can get recognition in yet another sub category.

The result is customers are looking for suppliers that can contribute the most procurement points, and therefore the need for substantially higher black ownership, and in particular black women ownership, is important. Ownership transactions therefore need to consider beyond the Ownership element and consider the impact of ownership in the Procurement element.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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