By Saul Symanowitz: Divisional Director, BEE 123 by Pastel

 

Saul Symanowitz

Introduction

It’s been around for more than 10 years, so there is no excuse to not be compliant with the regulations of Broad-Based Black Economic Empowerment, or BEE for short. BEE compliance is not compulsory by law, but it is recommended for all companies because it has become a real factor in winning and retaining business in South Africa.

Notwithstanding the above, BEE is an area where many misconceptions and negative attitudes still prevail. This is a pity, because, in my experience, once businesses understand how BEE actually works, they realise that BEE is actually far simpler and less onerous to implement than they had envisaged, especially for SMEs.

How BEE Works

So how does BEE actually work?

Not everyone knows that different sized businesses are treated differently for BEE.

  1. Exempted Micro Enterprises, or EMEs, are businesses that turnover less than R5million per annum. EMEs are free from the requirements of BEE. They are not measured by the BEE scorecard and are automatically considered as fully BEE compliant, achieving a level three contributor status if they are more than 50% owned by black people, and a level four if they are less than 50% black owned.
  2. Qualifying Small Enterprises, or QSEs, are those businesses with an annual turnover of between R5 million and R35 million. QSES are only measured against four of the seven BEE elements, with each counting 25 points.
  3. Generic Enterprises are businesses that turnover more than R35 million per annum. Generic Enterprises are measured in terms of all 7 BEE elements on the Scorecard, with differing weighting points for each element.

Herewith is a summary table of the above:

Element

Weighting

Generic(use all 7/7) QSE(use any 4/7) EME(N/A)
Ownership 20 points 25 points
  • Less than 50% black owned-

Level 4 BEE Status

 

  • More than 50% black owned-

Level 3 BEE Status

Management control 10 points 25 points
Employment equity 15 points 25 points
Skills development 15 points 25 points
Preferential procurement 20 points 25 points
Enterprise development 15 points 25 points
Socio economic development 5 points 25 points