Black Economic Empowerment

Report
HEAD FOR SUCCESS
Business Studies Grade 12
TERM 1
Topic 1: Impact of recent
legislation on business –
response to demands for redress
and equity
BLACK ECONOMIC EMPOWERMENT AND BROAD
BASED BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
IMPORTANT CONCEPTS:
During the apartheid era little recognition was given to anything to do with human
rights, inclusivity or environmental issues.
Since 1994 many laws and policies have been put in place to address this.
Most businesses in South Africa are very willing to apply or adhere to these laws and
policies.
The implementation of the laws related to human rights, inclusivity and environmental
issues are monitored by the government.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
IMPORTANT CONCEPTS:
Human Rights:
The Constitution of South Africa guarantees basic rights to all people.
Human rights are things you, as a human being, are allowed to be, to do or to have.
Therefore every person is entitled to privacy, dignity and equality.
These rights also help us get along with each other and live in peace.
The Human Rights Commission ensures that human rights are not violated.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
IMPORTANT CONCEPTS:
Inclusivity:
Means that people are given equal opportunities regardless of race, gender, age,
cultures and physical disabilities.
This requires businesses to ensure non-discrimination and diversity in the workplace.
There are different legislation which addresses different forms of discrimination e.g.
SDA and EEA.
The Human Rights Commission supervises and handles complaints.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
IMPORTANT CONCEPTS:
Environmental issues:
Relate to issues such as damage to the natural environment, exhaustion of natural
resources and the efficient use of resources.
With this ecological balance can be maintained and pollution can be addressed.
The Department of Environmental Affairs and Tourism passed legislation in order to
reduce pollution.
The Green Scorpions, for example, were established to protect South Africa’s parks,
water reserves, fisheries, etc.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
•In the apartheid era race was used to restrict and severely control access to the
economy by black people.
•The consequences were restricted wealth creation and imposed underdevelopment of
black communities.
•Including a lack of access to secondary and tertiary education.
NATURE of BEE and BBBEE:
•Increasing the extent to which black women own and manage existing and new
enterprises.
•Promoting economic transformation in order to enable meaningful participation of
black people in the economy.
•Achieving substantial change in the racial composition of ownership and management
structures and in the skilled occupations of existing and new enterprises.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
NATURE of BEE and BBBEE:
•Promoting access to finance for black economic empowerment.
•Empowering rural and local communities by enabling access to economic activities,
land, infrastructure, ownership and skills.
•Increasing the extent to which black woman have access to economic activities,
infrastructure and skills training.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
NATURE of BEE and BBBEE:
•The first set of Codes of Good Business Practice which was introduced in 2003, was
known as Black Economic Empowerment (BEE).
•The criticism was that this was too narrow because it only measured equity in
ownership and management representation.
•Very little previously disadvantaged people benefit from this Act.
•As a result of this, the BBBEE Act was established to spread wealth across a broad
spectrum of previously disadvantaged people.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
PURPOSE of BEE and BBBEE:
Black Economic Empowerment:
•Promote new opportunities for, and to increase the levels of participation of,
previously disadvantaged individuals and companies in the ownership, management
and control of economic activities.
•BEE therefore looks at the empowerment of black people in the following areas only:
• ownership
• management
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
PURPOSE of BEE and BBBEE:
Broad-Base Black Economic Empowerment:
•BBBEE as promoted by the South African government aims for all businesses to:
• Acknowledge the human rights of all people (as defined in the Constitution and includes issues of equality,
respect and dignity);
• Include all people (the poor, those previously discriminated against, all races, genders, ages and those with
disabilities); and
• Protect the health of people and to protect the environment.
•Through the BBBEE the government strives to involve all businesses (profit and non-profit) and
government enterprises to assist in the economic empowerment of all black people, including:
• Women
• Workers
• Youth
• People with disabilities
• And people living in rural areas
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
PURPOSE of BEE and BBBEE:
Broad-Base Black Economic Empowerment:
•The goal is to achieve that through socio-economic strategies such as:
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
PURPOSE of BEE and BBBEE:
Broad-Base Black Economic Empowerment:
•BBBEE is not about affirmative action.
•It is a growth strategy that targets inequality within the South African economy by
encouraging more black management, promoting employment equity, encouraging
skills training in businesses, nurturing black entrepreneurship and building black
SMME’s by means of affirmative procurement.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
PURPOSE of BEE and BBBEE:
The BEE and BBBEE Acts provide a framework that has been and is used for the
development of The Codes of Good Practice, which can be applied by all businesses
across all sectors of the economy.
To ensure that jobs and wealth are spread across a broader base.
The codes require that all entities operating in the South African economy (hence the
term ‘broad-based’) make a contribution towards the objectives of BBBEE.
The strategy to promote BBBEE is to assign point values on a BBBEE scorecard.
AF6bupNY
Basic
HTM
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
PURPOSE of BEE and BBBEE:
Previously, BBBEE comprised of seven pillars:
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
PURPOSE of BEE and BBBEE:
New BEE rating codes were issued at the end of 2013. The
seven pillars of BBBEE are now merged into five elements:
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
PURPOSE of BEE and BBBEE:
The BEE scorecard assesses a company’s BEE status.
A Level 8 rating is poor and the best rating is Level 1.
Any scoring lower than Level 8, is non-compliant.
Ownership, skills development and enterprise and supplier development have been identified
as three priority elements.
The BBBEE Act of 2003 makes the Codes of Good Practice binding on all government
organisations and public companies, and the government is required to apply them when
making economic decisions on:




Procurement
Licensing and concession
Public-private partnerships
The sale of state-owned assets or businesses.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
Existing features / Pillars of 2003
Direct development
Point
Amended features / Pillars of 2013
(30%) Direct development
Point
(40%)
Ownership
20
Ownership
25
Management / Control
10
Management / Control (Includes Employee Equity)
15
Indirect development
(70%) Indirect development
Employee equity
15
Skills Development
15
Preferential Procurement
20
Enterprise development
Social development initiatives (Social
Responsibility CSI)
TOTAL:
(60%)
Skills Development
15
15
Preferential Procurement (Enterprise and supplier
development)
40
5
Social Development
5
100
TOTAL:
100
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
PURPOSE of BEE and BBBEE:
The evaluation of businesses to measure the achieving in the aforementioned pillars is
done by SANAS (South African National Accreditation System) as well as other
agencies approved by SANAS.
The rating (scorecard) is valid for one year from issuance. Businesses applying for a
grading certificate pay for it according to the size of the business.
In 2012 the costs for such a certificate was R750 for small businesses, an average
business (R5 million - R35 million turnover) R6 000, and a large business (more than
R35 million turnover) R10 000.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
Advantages and Disadvantages:
ADVANTAGES:
DISADVANTAGES:
Opens opportunities to people who were
previously disadvantaged.
A few people are enriched at the expense
of the masses.
Provides access to capital to create new
business enterprises and employment
opportunities.
The Act does not necessarily benefit the
people who need it most.
Encourages investors to invest in
enterprises owned or managed by black
people.
Processes can lead to corruption and
nepotism.
Preference is given to BEE suppliers – this
gives BEE compliant suppliers a
competitive advantage.
Some businesses are disadvantaged by
the BEE rating.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
Advantages and Disadvantages:
ADVANTAGES:
DISADVANTAGES:
Encourage businesses to address demands
for redress and equity directly.
It increases businesses’ expenses to obtain
a grading certificate.
Provide guidelines for businesses to
transform.
Investment and ownership issues may lead
to hostility between shareholders and
management.
Businesses contribute directly to economic
transformation.
Provide for the development of human
resources through training opportunities.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
Advantages and Disadvantages:
ADVANTAGES:
Businesses are committed to social,
educational and economic development in
the community in which the business
operates.
Employees’ potential and skills develop.
A good BBBEE rating can be used as a
marketing strategy.
DISADVANTAGES:
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
Advantages and Disadvantages:
ADVANTAGES:
By being BBBEE rated the business will
have a good overview of how it is
performing with regard to the national
requirements of the country and where to
plan / change in future for greater
sustainability.
A good BBBEE rating would give the
business leverage to negotiate better
discounts and deals from suppliers.
A good BBBEE rating will improve the
image of the business and indicate that it
is in line with the democratic SA and its
governance.
DISADVANTAGES:
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
OBLIGATIONS OF THE BUSINESS AND RIGHTS OF EMPLOYEES REGARDING THE BBBEE ACT :
Human Rights:
•The Bill of Rights contained in the country’s Constitution provides that employees are treated
fairly.
•The charter stipulates among other things that people have certain rights, such as, among
others:
•
•
•
•
•
•
the right to equal treatment: everyone is equal before the law and have equal rights on protection and benefits.
respect: everyone deserves respect but he / she must be worthy to the respect.
dignity: everyone has the right to humane treatment and that this dignity is respected and to be protected.
economic rights: the right to earn a fair salary and an equal chance of being allocated a job.
social rights: the right to proper service.
cultural rights: the right to practice their own culture without discrimination.
•The above rights are applicable in terms of BBBEE.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
OBLIGATIONS OF THE BUSINESS AND RIGHTS OF EMPLOYEES REGARDING THE BBBEE ACT :
Inclusion (Employment Equity):
•Inclusion means that everyone has an equal opportunity.
•No discrimination against any person on the basis of poverty, inequality in the past, race,
gender, religion, language, age or any other factor.
•In South Africa, with a diversity of populations and racial and cultural groups, this diversity
must be reflected in the workplace.
•The workforce of businesses needs to include the demographic composition of the population.
•This diversity in the workplace must be managed with harmony between the workforce and
management to the benefit of business and society.
•Businesses must appoint suitable and qualified employees regardless of race, gender, culture,
etc.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
OBLIGATIONS OF THE BUSINESS AND RIGHTS OF EMPLOYEES REGARDING THE BBBEE ACT :
Environmental Issues:
•The BBBEE Act also deals with the relationship between business and the environment.
•This includes the working conditions of workers so that workers are not exposed to harm their
health adversely.
•Adequate lighting and ventilation are essential in the workplace.
•The environment must be preserved for future generations, which means that natural resources
should not be exploited and pollution must be combated by businesses.
•Other legislation also makes provision for this.
•Conservation and ecological sustainability of natural resources need attention.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
HOW THE FIVE PILLARS OF THE BBBEE ACT COULD AFFECT BUSINESSES:
As businesses receive points on the BBBEE scorecard when representatives of SANAS or their
accredited agencies visit the business for auditing purposes, businesses must ensure that they
behave correctly according to requirements of the five pillars.
Direct development
Ownership
•Businesses need to include black people as co-owners as shareholders in the company,
partners, etc.
•Exempted Micro Enterprises with 50 %+ black people in management positions is promoted to
Level 3 of the BBBEE scorecard.
•By applying the Act correctly, more black people can get the opportunity to become
entrepreneurs / business owners.
•Sometimes hard to find black business partners, since they do not have sufficient capital to buy
shares or money to invest in the business.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
HOW THE FIVE PILLARS OF THE BBBEE ACT COULD AFFECT BUSINESSES:
Direct development
Management and employee equity
•Appointment of blacks in management positions at senior executive level and middle management.
•Businesses should ensure that there is black female representation in management positions.
•When companies sell more than 25 % of their shares to black people and they serve on the board
of directors, the company can acquire points on the scorecard for both management and
ownership.
•Because of a scarcity of skilled black managers (directors) it is difficult for companies to comply
with the provisions of the Act.
•This aspect (pillar) of the Act causes that qualified white people immigrate to other countries where
there is no discrimination against them.
•Businesses must have an Employment Equity Plan, which means additional expense and it is timeconsuming to set it up and keep it updated.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
HOW THE FIVE PILLARS OF THE BBBEE ACT COULD AFFECT BUSINESSES:
Direct development
Management and employee equity
•Conflict between employees themselves and between employees and
management can arise.
•The workforce of businesses must include the demographic
composition of the population.
•This diversity in the workplace must be managed with harmony
between the workforce to the benefit of business and society.
•Businesses must appoint suitable and qualified employees regardless
of race, gender, culture, etc.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
HOW THE FIVE PILLARS OF THE BBBEE ACT COULD AFFECT BUSINESSES:
Indirect development
Skills Development
•Businesses should include black workers in skills development initiatives.
•Must provide for learnerships programs for black employees.
•Businesses need to put in extra effort for employees to be trained if no learnership
training is available.
•Businesses must pay 1 % of their salary expense (if more than R500 000 per annum)
as levies to the Skills Development Fund.
•Businesses benefit from an emboldened number of skilled / trained workers.
•Productivity is lost when mentors must make time to facilitate learnership programs.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
HOW THE FIVE PILLARS OF THE BBBEE ACT COULD AFFECT BUSINESSES:
Indirect development
Business and supplier development
•Businesses are encouraged to support black entrepreneurs.
•This can be done through loans, investments, donations, consulting services, advice,
mentoring, etc.
•Smaller businesses will find it difficult to exercise this pillar.
•Black entrepreneurs become too dependent on the support of other businesses and
struggles to come up with their own initiatives without the support of other businesses.
•Services that are outsourced should be delivered by providers that meet BBBEE
requiremetns. This could mean that these suppliers are unreliable, but to earn points
on the score sheet they should be used.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
HOW THE FIVE PILLARS OF THE BBBEE ACT COULD AFFECT BUSINESSES:
Indirect development
Management and employee equity
•Businesses need to support suppliers who meet diversity in ownership
and management, to earn points on the scorecard.
•If business’ suppliers are previously disadvantaged entrepreneurs,
they will gain more points on the scorecard.
•The suppliers of goods and services making use of BBBEE compliance
suppliers will receive priority in the awarding of government contracts
and tenders.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
HOW THE FIVE PILLARS OF THE BBBEE ACT COULD AFFECT BUSINESSES:
Indirect development
Social Development
•The extent to which the business pilot programs for the upliftment of the community will determine how
many points on their BBBEE scorecard they will earn.
•This program places pressure on the finances of the business and it is very time consuming to employees
which will harm productivity.
•Auditors of SANAS look at the following areas that the business target with their uplifting programmes;
environmental awareness, environmental conversation, education, waste management, housing, poverty,
unemployment, etc.
•In addition to the points earned on the scorecard, the business community can also boycott businesses that
do nothing for social development.
•Businesses find it difficult to meet all the different legal requirements for social development.
•Money that businesses spend on social development programs, reduce the business’s financial efficiency
and make it less competitive.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
HOW THE FIVE PILLARS OF THE BBBEE ACT COULD AFFECT BUSINESSES:
Indirect development
Social Development
•Small and medium sized businesses find it difficult to meet this pillar of BBBEE requirements.
•Discrimination may occur when decisions for specific uplifting programs should be taken as
businesses have limited funds at their disposal. (What is the most important issue that needs
addressing by the business?).
•The time and manpower the business has to spent on these programs may shift the attention from
the main purposes of the business (profitability) to uplifting.
•Money spent by businesses on these upliftment programs come from the profits of the business.
It could rather be used for the reduction of prices that could benefit larger part of the
community.
•It takes time and extra expenses to register these programmes and to run it sustainable. In
addition, detailed reports on these programs also must be kept.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
IMPLEMENTATION OF BBBEE:
BBBEE is implemented in a number of ways, for example:
•Favouring BEE’s in government procurement.
•Reserving shares for black people who comply with EE.
•Appointing previously disadvantaged individuals in managerial positions.
•Buying supplies from companies that are owned by black people.
•Appointing increased numbers of black people in executive and senior management
positions.
•Lending money to black-owned small and medium enterprises.
•Investment in black-owned and black-empowered enterprises.
•Skills development of black people.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
IMPLEMENTATION OF BBBEE:
BBBEE is implemented in a number of ways, for example:
•Joint ventures with black-owned and black-empowered
enterprises that result in substantive skills transfers.
•Investing money in new enterprises that are owned by black
people.
•Increasing the number of black people who have ownership
and control of existing and new enterprises.
•Increased ownership of land and other productive assets,
improved access to infrastructure, increased acquisition of skills
and increases participation in productive economic activities.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
IMPLICATIONS FOR BUSINESSES:
General Implications:
•Many business enterprises sell shares with the aim of empowering black people.
•Business enterprises are appointing black women in managerial positions.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
Implications for small and large businesses:
Small businesses:
Large businesses:
Businesses with an annual turnover of less than R10 million,
is exempt from BEE.
Managerial positions are sometimes reserved for people
who were previously disadvantaged – this may impact
negatively on the morale of other deserving employees.
As most small businesses have limited time, capacity and
staff, additional administrative and financial burdens are
difficult to cope with.
Time and money is spent on finding BEE compliant
suppliers.
The cost of such administrative and policy burdens not only Business operations are sometimes disrupted when
weighs heavily on small businesses, it also increases the cost employees are away on skills training.
of doing business.
This translates into higher prices for consumers and may
Generic companies require increased budgets and
also constrain the competitiveness of smaller businesses that manpower to maintain or improve ratings.
find cost increases more onerous than larger businesses.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
Implications for small and large businesses:
Small businesses:
This has a severe impact on job creation, as small
businesses are considered to be able to create jobs faster
than big businesses.
Large businesses:
Businesses are working hard to improve their BEE-rating,
BEE-certificates are valid for twelve months – this means
that businesses have to go through the BEE verification
process every year.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
COMPLIANCE WITH THE PROVISIONS IN THE ACT AND PENALTIES IF THE BUSINESS FAILS TO COMPLY:
•It is difficult to determine whether all businesses comply with the provisions of the BEE /
BBBEE legislation, as the Codes of Good Practice was only accepted in February 2007
by the Parliament.
•Some businesses circumvent the law by submitting fictitious numbers with respect to the
different racial groups, gender and disabled people.
•There is, however, an improvement in the number of previously disadvantaged people
and women in management positions and as business owners.
•Auditors from SANAS and their accredited agencies visiting businesses to report on their
progress with the legal provisions.
•The better businesses meet the requirements of the five pillars, the higher their scores on
the BBBEE scorecard will be, and they will receive preference in the awarding of tenders
and government contracts.
•Businesses that do not meet the requirements will not get government contracts and it is
actually currently their ‘penalty’ for failing to meet the terms.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
COMPLIANCE WITH THE PROVISIONS IN THE ACT AND PENALTIES IF THE BUSINESS FAILS TO
COMPLY:
•A person is guilty of an offence is he / she knowingly misrepresents or
attempts to misrepresent the BBBEE-status of an enterprise, or if he / she
provides false information to a verification professional or organ of state.
•Misrepresentation (fronting) of a company’s BEE status may result in
imprisonment of Directors or a fine amounting to 10 % of the company’s
annual turnover.
•It is clear that the Department of Trade and Industry (DTI) are committed to
achieving transformation through the use of these aggressive penalties.
•Fronting may take a number of forms and incorrect interpretation of the
Act could mean a company is inadvertently and unintentionally fronting.
BLACK ECONOMIC EMPOWERMENT AND BROAD BASED
BLACK ECONOMIC EMPOWERMENT ACT
(NR 53 OF 2003)
COMPLIANCE WITH THE PROVISIONS IN THE ACT AND PENALTIES IF THE BUSINESS
FAILS TO COMPLY:
•The Act applies to all businesses with an annual turnover
exceeding R10 million:
Exempt Micro Enterprises (EME’s)
• Businesses with an annual turnover of less than R10 million are
exempt from BEE.
Qualifying Small Enterprises (QSE’s)
• Businesses with an annual turnover of R10 million – R50 million.
• Qualifying Small Enterprises (QSE’s) must comply with ownership plus
one other priority element.
Generic Businesses
• Businesses with an annual turnover exceeding R50 million.
• Generic businesses must comply with all three priority elements.

similar documents