Broad-based black economic empowerment is no longer an annual compliance issue. To benefit fully from transformation it is now all about being strategic, having good administration systems in place, and ultimately understanding the impact that transformation will have on a business. Anton de Wet explains

The amended codes of good practice on broad-based black economic empowerment (B-BBEE) will become effective on 1 May 2015. This means that, after this date, all verifications performed on enterprises falling outside the scope of one of the nine sector-specific codes (sector codes) will be performed by both IRBA-approved registered auditors and SANAS-accredited verification agencies in terms of the already amended ‘generic’ codes.

Enterprises falling within the scope of one of the nine sector codes will be measured in terms of such an amended sector code. At present, some doubt exists whether all nine of the sector codes will be amended, issued for public comment and finally published in time. Also, should certain sector codes not be available by 1 May 2015, it is still uncertain as to under which codes such enterprises will then be measured until such time as the relevant sector code becomes available. It is expected that the DTI will provide written clarity on this in due course.

As the amended codes (both the generic and sector codes) will in their entirety be significantly more onerous than the ‘old’ codes, many enterprises have arranged to be verified in terms of the ‘old’ codes before 1 May 2015 in order to maintain their current B-BBEE status level for another 12 months. This will give them time to plan and implement enhanced initiatives in compliance with the amended codes.

The amended generic codes consist of five elements. Certain sector codes are expected to have more elements that comprise the areas within an enterprise that will be measured. Except for certain majority black-owned enterprises, all enterprises with an annual revenue exceeding R10 million will be measured on all five elements, namely equity ownership, management control, skills development, enterprise and supplier development, and socio-economic development. Although addressing all five elements is not compulsory, all five will be measured during verification.

Compliance will in most cases be dependent on a comprehensive B-BBEE strategy that addresses all five elements (the entire B-BBEE scorecard) in a sustainable manner.

Enterprises are advised to review their current transformation initiatives and consider either replacing or enhancing them to ensure compliance with the amended codes, or integrating them into a single holistic strategy managed by professionals with the necessary expertise and experience. B-BBEE is no longer an annual compliance exercise but should from now on form part of the overall business strategy managed by people who understand how to extract value from each and every initiative. This is what Middel & Partners and SchoemanLaw specialise in.

Middel & Partners is a dynamic and innovative medium-sized audit firm led by ten partners with a staff complement of more than 150. A network of national offices provides clients with value-added services focused on business improvement and growth within specialist sectors. Middel & Partners have become known for their high-quality B-BBEE consultation and verification offering.

SchoemanLaw, a Cape Town-based law firm, has an innovative and entrepreneurial mind-set that distinguishes it from other law firms. The firm applies its first-hand understanding of the challenges facing businesses when developing proven, practical solutions incorporating legal compliance, risk aversion and business sense.

Since the publication of the first draft amended codes in 2013, the partners of these two innovative firms have immersed themselves in finding a solution for their clients for when the amended codes eventually become effective. Their research has culminated in the development of a single, low-risk, cost-effective and legitimate solution they wish to offer to the national market in an effort to especially assist medium-sized white-owned companies in mitigating arguably one of the biggest current business risks.

In the next issue of Accountancy SA, more details will be given about the official launch of this comprehensive B-BBEE solution and why immediate implementation of the new codes is of vital importance.


Anton de Wet CA(SA) is B-BBEE partner at Middel & Partners