Thousands of companies will be making empowerment contributions before the end of February 2016 if this is their financial year-end. This is because contributions will only qualify if they fall within the measurement year which is the financial year of the company.
What ‘emergency’ measures can still be taken under each scorecard element before 28 February 2016 that will qualify in terms of the amended codes?
Black Equity Ownership will only be measured at date of verification, so there is possibly still some time to implement a transaction that makes commercial sense. Management Control will also only be measured at date of verification. The three remaining elements will be verified based on what was done during the 2016 financial year.
Training under the Skills Development element can still be booked and paid for before 28 February. Ensure that the training programme itself is properly accredited and NQF aligned to avoid the spend being capped at 15% of actual spend.
For Enterprise and Supplier Development, qualifying contributions are listed in the codes. Ensure that the beneficiary actually qualifies and that it can be proven that the contribution reached the end-beneficiary. Beware of some so-called ‘third-party facilitators’ that claim that they will do ED ‘on your behalf’ but that are then unable to later provide evidence that the funds flowed to a qualifying beneficiary.
For Socio-Economic Development it is always a good idea to simply donate the target amount to a NPO or PBO that can prove that it benefits at least 75% black people.
Both the requirements of the Amended Codes and the onus placed on verification professionals are now much stricter. Quick decisions can often go wrong and lead to money wasted. I have often seen this to be the case with last-minute contributions to beneficiaries chosen at the last minute. Either the amount contributed where insufficient or the contribution itself or beneficiary did not qualify in terms of the very specific requirements in the codes. It is worth obtaining some advice here.
Author: Anton de Wet CA(SA) is Managing Director of Net Value Holdings