Melissa Maritz

Since South Africa became a democratic republic in 1994, our economy and our law underwent transformation in various aspects such as human rights and equality.The South African government has, over the course of the past 20 years, attempted to implement certain legislative frameworks to constitute a democratic SA by giving individuals an equal opportunity to economic privileges, whilst encouraging change in areas of business-like ownership, management and control, employment equity, skills development, supplier and enterprise development.

The most popular framework, being the promotion of black economic empowerment (BEE), was formally defined in the 2001 Commission Report as follows:

“It is an integrated and coherent socio-economic process. It is located within the context of the country’s national transformation programme, namely the RDP. It is aimed at redressing the imbalances of the past by seeking to substantially and equitably transfer and confer the ownership, management and control of South Africa’s financial and economic resources to the majority of its citizens. It seeks to ensure broader and meaningful participation in the economy by black people to achieve sustainable development and prosperity.”

Accompanying the implementation of BEE is The Broad-Based Black Economic Empowerment (“B-BBEE”) Act No. 53, 2003[1] that contains Codes of Good Practice that can be awarded to BEE compliant businesses.

But what does this mean for businesses and companies all over SA?

BEE compliance is determined according to the number of points a business scores on the so called generic scorecard. The more points it scores, the higher its level of compliance.

It is also important to keep the size of the business in mind when determining the levels of B-BBEE compliance. All organs of state, public entities[2] and any private businesses that undertakes business with a public entity must formally implement the Codes of Good Practice.

Here is a breakdown of the different Codes and what each code contains:[3]

Code What it applies to
Code 000 Outlines the general principles of BEE,
Code 100 Measures the level of black ownership of a business.
Code 200 Measures the level of black management and control of a business.
Code 300 Outlines general principles for measuring employment equity in the workplace.
Code 400 Measures the extent to which employers develop the skills and competencies of black people
Code 500 Measures the level of goods and services that a business buys from BEE compliant suppliers.
Code 600 Measures a business’s contribution to enterprise development.
Code 700 Measures the extent to which a business promotes access to the economy for black people and contributes to socioeconomic development.
Code 800 Contains the general principles for measuring qualifying small enterprises (QSEs) in all aspects of the scorecard

Together, the measurement principles in Codes 100 to 700 make up the generic BEE scorecard, which is used to measure the total contribution that a business makes towards BEE.

Being BEE compliant is a choice each business has the comfort of making. Although there are no direct financial penalties non-BEE compliance companies face, is it evident that procurement managers and buyers will favour those businesses who are on some level more BEE compliant than others, thus increasing the financial prospects of these businesses.

As a law firm, we are proud to celebrate our new status as Level 1 BBEEE contributor and we hope to serve a whole new sphere of likeminded businesses that also believes in transformation the same way that we do. Should you require any additional information on BBEEE legislation and implementation, do not hesitate to give us a call.

  • [1] Board – Based Black Economic Empowerment Act – Codes of good practice pg 56-66
  • [2] Date visited: 19 January 2109
  • [3] Board – Based Black Economic Empowerment Act – Codes of good practice pg 56-66

This article is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice.