BBBEE requirements on business:
Does size really matter?
With Broad-Based Black Economic Empowerment (BBBEE) legislation often dictating the business landscape in the country, many companies have to ensure that their BBBEE scorecard is on par while simultaneously having to successfully navigated the turbulent economic conditions of the country.
It is important to keep in mind when it comes to BBBEE that not all businesses are created equal. What we mean by that is not all companies face the same requirements for accreditation. The requirements are dependent upon the size of your business.
How BBBEE legislation differs per size of your company:
- Exempt Micro Enterprises (EMEs) – produce an annual turnover of R10 million or less. This type of business will receive a level 4 BBBEEE status. In order to achieve this, a Commissioner of Oaths sworn affidavit needs to be produced upon turnover declaration. In order to move up a status, percentage of black ownership is taken into consideration: A 51% black owned will upgrade you to level 2 and 100% black owned will upgrade you to level 1 status.
- Qualifying Small Enterprises (QSEs) – produce an annual turnover of between R10 million and R50 million. While similar to EMEs in terms of black owned percentage and levels, QSEs need to prove compliance with at least five categories on the BBBEE scorecard. From this, their BBBEEE level is calculated. However, should you have more than 51% black ownership then full verification is not required – an affidavit should be sufficient. Should you fall short of the 51% black-owned threshold, then a full verification will be required. This verification includes the following five elements:
- Management Control
- Skills Development
- Enterprise and Supplier Development
- Socio-economic Development
- Generic Enterprises (GENs) – produce an annual turnover of over R50 million. The requirements that these companies face is a lot more stringent, and in order to acquire BBBEE accreditation a full verification is a must.
While many businesses struggle to fulfil BBBEE legislation, it is imperative that they do their best in order to gain an advantage in today’s business environment.