bee in the know

Too little too late? Clarity from dti makes on new codes

Jenni Lawrence Jenni Lawrence

The dti released a long-overdue clarification notice regarding the status of the amended BEE codes late on May 5, four days after the new regulations had taken effect.

This comes after Grant Thornton had made numerous pleas for explanations on the various issues causing confusion for businesses and the verification industry.

However, Jenni Lawrence, managing director of Verification Services at Grant Thornton, laments that there is still no sign of the much-needed verification manual..

The notice included the surprise, but welcome, announcement that any company being rated on a financial period up to 30 April 2015 could still be scored under the ‘old codes’.

“This is in contrast to the widely-held belief that certificates issued under the old codes had to be issued by 30 April 2015, regardless of financial period,” says Lawrence.

“The announcement also extends the life of the sector scorecards. Their alignment timeframe was extended to 30 October 2015, with the possibility of them being repealed should they not have been aligned by then.”

Other issues clarified in the announcement include:

  • Any certificate issued under the old codes should be treated as empowering suppliers under the new scorecard.
  • ‘Black participants in broad-based ownership schemes (BBOS) and employee share ownership (ESOP) programmes holding rights of ownership in a measured entity must only score points under paragraph 2.2.3 under the Ownership scorecard.’

 

“More clarification is required on the latter, but effectively it appears to limit black ownership points through these entities,” says Lawrence. “They would only contribute up to three bonus points on the scorecard whereas previously they could earn up to 12 points. This seems to negate much of the advantage of including one’s employees in ownership schemes.”

How does this affect you?

  • Lawrence explains that if your business is a Qualifying Small Enterprise (QSE), defined as having a turnover between R10-R50 million, or falls into one of the specific sectors, for example, construction, tourism or AgriBEE, you did not have a confirmed scorecard between 1 and 5 May this year. It is now confirmed that you can use the current relevant scorecard for measurement covering financial periods ending up to 30 April 2015
  • If you were unable to have a certificate issued under the old codes, you still have time to take advantage of the more lenient scorecard
  • If you were able to have a certificate issued and you used a financial period ending in 2014, you could possibly have yet another certificate issued under the old codes, giving you more time to plan under the new codes, assuming there is no major overlap of previously-used verified financial periods
  • In an accompanying media statement issued with the gazetted notice, Minister Rob Davies confirmed that he had approved Phase II of the Codes for implementation and that they would be gazetted for availability this week

 

Phase II includes the following Statements:

  • Code 000 Statement 003 – Development and Gazette of Sector Charters. This statement is “geared towards reporting and monitoring and providing oversight on sectorial performance by the Line Ministry.”
  • Code 000 Statement 004 – Scorecard for Specialised Enterprises
  • Code 100 Statement 102 – Recognition in the Sale of Assets
  • Code 100 Statement 103 – The Recognition of Equity Equivalent for Multinationals
  • Code 600 Statement 600 – Measurement of Qualifying Small Enterprises

 “While Grant Thornton is extremely relieved at this sensible ‘extension’ and the promise of the gazetting of the QSE scorecard this week, we are still calling for the release of the new verification manual, which will detail the methodology for verification under the new codes,” concludes Lawrence.