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BEE MATTERS: Compliance should not wait until next year

May 6 '16 | By La Afrique Media | Views: 150 | Comments: 0

Picture: THINKSTOCKPicture: THINKSTOCK


AS WE approach the end of the year, business owners generally want to put projects on hold and close or slow down. The general mood is that whatever is still outstanding can wait for the new year and few are prepared to pick themselves up mentally for anything substantial now.

However, shifting black economic empowerment (BEE) to next year’s to-do list could be to a business’s detriment.

Most business owners I deal with are still uninformed about the new BEE codes when they should be starting to implement measures to achieve the more stringent goals.

In April businesses were advised to obtain a BEE certificate before the new BEE codes came into full swing, which many have done. The certificates expire in April next year, giving the false impression that the new codes need to be looked at again only next year.

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AN ESTIMATED 90% of businesses in SA that performed a verification at financial year-ends up to May, and those whose financial year ends after May 1, will have to be rated in terms of the new BEE codes next year. Few still have a last bite at the old BEE codes.

A BEE certificate is issued based on initiatives implemented in a financial year. Expenditure initiatives relate to procurement, donations, socioeconomic development, enterprise development, supplier development and skills development.

Nonexpenditure items such as ownership, management and control (including employment equity) are rated as at date of measurement and not within a measured period.

It is worrying to see how many business owners are uninformed and complacent about their BEE affairs, especially those who operate enterprises that are BEE-sensitive and may lose contracts or be overlooked for future work due to a lack of compliance.

Those businesses whose financial year ends at the end of this month or end of February next year will be well advised to immediately determine when their next BEE rating is due, for which financial period, and what needs to be spent within the current financial period.

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IT SHOULD be done before businesses close or reopen in January next year as many enterprises might have missed their financial year-ends or are too close to the financial year-end for anything meaningful to be achieved. One of the areas to be considered carefully in this regard is skills development.

Qualifying small enterprises need to spend 3% and generic entities (with an annual turnover of more than R50m) need to spend 6% of their annual payroll on accredited training and learnership programmes for black people.

Generic entities cannot achieve enough points on accredited training alone, but have to embark on learnership programmes as well.

Learnership programmes are normally one-year, semitechnical skills programmes that include practical and theoretical training.

An added requirement for generic entities is that training expenditure must be in relation to race and gender demographics.

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CONSIDERING that skills development is a priority, while failure to achieve the subminimum of 40% would lead to an overall discount of a level, and as it takes time to register learnerships with a sector education training authority, these issues cannot be left to the last minute.

Successful entrepreneurs are good with risk management and ensuring vehicles, buildings and stock are well maintained and insured. They take diligent care of the products they buy in the process of producing their own products or services.

However, when it comes to the nontangible requirements such as BEE, business owners tend to prioritise it as low on their lists as possible. With the implementation of the new BEE codes, companies big and small face a tremendous risk and could, on average, drop three levels on the new scorecard and be discounted further for not achieving the subminimum for priority elements.

Business owners would be well advised to check what is required from a BEE point of view before closing down as they might run out of time if it is left until next year.

• Gerber is an attorney and the founder and director of Serr Synergy, specialising in BEE structuring and complianc
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source: BDLive.co.za

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