BBBEE Commission FAQs
Source: BBBEE Commission (www.bbbeecommission.co.za) – Frequently Asked Questions
What is BEE?
Black Economic Empowerment (BEE) is a program launched by the South African government to redress the inequalities of Apartheid by giving previously disadvantaged groups (black Africans, Coloureds, Indians and Chinese (declared to be Black in June 2008) who are SA citizens) economic opportunities previously not available to them. It includes measures such as Employment Equity, skills development, ownership, management, socio-economic development and preferential procurement.
Black economic empowerment has had a profound effect on the South African economy, with BEE transactions representing R200-billion in the past decade, according to ratings agency Moody’s (May 2008).
BEE is a key driver of corporate activity, such as mergers and acquisitions, and Moody’s forecasts that this trend will continue, with 52% of South African privately held businesses experiencing a change in ownership in the next 10 years.
In 2007, 153 transactions were carried out for a value of R96-billion. The value of BEE deals in 2006 was R56-billion.
What can Premier Verification B-BBEE Verifications be used for?
- Increased procurement opportunities by entities wishing to enhance their own broad-based BEE status through preferential procurement
- Government licensing eligibility or licensing renewal process
- Financing decisions, where empowerment is a key criterion for sourcing the fund, e.g. BEE Funds
- Independent, reliable proof of contributions made towards economic empowerment
What are the main benefits to your business being BEE compliant?
- Retention of market share (retaining your largest or most important clients)
- Having the advantage over non-compliant companies when applying for Tenders and Contracts
- Reputation of being socially responsible
- Larger companies and governments tend to invest and fund smaller BEE compliant companies
- Competitive advantage over other businesses that may have a weaker contribution level
Why do we need your Financial Statements?
- The financial statements are used to calculate the various targets for Skills Development, Preferential Procurement, Enterprise Development and Socio Economic Development.
- Under Preferential Procurement, figures from the financial statements are used to calculate the “TMPS” (Total Measured Procurement Spend).
- NOTE: Your Skills Spend, Procurement Spend, Donations to Enterprise Development and Socio Economic Development must be for the same twelve month period as the financial statements being used for Verification purposes.
How recent must the financial statements be?
We need financial statements which are no older than 12 months at the time of the verification.
Our financial statements have not yet been signed off. What now?
- We can use Management Accounts which have been signed off by the Financial Director and the other Directors. The Management Accounts must be for the same twelve month period as your usual Financial Year. Also note that due to the nature of Management Accounts, additional documentation is required as we need to do a “mini – audit” of the management accounts to ensure that the correct figures have been presented to us.
- As a result, Premier Verification reserves the right to charge an additional 20% fee if Management Accounts are used.