Who is the B-BBEE Commission?
We are a regulatory body established as an entity within the administration of the Department of Trade and Industry (“the dti”) by the Broad-Based Black Economic Empowerment Act 53 of 2003, as amended by Act 46 of 2013 (“the B-BBEE Act”), to oversee the implementation of the B-BBEE Act and investigate violation.
Jurisdiction of the B-BBEE Commission
We operate within the dti with jurisdiction throughout the Republic, and be impartial and perform its functions without fear, favour or prejudice, across all provinces.
B-BBEE Clarifications
In terms of section 13F (1) (a) of the B-BBEE Act, we are mandated to oversee, supervise and promote adherence with the B-BBEE Act in the interest of the public. In so doing, we must increase knowledge on the nature and dynamics and promote guidance to the public on the interpretation of the B-BBEE Act and Codes of Good Practice, and clarifications form part of our advisory services.
Nature of clarification provided
We have a mandate to provide clarification on all aspects of the B-BBEE, which includes the generic codes of good practice and the various sector codes. These are some of the issues that have been raised with us.
Socio-Economic Development
No, such would not qualify because it is not aligned to the objectives of Socio-Economic Development (SED). SED consist of monetary or non-monetary contributions, with the specific objective of promoting access to the economy for black people. SED is not the same as Corporate Social Investment or fringe benefits to the employee by the employer. The Benefit Factor matrix provides guidance as to what qualifies as an SED initiative. This is measured on an annual basis, meaning that the measured entity will contribute 1% NPAT annually towards SED initiative.
For a measured entity to claim points for SED, 1% NPAT must be contributed towards income generating activities to assist black people in rural and underdeveloped communities to access means to the economy. Further, beneficiaries of SED must be 75% black people.
SED is more than just donations, if excepted, then it means we will accept a donation for feeding schemes, SPCA, shoes etc. SED needs to lead to an incoming generating activity and assist black people to gains access to economic means.
In a case where a measured entity did not generate profit for that particular year, the Codes have provided for the use of industry norms applying the Indicative Profit Margin formula to determine the actual contribution.
The Net Profit After Tax (NPAT) or average target applies unless the company does not make a profit last year or on average over the last five years must be used.
The net profit margin is less than a quarter of the norm in the industry.
If the Turnover is to be used, the target will be set at 1% x Indicative Profit Margin (NPAT/Turnover) x Turnover. Indicative profit margin is the profit margin in the last year where the company’s profit margin is at least one quarter of the industry norm.