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BBBEE Verification - Why And How?

BBBEE Verification Why And How

Introduction
The Broad-Based Black Economic Empowerment Amendment Act No. 53 of 2003, as amended, (hereinafter the “BBBEE Act”) and the Codes of Good Conduct aim to accelerate the participation of black people in the economy by encouraging change in the following key areas of business: ownership, skills development and enterprise development.

When implemented correctly, Broad Based Black Economic Empowerment has the potential to boost economic growth, that will not only benefit businesses, but assist to create a more skilled workforce in South Africa.

But for most businesses the question remains: “How – and why – do I make it work for my business?” BBBEE Scorecard Verification can be quite a lengthy process and assessing the challenges in complying with all the elements can be daunting.

Why do you need to be verified?
Whether your business is a Start-Up or a listed Entity, you need to meet specific BBBEE criteria set out in the legislation to be seen as BBBEE compliant and to obtain a specific level of compliance.

It is crucial for most businesses in South Africa to be BBBEE compliant, especially when working with Government Bodies and Public-Sector Organisations. More often than not, you will be asked to submit your BBBEE Certificate when applying for a tender or even just to become a Supplier. Businesses want to work with other businesses that have a good BBBEE score as this, in return, gives them a better score procurement wise.

What does verification look at?
The BBBEE Generic Scorecard, as well as any Industry or Sector Codes that are based on it, measure BBBEE compliance on five elements namely: ownership, management and control, skills development, enterprise development and socio- economic development. Points and targets are allocated to each of these elements and your business’ score is calculated based on how close it is to reaching each target.

Complying with BBBEE requirements can be a complicated matter. Most Companies don’t understand what each element entails and how to apply same in their business. Furthermore, Business Owners need to look at their specific Sector Codes, which differs from Industry to Industry.

The Codes of Good Conduct can be very vague, and the correct interpretation thereof is key.

Good verification tips
Verification Agencies (approved by the South Africa National Accreditation System) are appointed to audit and verify the BBBEE evidence of your business in order to issue a BBBEE Certificate which is proof of your Company’s BBBEE credentials.

Firstly, it is your responsibility to provide your BBBEE Consultants with relevant and up-to-date data which will, in turn, be collated by the Verification Agent to prepare your score. Accurate document management is of the utmost importance when it comes to BBBEE verification. Without evidence or substantiating documentation, there can be no verification.

Secondly, you need to know which Codes are applicable to your business’ operations. As already mentioned, every Industry has Sector- specific Codes that apply to that Industries’ scorecard. It is imperative that your business be verified based on the correct scorecard.

Lastly, once verified, it remains your responsibility to ensure your BBBEE Certificate is valid. Make a note of when your Certificate is due to expire, because if your Certificate is not updated on time, you will lose out on current and potential business opportunities.

Conclusion
BBBEE compliance and verification might seem like a massive mountain in front of you, but with the right BBBEE advice and planning, the correct document management and the application of the legislation, your business will scale the mountain in no time!

At SchoemanLaw Inc, we pride ourselves on our expert BBBEE advice and we are committed to ensuring your verification process is as smooth as possible and you reach the compliance level you need.

© Arinda Truter - Schoemanlaw Inc. - 2018

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