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Amendments to the BBBEE Act. How do the amendments affect sector codes?

by , 20 April 2015
According to general belief, the May 1st changes to the BBBEE Act prove that Government is proactive about BEE. It also proves that it's more strict when it comes to implementing Broad Based Black Economic Empowerment (BBBEE).

In what follows we'll look at the new measures it introduced, the impact the amendments have on BBBEE skills development, the way the new amendments affect sector codes and the new weightings for measuring BBBEE status.

Among the new BBBEE measures introduced, we remind you of the following:

- A BBBEE Commission has been set to oversee and advocate, investigate complaints, transactions and supervise the general issues when it comes to BBBEE.  

- There are now criminal offences in case you misrepresent or give false information about your company's  BBBEE status. For example, a breach can be fined ten years in jail for individuals or a fine of up to 10% of a company's annual turnover.

- Government and the public entities have the right to cancel any contract in case you give false information as presented above

- It imposes an absolute obligation on Government and public entities to take the Codes into account.

- Any South African listed entity has to provide a report to the BBBEE Commission on their compliance with BBBEE

When will the BBBEE amendments come into effect?

The amendments to the Codes of Good Practice are due to take effect from 1 May 2015. Note that it is important that companies use the interim period to review and reassess their BBBEE strategies to mitigate (and preferably avoid) any adverse effects resulting from the changes, as  Werksmans.com explains. Keep in mind that the amendments to the BBBEE Act are not yet in force.

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What impact will the amendments have on BBBEE skills development?

The amendments to the Codes increase the number of factors you must consider under the skills development element. The previously mentioned source explains that under the current Codes, only three factors are taken into account for the skills development element whereas five factors are taken into account under the new Codes.

In other words, the new factors provide points for training unemployed black persons and the number of black people 'absorbed' at the end of learnership programmes. The number of points and the compliance target for skills development expenditure have increased from 6 to 8 and from 3% to 6% respectively.

How the BBBEE amendments affect sector codes?

"The BBBEE Act allows any sector of the economy to have its own BBBEE code. The current Codes provide that a sector code has equal status with any other code. This has led to confusion as to whether a firm's BBBEE status should be measured under the sector code or the 'generic' Codes. The amendments to the Codes (as well as the pending amendments to the BBBEE Act) resolve this by providing that the BBBEE status of a firm in the relevant sector may only be measured in accordance with the sector code for that sector (if any)", states  Werksmans.com.

© Table Werksmans.com

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