Frequently Asked Questions

1. Definition of Black people?Refers to Africans, Coloureds, Indian or Chinese persons who are South African citizens by birth or by descent or who were naturalised prior to the commencement of the interim constitution in 1993, or was naturalised after the commencement date of the constitution of the Republic of south Africa Act of 1993, but who, without the Apartheid policy would have qualified for naturalisation before then.2. What is a Value Adding Enterprise?

An entity registered as a vendor under the Value-Added tax of 1991, whose Net profit Before Tax summed with its total labour Cost exceeds  25% of the value of its Total Revenue.

3. How do you identify people with disabilities?

These are individuals who have a long-term or recurring physical or mental impairment which substantially limits theirs prospects of entry into, or advancement in employment.

4. What type of B-BBEE category is my company?

5.  What is fronting?

An entity, mechanism or structure established to circumvent Black Economic Empowerment. There is a tendency to use non-executive directorship as “hollow” appointments purely for compliance purposes.

6. When does a Trust qualify for Ownership points?

The qualification criteria for the recognition of Trust are as follows:

~ The trust deed must define the beneficiaries and the proportion of their entitlement to receive distributions

A written record of the names of the beneficiaries or the use of a defined class of natural person satisfies the requirement for identification

~ A written record of fixed percentages of entitlement or the use of a formula for calculating entitlement satisfies the need for defining proportion of benefit an

~ The trustees must have no discretion on the above mentioned terms and on winding-up or termination of the trust. All accumulated Economic Interest must be transferred to the beneficiaries or to an entity representing the interest of participants or class of beneficiaries.

Additional Criteria Applicable to Trusts:

For a Measured Entity to obtain the maximum points on its Ownership scorecard from shareholding by a Trust, the measured entity must be in possession of a certificate issued by a competent person to the effect:

  1. That the Trust was created for a legitimate commercial reason which must be fully disclosed and,
  2. That the terms of Trust do not directly or indirectly seek to circumvent the provisions of the Codes and the Act.

7. What is the relationship between the BEE Act and the EE Act?

Statement 000 of the Codes states that employment equity is one of the pillars of broad-based BEE. The Codes provide the link between the Employment Equity Act and the Broad-Based Black Economic Empowerment Act. A key difference between the two is the beneficiaries.  BEE restricts the beneficiaries to Black people; it thereby addresses a sub-component of the Employment Equity Act.

8. The benefit of qualifying as an EME or start-up?

Enterprises qualifying as EME’s are granted an automatic recognition level regardless of their contribution to BEE. Automatic recognition grants the entity a favourable BEE status without the need for contribution.

The Codes grant automatic recognition of BEE status Level Four, giving the enterprise a procurement recognition level of 100%.

~ Where an EME is more than 50% owned by Black people, the Codes grant automatic recognition as a Level Three contributor which has a BEE procurement recognition level  of 110%