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Section 9(1): Codes of Good Practice
Te Minister of Trade and Industry ereby issues te following Code of Good Practice
under section 9(1) of te Broad-Based Black Economic Empowerment Act 53 of 2003.
REPABOLIKI YA AFERIKA BORWA
REPUBLIEK VAN SUID AFRIKA
BROAD-BASED
BLACK ECONOMIC EMPOWERMENT
CODES OF GOOD PRACTICE
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2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
INDEX FOR ThE CODES
Index of Code Series
Code Series Code Title
000 FrameworkformeasuringBroad-BasedBlackEconomicEmpowerment
100 Measurement of the Ownership Element of Broad- Based Black Economic
Empowerment
200 Measurement of the Management Control Element of Broad -Based Black
EconomicEmpowerment
300 MeasurementoftheEmploymentElementofBroad-BasedBlackEconomic
Empowerment
400 Measurement of the Skills Development Element of Broad-Based Black
EconomicEmpowerment
500 MeasurementofthePreferentialProcurementElementofBroad-BasedBlack
EconomicEmpowerment
600 MeasurementoftheEnterpriseDevelopmentElementofBroad-BasedBlack
EconomicEmpowerment
700 MeasurementoftheSocio-EconomicDevelopmentElementofBroad-Based
BlackEconomicEmpowerment
800 MeasurementofQualifyingSmallEnterprisesofBroad-BasedBlackEconomic
Empowerment
Index for generic Statements
Statement Number Code Series and Statement Title
000 Codeseries000- GeneralprinciplesandtheGenericScorecard
003 Codeseries000- Guidelines for the development and gazetting of
TransformationChartersandSectorCodes
004 Codeseries000- Scorecardsforspeciali sedEnterprises
100 Codeseries100- ThegeneralprinciplesformeasuringOwnership
102 Codeseries100- RecognitionoftheSaleofAssets
103 Codeseries100- TherecognitionofEquit yEquivalent sforMultinationals
200 Codeseries200- The general principles for measuring Management
Control
300 Codeseries300- The general principles for measuring Employment
Equity
400 Codeseries400- The general principles for measuring Skills
Development
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500 Codeseries500- The general principles for measuring Preferential
Procurement
600 Codeseries600- The general principles for measuring Enterprise
Development
700 Codeseries700- The general principles for measuring Socio-
EconomicDevelopment
Special Index for Qualifying Small Enterprises
Statement Number Code Series and Statement Title
800 Codeseries800- The Qualifying Small Enterprises Scorecard and
ExemptedMicro-Enterprises
801 Codeseries800- OwnershipforQualifyingSmallEnterprises
802 Codeseries800- Management Control for Qualifying Small
Enterprises
803 Codeseries800- EmploymentEquit yforQualif yingSmallEnterprises
804 Codeseries800- SkillsDevelopmentforQualif yingSmallEnterpri ses
805 Codeseries800- Preferential Procurement for Qualifying Small
Enterprises
806 Codeseries800- Enterprise Development for Qualifying Small
Enterprises
807 Codeseries800- Socio-Economic Development for Qualifying Small
Enterprises
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2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
CODE SERIES 000: FRAMEWORK FOR MEASURING
BROAD-BASED BLACK ECONOMIC EMPOWERMENT
STATEMENT 000: GENERAL PRINCIPLES AND ThE GENERIC SCORECARD
Issued under section 9 of the Broad-Based Black Economic Empowerment Act of 2003
Arrangement of this statement
Para Subject Page
1 Objectivesofthisstatement 2
2 Keyprinciples 2
3 ApplicationoftheCodes 3
4 EligibilityasanExemptedMicro-Enterprise 3
5 EligibilityasaQualifyingSmallEnterprise 3
6 Start-upenterprises 4
7 TheElementsofB-BBEEintermsoftheGenericScorecard 4
8 TheGenericScorecard 5
9 Enhancedrecognitionforcertaincategoriesofblackpeople 5
10 FrameworkfortheAccreditationofBEEVericationAgencies 5
11 Transitionalperiod 6
12 Adjustmentofthresholds 6
13 DurationoftheCodes 6
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1 Objectives of tis statement
Theobjectivesofthisstatementareto:
1.1 specifyinterpretativeprinciplesofB-BBEE;
1.2 specify the application of the Codes and the basis for measurement under the
Codes;
1.3 specify the qualifying thresholds for businesses to qualify as Exempted Micro-
Enterprises(EME)orQualifyingSmallEnterprises(QSE);
1.4 specifythemethodofmeasuringstart-upenterprises;
1.5 specifytheelementsofB-BBEEmeasurableundertheGenericScorecard;
1.6 specifytheGenericScorecard;
1.7 specifythebasisfordeterminingcompliancebyentitieswiththeCodes;
1.8 providefortheTransitionalPeriodbeforethecompulsoryuseoftheGenericScorecard
starts;and
1.9 denethedurationfortheapplicabilityoftheCodes.
2 Key principles
2.1 ThefundamentalprincipleformeasuringB-BBEEcomplianceisthatsubstancetakes
precedenceoverlegalform.
2.2 IninterpretingtheprovisionsoftheCodesanyreasonableinterpretationconsistent
withtheobjectivesoftheActandtheB-BBEEStrategymusttakeprecedence.
2.3 ThebasisformeasuringB-BBEEinitiativesundertheCodesistheB-BBEEcompliance
ofthemeasuredentitiesatthetimeofmeasurement.
2.4 AnymisrepresentationorattempttomisrepresentanyenterprisestrueB-BBEEStatus
mayleadtothedisqualicationoftheentirescorecardofthatenterprise.
2.5 Initiativeswhichsplit,separateordivideenterprisesasameansofensuringeligibility
as an E xempted Micro -Enterpri se, a Qualif ying Small Enterprises or a Star t- Up
EnterpriseareacircumventionoftheActandmayleadtothedisqualicationofthe
entirescorecardofthoseenterprisesconcerned.
2.6 Any representation made by an Entity about its B-BBEE compliance must be
supported by suitable evidence or documentation. An Entitythat does notprovide
evidenceordocumentationsupportinganyinitiative,mustnotreceiveanyrecognition
forthatinitiative.
2.7 WhereveraStandardValuationMethodappliestomeasuringanindicator,thesame
standardshouldapply,asfarasreasonablypossible,consistentlyinallotherapplicable
calculationsinthisstatement.
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2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
3 Application of te Codes
3.1 ThefollowingentitiesaremeasurableundertheCodes:
3.1.1 allpublicentitieslisted in schedule2 or schedule3 (Parts AandC)of the Public FinanceManagementAct;
3.1.2 anypublicentitylistedinschedule3(PartsBandD)whicharetradingentitieswhich
undertakeanybusinesswithanyorganofstate,publicentityoranyotherEnterprise;
and
3.1.3 anyenterprisethatundertakesanybusinesswithanyorganofstateorpublicentity;
3.1.4 anyotherenterprisethatundertakesanybusiness,whetherdirectorindirect,withany
entitythatissubjecttomeasurementunderparagraph3.1.1to3.1.3andwhichis
seekingtoestablishitsownB-BBEEcompliance.
3.2 The basis for measuring the B-BBEE compliance of an entit y in terms of
paragraph3.1is-
3.2.1 paragraph4,inthecaseofanExemptedMicro-Enterprise(EME);
3.2.2 theQSEstatementsinCode800,inthecaseofaQualifyingSmallEnterprise(QSE);
3.2.3 theGenericScorecard,inthecaseofotherenterprises.
3.3 Despite 3.2,a SectorCode published in terms of Statement 003may providethe
basisformeasuringenterpriseswithinthatsector.
4 Eligibility as an Exempted Micro-Enterprise
4.1 AnyenterprisewithanannualTotalRevenueofR 5million or less qualies as an
ExemptedMicro-Enterprises,.
4.2 Exempted Micro-Enterprises are deemed to have B-BBEE Status of Level Four
Contributor having a B-BBEE procurement recognition of 100% under
paragraph6.3.
4.3 Despiteparagraph4.2,anExemptedMicro-Enterprisequaliesforapromotiontoa
B-BBEEStatusofLevelThreeContributorhavingaB-BBEEprocurementrecognition
of110%underparagraph6.3ifitismorethan50%ownedbyblackpeopleorby
blackwomen.
4.4 Exempted Micro-Enterprises are allowed to be measured in terms of the QSE
scorecard should they wish to maximise their points and move to the next procurementrecognitionlevel.
4.5 SufcientevidenceofqualicationasanExemptedMicro-Enterpriseisanauditors
certicateorsimilarcerticateissuedbyanaccountingofcerorvericationagency.
5 Eligibility as a Qualifying Small Enterprise
5.1 AnyenterprisewithanannualTotalRevenueofbetweenR5millionandR35million
qualiesasaQualifyingSmallEnterprise.
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5.2 AQualifyingSmallEnterprisemustselectanyfourofthesevenElementsofB-BBEE
forthepurposes of measurementunderthe QualifyingSmall Enterprise Scorecard
containedinCode800.WhereaQualifyingSmallEnterprisedoesnotmakeaselection,
itsfourbestelementscoreswillbeusedforthepurposesofmeasurement.
6 Start-up enterprises
6.1 Start-upenterprisesmust be measuredas Exempted Micro-Enterprises under this
statementfortherstyearfollowingtheirformationorincorporation.Thisprovision
appliesregardlessoftheexpectedtotalrevenueofthestart-upenterprise.
6.2 Start-upEnterprisesaredeemedtohaveaB-BBEEStatusofLevelFourContributor
havingaB-BBEEprocurementrecognitionof100%underthisparagraph
6.3 InordertoqualifyasaStart-upEnterprise,theenterprisemustprovideanindependent
conrmationofitsstatus.
6.4 Despiteparagraph6.1and6.2,Start-upEnterprisesmustsubmitaQSEScorecard
whentenderingforanycontract,orseekinganyotherbusinesscoveredbysection10
oftheAct,withavaluehigherthanR5millionbutlessthanR35million.Forcontracts
aboveR35milliontheyshouldsubmitthegenericscorecard.Thepreparationofsuch
scorecardsmustuseannuali seddat a.
7 Te Elements of B-BBEE in terms of te Generic Scorecard
7.1 The Ownership Element, as set out in Code series 100, measures the effective
ownershipofenterprisesbyblackpeople.
7.2 The Management Control Element, as set out in Code series 200, measures the
effectivecontrolofenterprisesbyblackpeople.
7.3 TheEmploymentEquityElement,assetoutinCodeseries300,measuresinitiatives
intended to achieve equity in the workplace under the Act, and the Employment
EquityAct.
7.4 TheSkillsDevelopmentElement,assetoutinCodeseries400,measurestheextent
to whichemployers carry out initiativesdesignedto develop thecompetenciesof
blackemployees.
7.5 The Preferential Procurement Element, as set out in Code series 500, measures
theextenttowhichenterprisesbuygoodsandservicesfromsupplierswithstrongB-
BBEEprocurementrecognitionlevels.
7.6 The Enterprise Development Element, as set out in Code series 600, measures
theextenttowhichEnterprisescarryoutinitiativesintendedtoassistandaccelerate
thedevelopmentandsustainabilityofotherEnterprises.
7.7 TheSocio-EconomicDevelopmentandSectorSpecicContributionsElement,asset
outinCodeseries700,measurestheextenttowhichenterprisescarryoutinitiatives
that contribute towards Socio-Economic Developmentor Sector Specicinitiatives
thatpromoteaccesstotheeconomyforblackpeople.
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2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
8 Te Generic Scorecard
8.1 ThefollowingtablerepresentstheGenericScorecardandcontainsthe:
8.1.1 elementsofthescorecard;
8.1.2 weightings,and
8.1.3 the Code series reference that specify the mechanisms for measurement and
calculationofeachoftheElementsofthescorecard(Codeseries100700).
Element Weighting Codeseriesreference
Ownership 20points 100
Managementcontrol 10points 200
Employmentequity 15points 300
Skillsdevelopment 15points 400
Preferentialprocurement 20points 500
EnterpriseDevelopment 15points 600
Socio-EconomicDevelopmentinitiatives 5points 700
8.2 BasedontheoverallperformanceofaMeasuredEntityusingtheGenericScorecard,
itreceivesoneofthefollowingB-BBEEStatus-:
B-BBEEStatus Qualication B-BBEErecognitionlevel
LevelOneContributor 100pointsontheGenericScorecard 135%
LevelTwoContributor 85but
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11 Transitional period
11.1 Fortherstyearafterthecommencementofthisstatement,ameasuredentitymay
electtouse
11.1.1 theGenericScorecard;or;
11.1.2 thetransitionalscorecard.
11.2 Thereafter, all B-BBEEcompliancemeasurement undertheCodesforMediumand
LargeenterprisesissubjecttotheuseoftheGenericScorecard.
11.3 The transitional scorecard assigns a BEE Status based on the Ownership and
ManagementControloftheentitycalculatedintermsoftheformulabelow:
A = B x 1.92
Where
AistheindicativeBEEStatusduringthetransitionalperiod
BisthetotalscoreachievedunderCodeseries100and200
10.4 Such Accreditation Standards govern the terms and conditions on which the
Accreditation Body may grant, refuse to grant, revoke or suspend an accreditation
of a Verication Agency.
10.5 Those verication agencies wishing to apply for accreditation will do so throughSANAS.
10.6 The dti encourages the establishment of an independent Industry Body that will
provide guidance to the verication industry through the development and
maintenance of high quality and reliable BEE verication services.
10.7 The dti together with the relevant Industry Body will from time to time develop
Verication Methodology and other relevant practices that will be used as standards
by all verication agencies.
10.8 The dti together with the Accreditation Body will implement such mechanisms as
may be necessary to ensure that Verication Certicates are accurate and
reliable.
10.9 The dti will establish a publicly accessible central database containing the
information underlying each verication Certicate
12 Adjustment Of Tresolds12.1 TheMinistermay,bynoticeintheGazette,adjustthethresholdsinparagraphs4to
6.Anysuchchangesapplytocompliancereportspreparedforenterprisesaftera12-
monthperiodfollowingthegazettingoftheadjustment.
13 Duration of te Codes
13.1 ACoderemainsineffectuntilamended,substitutedorrepealedundersection9of
theAct.
13.2 The Ministerwill review the Codesfollowing the end ofthetenth yearfollowing the
commencementdateofthisstatement,despitetheaforementioned,annualreviews
willtakeplacetomonitortheimplementationofB-BBEEthroughouttheeconomy.
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1 Objective of tis statement
Theobjectivesofthisstatementaretospecify:
1.1 themannerofgazettingTransformationChartersundersection12oftheAct;
1.2 theprocessfordevelopingandgazettingofSectorCodesundersection9oftheAct;
1.3 thestatusofTransformationChartersandSectorCodes;
1.4 thestatusofenterpriseB-BBEEplans;and
1.5 recommendanapproachfordrawingupTransformationCharters.
2 Procedure for developing and gazetting of Transformation Carters
2.1 TherepresentativebodyofasectorseekingtogazetteaTransformationCharterunder
section12must:
2.1.1 applyinwritingtotheMinister;and
2.1.2 provideevidenceofcompliancewithsection12oftheAct.
2.2 The Minister may refuse an application to gazette a Transformation Charter ifthe
applicanthasfailedtocomplywithsection12oftheAct.
2.3 IftheMinisterrefusestograntanapplicationunderparagraph2.2,
2.3.1 theMinistermustnotifytheapplicantofthatdecisionin writingwithintwomonths;
and
2.3.2 anapplicantmayreapplyforthegazettingofthatTransformationCharterbyrevising itssubmission.
2.4 TheMinister mustgazettethat TransformationCharter as soonas itisreasonably
possiblefollowingthegrantingofanapplicationunderparagraph2.1.
3 Procedure for developing and gazetting of Sector Codes
3.1 ThefollowingprinciplesapplytodevelopingSectorCodes:
3.1.1 there must be common commercial and other characteristics within the entities
operatinginthesectorwhichwouldmakeitfeasibletoformulatea transformation
chartersubjecttotheproposedSectorCode;
3.1.2 the proposed Sector Code must fully address all the Elements in the Generic
Scorecard;
3.1.3 theproposedSectorCodemustusethesamedenitionsinrespectofallbeneciaries
asthoseusedintheCodes;
3.1.4 theproposedSectorCodemustusethesamecalculationmethodologiestomeasure
complianceasthoseusedintheCodes;
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3.1.5 theproposedSectorCodemaydeviatefromTargetsandWeightingsusedintheCodes
only where those deviations are justiable based on sound economic principles,
sectoralcharacteristicsorempiricalresearch;
3.1.6 theproposedSectorCodemayintroduceanewadditionalElementformeasurement where such addition is justiable based on sound economic principles, sectoral
characteristicsorempiricalresearch;
3.1.7 theproposedSectorCodemustclearlydeneitsscopeofapplication;
3.2 TherepresentativebodyofasectorseekingtogazetteaSectorCodeundersection9
must:
3.2.1 applyinwritingtotheMinister;
3.2.2 indicatetheprocessbywhichtheCharterhasB-BBEEndeveloped;and
3.2.3 provideevidenceofcompliancewithsection12oftheAct.
3.3 The Minister must refuse an application under this paragraph 3 if the proposed
SectorCode:
3.3.1 inadequatelyaddressesanyoftheprinciplesofanyoftheElementsreferredtointhe
GenericScorecardasreferredtoinparagraph3.1.2;
3.3.2 contains deviationsfrom the calculation methodologies applicable inmeasuring B-
BBEEcomplianceasreferredtoinparagraph3.1.4;
3.3.3 contains deviations in the denitions of beneciaries of B-BBEE as referred to in
paragraph3.1.3;
3.3.4 containsinconsistenciesintheTargetsandWeightingsreferredtoinparagraph3.1.5
unlessfullyjustiedunderthatparagraph;or
3.3.5 containsinadequaciesorapotentialforambiguityindeningthescopeofthesector
asreferredtoinparagraph3.1.7.
3.4 Ifonreceivingthedocumentsreferredtoinparagraph3.2,theMinisterdecidesagainst
adoptingthatproposedSectorCode,theMinistermay:
3.4.1 refertheapplicationbacktotherepresentativebodyforthesector;
3.4.2 refer the document s to the Advisor y Council for fur ther consideration or
recommendations.
3.5 The Minister may issue a draft Sector Code for public comment, in terms of
section9(5)oftheAct.
3.6 Afterconsideringthepubliccomment,theMinistermaygazettetheTransformation
CharterasaSectorCodeundersection9oftheAct.
4 Status of Transformation Carters and Sector Codes
4.1 ThegazettingofaTransformationCharterundersection12oftheActisevidenceof
thecommitmenttopromoteB-BBEEintheapplicablesectorandisnotbindingon
organsofstateorpublicentities.
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5.2.2.6 Consultation with Stakeholders:the Steering Committee will communicate the key
elements of the rstdraft of the Transformation Charter, including a draft of its
scorecardtostakeholders.
5.3 RecommendedConsultingProcess,RepresentativesandStakeholderIdentication:
5.3.1 TheconsultationprocessfordevelopingaTransformationcantakeanyofthefollowing
forms:
5.3.1.1 amajorgatheringofthekeystakeholdersinthesector;
5.3.1.2 workshopsaddressingparticularis suesintheTransformationCharter;
5.3.1.3 sector-wideroadshows;or
5.3.1.4 other interactivemechanismsthat would ensure effective communication withand
participationbytherelevantstakeholders.
5.3.2 Therelevantstakeholdersmayinclude:
5.3.2.1 keyenterpriseswithinthesector;
5.3.2.2 industrybodiesforthesectorandtherelevantchamberofcommerce;
5.3.2.3 government,andinparticular,therelevantgovernmentdepartmentshavingjurisdiction
overtheparticularsector;
5.3.2.4 labourbodiesortherelevanttradeunions;
5.3.2.5 industryregulatorsandcivilsociet yorganisations;and
5.3.2.6 anyotherswitharelevantinterestinthesector.
5.3.3 Thesteeringcommitteeshouldhaveequitablerepresentationtoenableparticipation
byallthedifferentstakeholdersintheTransformationCharterformulation.
5.3.4 Implementationofinnovativemechanismsforensuringthatunderresourcedparties
contribute in the key strategic decisions is a keyconsideration, especially in the
followingstages:
5.3.4.1 settingupvariousworkinggroups
5.3.4.2 settingthemandatesoftherespectivechartercommittees;
5.3.4.3 activelytakingpartinthevariouschartercommittees;
5.3.4.4 outlining the key principles and qualitative undertakings of the Transformation
Charter;
5.3.4.5 settingtargets and weightings for the sectoras containedin the balancedB-BBEE
scorecard;
5.3.4.6 providingforimplementation,reportingandmonitoringmechanisms;
5.3.4.7 presentationoftheTransformationChartertotheAdvisoryCouncil,theministryinthe
government responsible for the relevant sector and to the Minister of Trade
andIndustry.
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5.3.4.8 settingthemandateandthepowersoftheCharterCouncil;
5.3.4.9 ensuringapplicationofgoodcorporategovernanceprinciplesintheSteeringCommittee
oranyexecutivebodyreportingtotheCharterCouncil.
5.4 TheRoleofCharterCouncils:
5.4.1 ThefollowingrepresentsarecommendedmodelforsettingupCharterCouncils:
5.4.1.1 equitablecompositionofstakeholdersinthemembersoftheCharterCouncil;
5.4.1.2 ensuringapplicationofgoodcorporategovernanceprinciplesintheCharterCouncil.
5.4.2 ThefunctionsoftheCharterCouncilmayinclude:
5.4.2.1 to provide guidance on sector-specic matters effecting B-BBEE in entities within
thesector;
5.4.2.2 tocompilereportsonthestatusofbroad-basedblackeconomicempowermentwithin
thesector,and
5.4.2.3 to share information with sector members, approved accreditation agencies or
theMinister.
5.4.3 TheCharter Councils should report to theMinister andto theAdvisoryCouncil on
progressmadebythesectorsubjecttotherelevantTransformationCharter. Such
reports should typically contain qualitative and quantitative information about
sectoralperformance,includingdetailsaboutalltheelementsofthesectorsB-BBEE
balancedscorecard.
6 Variation of Indicators in Codes 200 and 300
6.1 ASectorCodemayallowthe useof indicators that differ from thosecontained in
Codes200and300asameansofxingtherelevantMeasurementCategories.
6.2 Sectorsadoptingthisapproachmust:
6.2.1 consider using indicators that are consistent with the principles contained in the
EERegulations;
6.2.2 consider all relevant factors such as seniority, expertise, scarcity of skill-set,
organisationalroleandresponsibilityandgeographiclocation;
6.2.3 basethedenitionofoccupationallevelsonsoundandempiricalresearchundertaken
inthesectorbyareputableinstitution;and
6.2.4 iftheindicatorsincludesalaryscales,considerprovidingfor adefaultcost ofliving
orinationadjustmentinthesalaryscales,evenifthesectorintendstoamendthose
salaryscalesannually.
6.3 ThegazettingofaSectorCodedoesnotaffectanyemployersobligationstocomply
withtheEEActandit sregulations .
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CODE SERIES 000: FRAMEWORK FOR MEASURING
BROAD-BASED BLACK ECONOMIC EMPOWERMENT
STATEMENT 004: Scorecards for SPECIALISED Enterprises
Issued under section 9 of the Broad-Based Black Economic Empowerment Act of 2003
Arrangement of this statement
Para Subject Page
1 Objectiveofthisstatement 2
2 Generalprinciples 2
3 TheAdjustedGenericScorecard 3
4 TheAdjustedQualifyingSmallEnterprisesScorecard 3
5 ImportantClarication 3
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1 Objective of tis statement
Theobjectivesofthisstatementareto:
1.1 provideguidanceaboutthetreatmentofOwnershipforSpecialisedEnterprises,for B-BBEEpurposes,of:
1.1.1 companieslimitedbyguarantee;
1.1.2 HigherEducationInstitutions;
1.1.3 Non-protOrganisations;
1.1.4 publicentitiesandotherEnterpriseswhollyownedbyorgansofstate;
1.1.5 PublicBenetSchemes;and
1.1.6 section21companies;and
1.2 specifyscorecardsapplicabletoMeasuredEntitiessubjecttothisstatement.
2 General principles
2.1 PublicentitiesandotherEnterpriseswhollyownedbyorgansofstateareincapable
ofevaluationofblackownershipunderCodeseries100.
2.2 Higher Education Institutions are not public entities under the Public Finance
ManagementActof1999.Theyareincapableofevaluationofblackownershipunder
Codeseries100.
2.3 Companieslimitedby guarantee andsection 21companies have no shareholding.
Theyare incapableofevaluationofblackownershipunderCodeseries100.This does not imply that companies limited by guarantee and section 21 companies
sharing in the ownership of other Enterprises cannot contribute towards black
ownershiptosuchEnterprisesasprovidedforinStatement100.
2.4 Non-protOrganisationsandPublicBenetOrganisationsgenerallydonothaveany
benecialownershipandareincapableofevaluationofblackownershipunderCode
series 100. This does not imply that Non-prot Organisations and Public Benet
OrganisationssharingintheownershipofotherEnterprisesasbroad-basedownership
schemescannotcontributetowardsblackownershiptosuchEnterprisesasprovided
forinStatement100.
2.5 Whereveranyoftheentitieslistedinparagraphs1and2requireevidenceoftheir
ownB-BBEEcompliance,theywillusetheAdjustedGenericScorecard.Ifthoseentities are also Qualifying Small Enterprises, they will use the Adjusted Qualifying Small
EnterprisesScorecard.
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3 Te ADJUSTED Generic Scorecard
3.1 ThefollowingtablerepresentstheAdjustedGenericScorecardandcontainsthe:
3.1.1 Elementsofthescorecard;
3.1.2 weightings,and
3.1.3 the Code series reference that specify the mechanisms for measurement and
calculationofeachoftheElementsofthescorecard(Codeseries100700).
Element Weighting Codeseriesreference
Managementcontrol 15points 200
Employmentequity 15points 300
Skillsdevelopment 20points 400
Preferentialprocurement 20points 500
EnterpriseDevelopment 15points 600
Socio-EconomicDevelopment 15points 700
3.2 Allothertermsofstatement000applytoMeasuredEntitiessubjecttothisstatement,
mutatismutandis.
4 Te ADJUSTED Qualifying Small Enterprises Scorecard
4.1 ThefollowingtablerepresentstheAdjustedGenericScorecardandcontainsthe:
4.1.1 Elementsofthescorecard;
4.1.2 weightings,and
4.1.3 the Code series reference that specify the mechanisms for measurement and calculationofeachoftheElementsofthescorecard(Codeseries100700).
Element Weighting Codeseriesreference
Managementcontrol 25points 200
Employmentequity 25points 300
Skillsdevelopment 25points 400
Preferentialprocurement 25points 500
EnterpriseDevelopment 25points 600
Socio-EconomicDevelopment 25points 700
4.2 AMeasuredEntity,subjecttothisstatement,thatisaQualifyingSmallEnterprisemust
chooseanyfourofthesixElementsofB-BBEEagainstwhichtheirB-BBEEcompliance
willbemeasuredundertheAdjustedQualifyingSmallEnterpriseScorecard.
5 ImportantClarication
ThestatusofSocio-EconomicDevelopmentContributionsmadetoanyofthetypesofentities
inparagraphs1and2underCodeseries700isnotdependentonsuchentitysscorecard
result,butratherthenatureofthecontributionitselfandtheidentityofthatcontributions
beneciaries.
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CODE SERIES 100: MEASUREMENT OF ThE
OWNERShIP ELEMENT OF BROAD-BASED BLACK
ECONOMIC EMPOWERMENT
STATEMENT 100: ThE GENERAL PRINCIPLES FOR MEASURING OWNERShIP
Issued under section 9 of the Broad-Based Black Economic Empowerment Act of 2003
Arrangement of this statement
Para Subject Page
1 Objectivesofthisstatement 2
2 Theownershipscorecard 2
3 Keymeasurementprinciples 3
4 Broad-BasedOwnershipScheme 5
5 PrivateEquityFunds 5
6 Section21companiesandcompanieslimitedbyguarantee 5
7 Trusts 6
8 OptionsandShareWarrants 6
9 EquityInstrumentscarryingpreferentrights 7
10 Realisationpoints 7
11 Thebonuspoints 7
12 Annexe100(A) 8
13 Annexe100(B) 9
14 Annexe100(C) 11
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2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
1 Objectives of tis Statement
Theobjectivesofthisstatementareto:
1.1 specifythescorecard for measuring the ownership Element of Broad-BasedBlack EconomicEmpowerment(B-BBEE);
1.2 dene the key measurement principles associated with the ownership Element
ofB-BBEE;
1.3 specify the specic measurement principles applicable to various t ypes
ofEnterprises;
1.4 specif y the specic measurement principles applicable to various t ypes of
EquityInstruments;
1.5 specifytheformulaformeasuringVotingRights,EconomicInterest,RealisationPoints
andbonuspoints.
2 Te Ownersip Scorecard
Thefollowingtablerepresentstheindicatorsandmethodforcalculatingascoreforownership
underthisstatement:
Category Ownershipindicator Weightingpoints ComplianceTarget
2.1 Votingrights:
2.1.1 ExercisableVotingRightsintheEnterpriseinthehandsofblackpeople
3 25%+1vote
2.1.2 ExercisableVotingRightsintheEnterpriseinthehandsofblackwomen 2 10%
2.2 EconomicInterest:
2.2.1 EconomicInterestofblackpeopleintheEnterprise
4 25%
2.2.2 EconomicInterestofblackwomenintheEnterprise
2 10%
2.2.3 EconomicInterestofthefollowingblacknaturalpeopleintheEnterprise:
1 2.5%
2.2.3.1 blackdesignatedgroups;2.2.3.2 blackParticipantsinEmployeeOwnershipSchemes;2.2.3.3 blackbeneciariesofBroadbasedOwnershipSchemes;or2.2.3.4 blackParticipantsinCo-operatives
2.3 Realisationpoints:
2.3.1 O wnershipfullment 1 Refer to paragraph10.1
2.3.2 NetValue 7 Refer to Annexe Cparagraph4
2.4 Bonuspoints:
2.4.1 InvolvementintheownershipoftheEnterpriseofblacknewentrants;
2 10%
2.4.2 InvolvementintheownershipoftheEnterpriseofblackParticipants:
1 10%
2.4.2.1 inEmployeeOwnershipSchemes;2.4.2.2 ofBroad-BasedOwnershipSchemes;or2.4.2.3 Co-operatives.
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3 Key Measurement Principles
3.1 Generalprinciples:
3.1.1 AnEnterprisereceivespointsforparticipationbyblackpeopleinitsrightsofownership, usingtheownershipscorecardinparagraph2.Blackpeoplemayholdtheirrightsof
ownershipinaMeasuredEntityasdirectParticipantsorasParticipantsthroughsome
formofbusinesssuchas:
3.1.1.1 acompanywithshares;
3.1.1.2 aclosecorporation;
3.1.1.3 aco-operative;
3.1.1.4 anyformofjuristicpersonrecognisedunderSouthAfricanlaw;
3.1.1.5 apartnershiporotherassociationofnaturalpersons;
3.1.1.6 aBroad-BasedOwnershipScheme;
3.1.1.7 anEmployeeOwnershipScheme;and
3.1.1.8 aTrust.
3.2 TheFlow-ThroughPrinciple:
3.2.1 Asageneralprinciple,whenmeasuringtherightsofownershipofanycategoryofblack
people in aMeasuredEnterprise,only rights heldby natural persons are relevant.
Iftherightsofownershipofblackpeoplepassthroughajuristicperson,thentherights
ofownershipofblackpeopleinthatjuristicpersonaremeasurable. Thisprinciple
appliesacrosseverytierofownershipinamulti-tieredchainofownershipuntilthat
chainendswithablackpersonholdingrightsofownership.
3.2.2 The methodof applyingthe Flow-Through Principle acrossone ormore intervening
juristicpersonsisasfollows:
3.2.2.1 MultiplythepercentageoftheParticipantsrightsofownershipinthejuristicpersons
throughwhichthoserightspassbythepercentagerightsofownershipofeachofthose
juristicpersonssuccessivelytotheMeasuredEnterprise;and
3.2.2.2 theresultofthiscalculationrepresentsthepercentageofrightsofownershipheldby
theParticipant.
3.3 TheModiedFlow-ThroughPrinciple:
3.3.1 TheModiedFlow-ThroughPrincipleappliestoanyBEEownedorcontrolledcompany
intheownershipoftheMeasuredEnterprise.
3.3.2 IncalculatingExercisableVotingRightsunderparagraph2.1.1,andEconomicInterest
underparagraph2.2.1thefollowingapplies:Whereinthechainofownership,black
peoplehaveaow-throughlevelofparticipationinexcessof50%,thenonlyoncein
thatchainmaysuchblackparticipationbetreatedasifitwere100%black.
3.3.3 The Modied Flow-ThroughPrinciple may only be applied in the calculation of the
indicators in paragraphs 2.1.1and2.2.1. In allotherinstances,the Flow-Through
Principleapplies.
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2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
3.4 TheExclusionofspeciedentitieswhendeterminingownership:
3.4.1 Whendeterminingownershipinameasuredentity,ownershiphelddirectlybyorgans
ofstateorpublicentitiesmustbeexcluded.
3.4.2 IncalculatingtheirOwnershipscore,MeasuredEnterprisesmustapplytheExclusion
PrincipletoanyportionoftheirOwnershipheldbyOrgansofStateorPublicEntities.
3.4.3 Despiteparagraph3.4.1and3.4.2,theMinistermaybynoticeinthegazette,designate
certainPublicEntitiesasBEEFacilitators.IncalculatingtheirOwnershipscore,Measured
EnterprisesmusttreatBEEFacilitatorsashavingrightsofOwnershipheld:
3.4.3.1 100%byBlackPeople;
3.4.3.2 40%byBlackWomen;
3.4.3.3 10%byblackdesignatedgroups;
3.4.3.4 withoutanyacquisitiondebts;and
3.4.3.5 withoutanythird-partyrights.
3.4.4 Whendeterminingownershipina measuredentity,rightsof ownershipofMandated
Investmentsmay beexcluded. Themaximum percentageofthe ownership ofany
measuredentitythatmaybesoexcludedis40%.
3.4.5 AMeasuredEntityelectingnottoexcludeMandatedInvestmentswhenitisentitled
todoso,mayeithertreatallofthatownershipasnon-blackorobtainacompetent
personsreportestimatingtheextentofblackrightsofownershipmeasurableinthe
MeasuredEntityandoriginatingfromthatMandatedInvestment.
3.4.6 A Measured Entity cannot selectively include or exclude Mandated Investments
and anelectionto exclude onemandated investmentis an election to excludeall
MandatedInvestment sandvisavers a.
3.5 Therecognitionofownershipafterthesaleorlossofsharesbyblackparticipants:
3.5.1 AMeasuredEntityisallowedtorecogniseaportionofblackownershipafterablack
participant has exited through the sale or loss of shares subject to the
followingcriteria:
3.5.1.1 theblackparticipanthasheldsharesforaperiodof3years;
3.5.1.2 valuemusthavebeencreatedinthehandsofblackpeople;
3.5.1.3 transformationhastakenplacewithinthemeasuredenterprise.
3.5.2 black participation arising from continued recognition of black ownership cannot
contributemorethan40%ofthescoreontheownershipscorecard.
3.5.3 In the case of a loss of shares by the black investor, the following additional
rulesapply:
3.5.3.1 awrittentripartiteagreementbetweentheMeasuredEnterprise,theblackParticipant
andalendermustrecordtheloanorsecurityarrangement,unlesstheMeasuredEntity
isthelender;and
3.5.3.2 The period overwhich thepoints wereallocated orrecognised will not exceed the
periodoverwhichtheshareswereheld.
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3.5.4 TheownershippointsunderthisparagraphthatareattributabletotheMeasuredEntity
willbecalculatedbymultiplyingthefollowingelements;
3.5.4.1 ThevaluecreatedinblackhandsasapercentageofthevalueoftheMeasuredEntity
atthedateofthelossofsharesasapercentageofMeasuredEntitysvalue;
3.5.4.2 TheB-BBEE statusof theMeasured Entitybasedon thebalancedscorecard atthe
dateofmeasurement;and
3.5.4.3 TheownershippointsthatwereattributabletotheMeasuredEnterpriseonthedateof
saleorloss.
4 Broad-based Ownersip and Employee Ownersip Scemes
4.1 Black Participants in Broad-Based Ownership Schemes and Employee Share
Ownerships Schemes holding rights of ownership in a Measured Entity
maycontribute:
4.1.1 amaximumof40%ofthetotalpointsontheownershipscorecardoftheMeasured
EntityiftheymeetthequalicationcriteriasetoutinAnnexe100(B).
4.1.2 100%ofthetotalpointsontheownershipscorecardoftheMeasuredEntityifthey
meettheadditionalqualicationcriteriasetoutinAnnex100(B).
5 Private Equity Funds
5.1 AMeasuredEntitymaytreatanyofitsownershiparisingfromaPrivateEquityFundas
ifthatownershipwereheldbyblackpeople,wherethePrivateEquityFundmeetsthe
followingcriteria:
5.1.1 morethan50%ofanyExercisableVotingRightsassociatedwiththeEquityInstruments
through which the Private Equit y Fund holds right s of owner ship, be held by
blackpeople;
5.1.2 morethan50%ofprotsmadebythePrivateEquityFundafterrealisinganyinvestment
madebyit,mustbywrittenagreement,accruetoblackpeople;
5.1.3 thePrivateEquityFundmanagermustbeaBEEOwnedCompanyasdened;and
5.1.4 morethan50%ofthevalueoffundsinvestedbyanyPrivateEquityFundmustatall
timesbeinvestedinblackownedenterprisesthatwereatleast25%blackowned
beforetheinvestmentofthePrivateEquityFund.
6 Section 21 Companies and Companies Limited by Guarantee
AMeasuredEntitymayelecttoincludeorexcludeSection21companiesorcompanieslimited
byguaranteeforthepurposesofmeasuringownershipintermsofthisstatement
6.1 ASection21companyorcompanylimitedbyguaranteethathousesaBroad-Based
OwnershipSchemeoranEmployeeOwnershipSchemeissubjecttotheprovisions
governingthosetypesofschemesandnottothisparagraph.
6.2 WhenaMeasuredEntityelectstoexcludesuchcompanies,itcandosobyexcluding
upto40%oftheleveloftheirownershipcompletelyfromthedeterminationofits
compliancewiththeowner shiptarget.
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2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
6.3 AMeasuredEntityelectingnottoexcludesection21companiesorcompanieslimited
byguaranteewhenitisentitledtodoso,mayeithertreatallofthatownershipasnon-
blackorobtainacompetentpersonsreportestimatingtheextentofblackrightsof
ownershipmeasurableintheMeasuredEntityandoriginatingfromthosesection21
companiesorcompanieslimitedbyguarantee.
6.4 BlackParticipantsinaSection21CompanyholdingrightsofownershipinaMeasured
Entitymaycontribute:
6.4.1 amaximumof40%ofthetotalpointsontheownershipscorecardoftheMeasured
EntityiftheymeetthequalicationcriteriaforBroad-BasedOwnershipSchemesset
outinAnnexe100(B).
6.4.2 100%ofthetotalpointsontheownershipscorecardoftheMeasuredEntityifthey
meettheadditionalqualicationcriteriasetoutforBroad-BasedOwnershipSchemes
inAnnex100(B).
7 Trusts
7.1 Black Participants in a Trust holding rights of ownership in a Measured Entity
maycontribute:
7.1.1 amaximumof40%ofthetotalpointsontheownershipscorecardoftheMeasured
EntityifthetrustmeetsthequalicationcriteriaforTrustssetoutinAnnexe100(B).
7.1.2 100%ofthetotalpointsontheownershipscorecardoftheMeasuredEntityifthey
meettheadditionalqualicationcriteriasetoutforTrustsinAnnex100(B).
8 Options and sare warrants:
8.1 ExercisablevotingrightsandEconomicinterestwillberecognisedwhereaParticipant
holdsaninstrumentgrantingtheholdertherighttoacquireanEquityInstrumentor
partthereofatafuturedate,ifthefollowingrequirementsaremet:
8.1.1 TheExercisableVotingRightsattachedtothatinstrumentareirrevocablytransferred
totheholderfortheoptionperiodandareexercisablebytheholderbeforeacquiring
theEquityInstrument;
8.1.2 thevalueofanyEconomicInterestisirrevocablytransferredfortheoptionperiodand
paidtotheholderofthatinstrumentbeforetheexerciseofthatright.
8.1.3 ThevalueofaninstrumentmustbedeterminedbyusingaStandardvaluationmethod
forcalculatingtheNetvalue.
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9 Equity Instruments Carrying Preferent Rigts
9.1 AnEquityInstrumentcarryingpreferentrightsismeasurableinthesamemanneras
anordinaryEquityInstrument.
9.2 AnEquityInstrumentcarryingpreferentrightsthathasthecharacteristicsofadebt,
regardlessofwhetherthedebtisthatofanEnterpriseorofaParticipant,isanordinary
loan.IfthedebtisthatofablackParticipant,itmaybesubjecttomeasurementunder
CurrentEquityInterest.
9.3 Inevaluatinganinstrumentthathasahybridnatureincludingthecharacteristicsofa
debt,onlythatportionthatrepresentsadebt,willbemeasuredundercurrentequity
interest.Theremainderismeasurableasanordinaryequityinstrument.
10 Net Value
10.1 OwnershipFullmentoccurs:
10.1.1 onthereleaseofallblackParticipantsinaMeasuredEntityfromallthird-partyrights
arisingfromthenancingtheirtransactionwiththeMeasuredEntity;or
10.1.2 ifallblackParticipantsin theEnterprisehaveneverbeensubjecttoanysuchthird-
partyrights.
10.1.3 A score of 7 points for Net Value is a requirement for awarding the Ownership
Fullmentpoint.
11 Te Bonus Points
11.1 AMeasured Entitywith25%blackEconomicInterest,canreceivea maximum of2 bonuspointsfora10%holdingofEconomicInterestbyblacknewentrants.
11.2 AMeasured Entitywith25%blackEconomicInterest,canreceivea maximum of1
bonuspointfora10%holdingofEconomicInterestbyblackParticipantsin:
11.2.1 EmployeeOwnershipSchemes;
11.2.2 Broad-BasedOwnershipSchemes;and
11.2.3 Co-Operatives.
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2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
Description of Investment
Investmentsmade byor fora collective investmentscheme as dened in the Collective InvestmentsSchemeControlActof2002
InvestmentsmadebyorforapensionfundasdenedinthePensionFundActof1956
Investments made by or for a medical scheme asdenedin the Medical SchemesActof 1998out ofmembersfunds
Investments made by or for long-term insurers asdenedintheLong-TermInsuranceActof1998outofpolicyholderfunds
Investments made by or for a friendly society asdenedintheFriendlySocietiesActof1956
InvestmentsmadebyorforabankasdenedintheBanksActof1990outofdepositorfundsasopposed
toownreserves
InvestmentsmadebyorforamutualbankasdenedintheMutualBanksActof1993outofdepositorfundsasopposedtoownreserves
Portion Subject to Exclusion Principle
fullvalue
fullvalue
portionrecordedasmadeoutofmembersfunds
portionrecordedasmadeoutofpolicyholderfunds
fullvalue
dep ositor p ortion determined by app ortioninginvestmentin the ratio that depositor funds toownreserves;
dep ositor p ortion determined by app ortioninginvestmentin the ratio that depositor funds toownreserves;
Annexe100AExamplesofMandatedInvestments
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Annexe100(B)
RULES ON CERTAIN TYPES OF ENTERPRISES
1 Rules for Broad-Based Ownersip Scemes:
1.1 ThefollowingrulesapplytoBroad-BasedOwnershipSchemes:
1.1.1 theManagementFeesoftheschememustnotexceed15%;
1.1.2 theconstitutionoftheschememustrecordtherulesgoverninganyportionofEconomic
Interestreceivedandreservedforfuturedistributionorapplication;
1.1.3 at least 85% of the value of benets allocated by the scheme must accrue to
blackpeople;
1.1.4 atleast50%oftheduciariesoftheschememustbeindependentpersonshavingno employmentwithordirectorindirectbenecialinterestinthescheme;
1.1.5 atleast50%oftheduciariesoftheschememustbeblackpeopleandatleast25%
mustbeblackwomen;
1.1.6 thechairpersonoftheschememustbeindependent;and
1.1.7 onthewinding-uporterminationofthescheme,allaccumulatedEconomicInterest
mustbetransferredtobeneciariesoranentitywithsimilarobjectives.
2 Rules for Employee Sare Ownersip Scemes:
2.1 ThefollowingrulesapplytoEmployeeShareOwnershipSchemes(ESOP);
2.1.1 theschemeconstitutionmustdenetheParticipantsandtheproportionoftheirclaim
toreceivedistributions;
2.1.2 awrittenrecordofthenameoftheParticipantsortheuseofadenedclassofnatural
personsatisestherequirementforidentication;
2.1.3 awrittenrecordofxedpercentagesofclaimortheuseofaformulaforcalculating
claimssatisestheneedfordeningproportionofbenet;and
2.1.4 theduciariesoftheschememusthavenodiscretionontheabovementionedterms;
and
2.2 TheParticipantsmusttakepartin:
2.2.1 appointingatleast50%oftheduciariesofthescheme;
2.2.2 managingtheschemeatalevelsimilartothemanagementroleofshareholdersina
companyhavingshareholding;
2.2.3 the constitution, or other relevant statutory documents, of the scheme must be
available,onrequest,toanyParticipantinanofciallanguageinwhichthatpersonis
familiar;and
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0
2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
2.2.4 AllaccumulatedEconomicInterestoftheschemeispayabletotheParticipantsatthe
earlierofadateoreventspeciedintheschemeconstitutionorontheterminationor
winding-upofthescheme;and
2.2.5 theschemeduciariesmustpresentthenancialreportsoftheschemetoParticipants yearlyatanannualgeneralmeetingofthescheme.
3 Rules for Trusts
3.1 ThequalicationcriteriafortherecognitionofTrustsisasfollows:
3.1.1 Thetrustdeedmustdenethebeneciariesandtheproportionoftheirentitlementto
receivedistributions;
3.1.2 Awrittenrecord of thenamesof the beneciaries or the use of adenedclassof
naturalpersonsatisestherequirementforidentication;
3.1.3 A written record of xed percentages of entitlement or the use of a formula for calculatingentitlementsatisestheneedfordeningproportionofbenet;and
3.1.4 The trustees must have no discretion on the above mentioned terms; and . On
winding-upor terminationof thetrust, all accumulated Economic Interest mustbe
transferred to the beneciaries or to an entity representing the interest of the
par ticipant sorclas sofbeneciaries.
4 Additional Criteria Applicable to Trusts:
4.1 ForaMeasuredEntitytoobtainthemaximumpointsonitsOwnershipscorecardfrom
shareholdingbyaTrust,theMeasuredEntitymustbeinpossessionofacerticate
issuedbyacompetentpersontotheeffect:
4.1.1 Thatthe Trust was createdfora legitimate commercialreason whichmustbe fully
disclosed;and;
4.1.2 ThatthetermsofTrustdonotdirectlyorindirectlyseektocircumventtheprovisionsof
theCodesandtheAct.
5 Additional Criteria Applicable to Broad Based Ownersip Scemes
and Employee Ownersip Scemes:
5.1. ForaMeasuredEntitytoobtainthemaximumpointsonitsownershipscorecard,the
followingadditionalrequirementsmustbemetbyaBroad-BasedSchemeorEmployee ShareOwnershipScheme:
5.1.1 atrack-recordofoperatingasaBroad-BasedOwnershipSchemeorEmployeeShare
OwnershipScheme,orintheabsenceofsuchatrack-recorddemonstrableevidence
of full operational capacity to operate as a Broad-Based Ownership Scheme or
EmployeeShareOwnershipScheme;
5.1.2 Operationalcapacitymustbeevidencedbysuitablyqualiedandexperiencedstaff
insufcientnumber,experiencedprofessionaladvisors,operatingpremisesandall
othernecessaryrequirementsforoperatingabusiness.
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2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
A =B C
D
3 Calculation of Deemed Net Value
IncalculatingtheDeemedNetValuereferredtoinparagraph4below,thefollowingformula
applies:
Where
AistheDeemedNetValue
Bforthepurposesofparagraph4belowisthevalueoftheEquityInstrumentsrelevantto
thecalculation,determinedonthedateofmeasurement
Bforthepurposesofparagraph5belowisthevalueoftheEquityInstrumentsrelevantto
thecalculation,determinedonthedateofsaleorloss
Cforthepurposesofparagraph4belowisthecarryingvalueofanyacquisitiondebtsoftherelevantblackParticipantsonthedateofmeasurement
Cforthepurposesofparagraph5belowisthecarryingvalueofanyacquisitiondebtsof
therelevantblackParticipantsonthedateofsaleorloss
Dforthepurposesofparagraph4and5belowisthevalueoftheMeasuredEntityonthe
dateofmeasurement
Dforthepurposesoftheexclusionprincipleisthevalueofthemeasurableportionofthe
MeasuredEntityonthedateofmeasurement
4 Net Value
4.1 TheNetValuepointsinparagraph2.3.2isthelowerresultofFormulaAandFormula Bbelow:
FormulaA
A =1
25% x CB x x 7
Where
Aisthescoreunderparagraph2.3.2
BistheDeemedNetValueforallblackParticipantsintheMeasuredEntitydetermined
usingFormula3
Cisthetime-basedgraduationfactoroftheEconomicInterestcompliancetargetoutlinedbelow:
10%fortherstyearafterthecurrentequityinterestdate.
20%forthesecondyearafterthecurrentequityinterestdate.
40%fromtherstdayofthethirdyearafterthecurrentequityinterestdatetothelast
dayofthefourthyearafterthecurrentequityinterestdate.
60%fromtherstdayofthefthyearafterthecurrentequityinterestdatetothelast
dayofthesixthyearafterthecurrentequityinterestdate.
80%fromtherstdayoftheseventhyearafterthecurrentequityinterestdatetothe
lastdayoftheeighthyearafterthecurrentequityinterestdate.
100%fromtherstdayoftheninthyearafterthecurrentequityinterestdatetothelast
dayofthetenthyearafterthecurrentequityinterestdate.
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FormulaB
Where
Aisthescoreunderparagraph2.3.2
BisthepercentageEconomicInterestintheMeasuredEntityofblackParticipants
Cisthetargetfortheownershipindicatorinparagraph2.2.1
A =B
Cx 7
4.2 IfanEnterprisegainsascoreinparagraph4.1thatismorethantheWeightingpoints
inparagraph2.3.2,thatEnterprisewillonlyreceivetheWeightingpoints.
4.3 OwnershipFullmentoccurs:
4.3.1 onthereleaseofallblackParticipantsinaMeasuredEntityfromallthird-partyrights;
or
4.3.2 whenblackParticipantshaveneverbeensubjecttoanythird-party.
4.4 Aminimumscoreof7pointsforCurrentEquityInterestisarequirementfortheaward
oftheOwnershipFullmentpoint.
5 Calculation of te Recognition of Ownersip after te Sale or Loss
of Sares by Black Participants:
Thecalculationsinparagraphs3.5.1and3.5.3usethefollowingformula:
Where
AisthepercentageofrightsofownershipthatsurvivethesaleofanEquityInstrumentby
ablackParticipantinparagraph3.5
Bisthepercentageofrightsofownershipforeachofindicatorsintheownershipscorecard
thatwereattributabletotheblackParticipantimmediatelybeforehisorhersaleorloss
CistheNetValuepercentageprovidedforinparagraph3aboveundertakenfortheEquity
InstrumentssoldorlostbytheblackParticipantonthedateofthesaleorloss.Thevalue
oftheEnterprisesismeasurableasatthedateofmeasurement
DisthemostrecentlydeterminedBEERecognitionLeveloftheMeasuredEntity(which
mustbelessthan1-yearold)basedonitsGenericScorecardresultforallElementsother
thanownershipdeterminedusingstatement000
A = B x C x D
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2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
6 Te Bonus Points
6.1 Thecalculationofthebonuspointsusesthefollowingformula:
Where
Aisthebonuspointsawardedinparagraphs2.4.1and2.4.2
B is the percentage that Economic Interest to which Participants who fall within that
categoryofblackpeopleinthatEnterpriseholdstothetotalofallEconomicInterestofthat
Enterprise
CisthepercentagecomplianceTargetforEconomicInterestforthemeasuredownership
indicatorinparagraph2.4
DispercentageoftheEconomicInterestintheMeasuredEntityofblackpeopleuptoa
maximumof25%
E is the Weighting points allocated to the applicable measured ownership indicator in
paragraph2.4
A =B
Cx E
D
25x
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CODE SERIES 100: ThE MEASUREMENT OF ThE
OWNERShIP ELEMENT OF BROAD-BASED
BLACK ECONOMIC EMPOWERMENT
STATEMENT 102: RECOGNITION IN ThE SALE OF ASSETS
Issued under section 9 of the Broad-Based Black Economic Empowerment Act of 2003
Arrangement of this statement
Para Subject Page
1 Objectivesofthisstatement 2
2 Application 2
3 KeyMeasurementPrinciples 2
4 MeasurementPrinciples 3
5. RecognitionofSaleofAssets,EquityInstrumentsandBusiness 3
5. Annexe102(A) 4
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2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
1 Objectives of tis statement
Theobjectivesofthisstatementareto:
1.1 Set out the conditions where the Sale of Assets, Equity Instruments and other Businesseswillberecognised.
1.2 SetouthowtheOwnershippointswillbedetermined.
2 Application
2.1 Atransactionintermsofthisstatementmayinvolvethesaleof:
2.1.1.1 anasset;
2.1.1.2 abusiness;or
2.1.1.3 EquityInstrumentsinanEnterprise.
3 Key Measurement Principles
3.1 Generalprinciples:
3.1.1 ASellerthathasconcludedatransactioninvolvingasaleofasset,EquityInstrument
orbusinesswithanAssociatedEnterprisemayclaimthebenetsprovidedforinthis
statementinitsownOwnershipScorecard.
3.1.2 Where a Seller has claimed benet in terms of the Ownership scorecard for the
Sale of Asset, Equity Instrument or Business it may notclaim benets under the
EnterpriseDevelopmentElement.
3.2 QualicationCriteria:
3.2.1 ForOwnershippointstoberecognisedthetransaction:
3.2.1.1 Mustresultinthecreationofsustainablebusinessesorbusines sopportunitiesinthe
handsofblackpeople;and
3.2.1.2 Resultinthetransferofspecialisedskillsorproductivecapacitytoblackpeople.
3.2.2 ASaleofAsset,EquityInstrumentandBusinessmustinvolveaseparateAssociated
Enterprisewhichhas:
3.2.2.1 nounreasonablelimitationsastoitsclientsorcustomers;and
3.2.2.2 clients,customersorsuppliersotherthantheSeller.
3.2.3 Any operational outsourcing arrangements between the Seller and the Associated
Enterprisemustbenegotiatedatarms-lengthonafairandreasonablebasis.
3.2.4 ThefollowingtransactionsdonotconstituteQualifyingTransactions:
3.2.4.1 transfersofbusinessrightsbywayoflicense,leaseorothersimilarlegalarrangements
notconferringunrestrictedownership;and
3.2.4.2 salesoffranchisesbyfranchisorstofranchisees,butincludessalesoffranchisesfrom
franchiseestootherfranchiseesortonewfranchisees.
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4 Measurement Principles
4.1 Thecalculationoftheownershippointsintermsofparagraph2.3.2.oftheOwnership
scorecardmustbebasedon:
4.1.1 thevalueofthetransaction.
4.1.2 the value of Equity Instruments held by black Participants in the Associated
Enterprise;
4.1.3 the carrying value of the Acquisition Debt of black Participants in the Associated
Enterprise;and
4.2 Allcalculationsintermsofparagraph4.1.1to4.1.3mustuseaStandardvaluation
method.
4.3 TheSellermayclaimthepointforOwnershipFullmentonlyifboththeSellerandthe
AssociatedEnterprisecomplywiththerequirementsfortheawardofthatpoint.
4.4 EquivalencyPercentagesunderthisstatement:
4.4.1 applyonlyto the ownership indicatorsinparagraphs2.1and2.2oftheOwnership
Scorecard;
4.4.2 donotapplytotheownershipindicatorsinparagraphs2.3and2.4oftheOwnership
Scorecard.
4.5 TheSellermustincludetheEquivalencyPercentagesinitsownOwnershipScorecard
asifthosepercentagesarosefromblackownershipofEquityInstrumentsintheSeller.
The EquivalencyPercentagesforthe indicatorsinparagraphs 2.1 and 2.2 ofthe
OwnershipScorecardcanbecalculatedintermsofAnnexe102(A).
5 Recognition Of Sale Of Asset, Equity Instruments And Businesses
5.1 ASellerseekingrecognitionofaTransactioninitsOwnershipScorecardmustdetermine
that recognition under paragraph 4 in compliance with paragraph 2.3 of
statement000:
5.1.1 for the rst three years after the transaction, based on data current on date of
measurement;
5.1.2 foreachyearthereafter,basedon:
5.1.2.1 theIndicatorPercentagesatthedateofmeasurement;and
5.1.2.2 the values of the Qualifying Transaction and benet to the Seller at the date of
measurementinthethirdyearafterthetransaction.
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2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
ANNEXE102(A)
Thisformuladeterminestheequivalencypercentagesfortheindicatorsinparagraph2.1and
2.2oftheOwnershipScorecard.
A =B
Cx D
Where
AistheEquivalencyPercentageforeachoftheindicatorsinparagraphs2.1and2.2oftheOwnershipScorecard
BisthevalueoftheQualifyingTransactiontotheAssociatedEnterprisedeterminedusingaStandardvaluationmethod
CisthevalueoftheSellerdeterminedusingaStandardvaluationmethod
DistheIndicatorPercentagesoftheAssociatedEnterprise
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CODE SERIES 100: ThE MEASUREMENT OF ThE
OWNERShIP ELEMENT OF BROAD-BASED BLACK
ECONOMIC EMPOWERMENT
STATEMENT 103: ThE RECOGNITION OF EQUITY EQUIVALENTS FOR
MULTINATIONALS
Issued under section 9 of the Broad-Based Black Economic Empowerment Act of 2003
Arrangement of this statement
Para Subject Page
1 Objectivesofthisstatement 2
2 Keymeasurementprinciples 2
3 RecognitionofEquityEquivalentProgrammes 2
4 MeasurementofEquityEquivalentContributionsontheOwnershipScorecard 3
5 TwoSpecicExamplesofEquityEquivalentProgrammes 3
6 SpecicrulesonMultinationals 4
7 Annexe103 5
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2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
1 Objectives of tis statement
Theobjectivesofthisstatementareto:
1.1 denethemeansbywhichMultinationalsmayapplyforrecognitionofEquityEquivalent Programmes;
1.2 specifyhowcontributingtowardstheOwnershipElementofB-BBEEbyMultinationals
ismeasurable;
2 Key Measurement Principles
Any Equity Equivalent Contributions towards the Ownership Element of B-BBEE made by
MultinationalsaremeasurableagainstthevalueoftheiroperationsintheRepublicofSouth
Africa.
3 Recognition of Equity Equivalent Programmes
3.1 TheMinistermay,approvecertainEquityEquivalentProgrammesaftertheMultinational
hasconsultedwiththesectorallineministry,Premiersorotherstakeholdersinany
governmentdepartment,provincialgovernmentorlocalgovernmentwithrespectto
theirequit yequivalentproposal.
3.2 Any Equity Equivalent Programme forming part of a Sector Code constitutes an
approvedprogramme.
3.3 EquityEquivalent Programmesare preferably SectorSpecic,butthe Ministermay
considerrequestsforapprovalofprogrammesthatarenotSectorSpecic.
3.4 EquityEquivalentProgrammesmayinvolve:
3.4.1 programmesthatsupport:
3.4.1.1 theAcceleratedandSharedGrowthInitiativeforSouthAfrica;
3.4.1.2 theJointInitiativeforPrioritySkills;
3.4.1.3 theNationalSkillsDevelopmentStrategy;
3.4.2 programmesthatpromoteenterprisecreationinrespectofcooperativesthatare:
3.4.2.1 morethan50%ownedbyblackpeople;or
3.4.2.2 morethan30%ownedbyblackwomen;or
3.4.2.3 morethan50%ownedbymembersofblackdesignatedgroups;;
3.4.3 any otherprogrammesthat promoteSocio-Economic advancementor contribute to
theoverallsociodevelopmentoftheRepublicofSouthAfrica.
3.5 EquityEquivalentProgrammesmustinclude:
3.5.1 afulldescriptionofprogrammeobjectivesandprojectedoutcomes;
3.5.2 qualicationcriteriaforparticipationintheprogramme;
3.5.3 timelinesforimplementationanddeliverywithmilestonesagainstwhichprogressis
measurable;and
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3.5.4 detailsaboutthesponsorsoftheprogramme.
3.6 Equity Equivalent Programmes are limited to Multinationals subject to a Global
Practice.
3.7 EquityEquivalentProgrammesmayhaveanyofthefollowingastheirbeneciaries:
3.7.1 enterprisesinwhich:
3.7.1.1 blackpeopleholdmorethan50%oftheexercisablevotingrightsandmorethan50%
oftheeconomicinterest;
3.7.1.2 blackwomenholdmorethan30%oftheexercisablevotingrightsandmorethan30%
oftheeconomicinterest;and
3.7.1.3 BlackDesignated Groups hold more than50% oftheexercisable voting rightsand
morethan50%oftheeconomicinterest;or
3.7.2 communities,naturalpersonsorgroupsofnaturalpersonswhereatleast75%ofthe beneciariesareblackpeopleandthesamepercentageofeconomicvalueisderived
byblackpeople.
4 Measurement of Equity Equivalent Contributions on te Ownersip
Scorecard
4.1 TheownershipscoreofaMultinationalparticipatinginanEquityEquivalentProgramme
is calculated in termsof paragraph4.3. A Multinational participatingin anEquity
EquivalentProgrammecannotreceiveanypointsforownershipunderanystatement
inCodeSeries100otherthanthisstatement.
4.2 ContributionstoEquityEquivalentProgrammesaremeasuredasactualcontributions madeusingthegeneralprinciplesetoutincodeseries600and700againstanyofthe
followingtargets:
4.2.1 25% ofthe valueof the South African operations ofthe Multinational, determined
usingaStandardValuation;or
4.2.2 4% ofTotal Revenuefrom its South African operations annuallyover the period of
continuedmeasurement;
4.3 TheOwnershipScoreunderanEquityEquivalentProgrammeusingeitherofthetargets
inparagraphs4.2mustbecalculatedintermsofAnnexe103(A).
5 Examples of Equity Equivalent Programmes
5.1 Enterprisecreation:
5.1.1 IftheequityequivalentcontributionofaMultinationalinvolvesthecreationofanew
Enterprise:
5.1.1.1 thenewEnterprisemustqualifyasaValue-AddingEnterprise;
5.1.1.2 thecreationofthenewEnterprisemustcomplywiththerequirementsforaQualifying
Transactionasdenedinstatement102;
5.1.1.3 thecreationofthenewEnterprisecannotcontributetotheMultinationalsscoreunder
Codeseries600;and
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2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
5.1.1.4 theequity equivalent contributionmust involvethe provisionof interest freeloans,
No-GainGrantsorHumanCapitalInvestmentstothenewEnterpriseequivalentinvalue
to50%ofthenewEnterprisesprojectedoperationalcostsfortherst3yearsfollowing
itsestablishement.
5.2 Investmentinsocialadvancement:
5.2.1 An equity equivalent contribution of a Multinational that involves enhanced Socio-
EconomicDevelopment.
5.2.1.1 mustcomplyfullywithCodeseries700;and
5.2.1.2 cannotformpartoftheMultinationalsscoreunderCodeseries700.
6 SpecicRulesonMultinationals
6.1 AnycontributionstowardstheownershipElementofB-BB-BBEEmadebyMultinational
BusinessesorSouthAfricanMultinationalsaremeasurableagainstthevalueoftheir operationsintheRepublicofSouthAfrica.
6.2 In calculating their ownership score, Multinational Businesses and South African
MultinationalsmustapplytheExclusionPrincipletoanyportionofthebusinessvalue
oftheirSouthAfricanoperationsgainedfromnon-SouthAfricansources.AStandard
valuation method must be used to determine the value of the South African
operations.
6.3 Incalculatingtheirownershipscore,MultinationalBusinessesmayrecognisesalesof
EquityInstrumentsinnon-SouthAfricanEnterprisestoblackpeople,onthefollowing
basis:
6.3.1 thenon-SouthAfricanEnterprisemustformpartofthechainofownershipbetween theMultinationalBusinessanditseventualholdingcompany;and
6.3.2 thetransactionmustcomplywithSouthAfricanexchangecontrolrequirements;and
6.3.3 the percentage of the value of the Equity Instruments sold to the value of the
MultinationalBusinessrepresentstherecognisableblackclaimtoEconomicInterest;
and
6.3.4 the percentage of Exercisable Voting Rights ceded to the buyers of the Equity
InstrumentsintheMultinationalBusinessrepresentstherecognisableblackrightto
ExercisableVotingRights;and
6.3.5 therightsofownershipintheEquityInstrumentsarecomparabletorightsthatwould
haveaccruedhadtheEquityInstrumentB-BBEEnintheMultinationalBusiness.
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ANNEXE 103(A)
ThisformulaisfordeterminingtheOwnershipScoreunderanEquityEquivalentProgramme
usingeitherofthetargetsinparagraph5.2,wherethecontributionismadeupfrontonaonce
offbasis.
A =B
Cx20
Where
A is ownershippoints ofthe Multinational in anyyear arising from its equityequivalent
contribution
Bisthevalueofcontributionsmade
Cisthenancialvalueofthetargetof4%oftotalrevenuefromitsSouthAfricanoperations
annuallyovertheperiodofcontinuedmeasurement;
ThisformulaisfordeterminingtheOwnershipScoreunderanEquityEquivalentProgramme
usingeitherofthetargetsinparagraphs5.2,wherethecontributionismadeonanannual
basistowardsatenyeartargetisasfollows:
Where
AisownershippointsoftheMultinationalinanyyeararisingfromitsequityequivalent
contribution
Bisthevalueoftotalcontributionsmadepriortothedateofmeasurement
Cisthenancialvalueofthetargetinparagraph4.2.1.orthetenyearvalueofcontributions
tobemadeoverthelifeofthisstatement
Disthetime-basedgraduationfactoroutlinedbelow:
10%fortherstyearafterthecommencementofstatement000.
20%forthesecondyearafterthecommencementofstatement000.
40%fromtherstdayofthethirdyearafterthecommencementdateofstatement
000 tothelastdayattheendof the fourthyear afterthecommencementdateof statement000.
60%fromtherstdayofthefthyearafterthecommencementdateofstatement000to
the last day at the end of the sixth year after the commencement date of
statement000.
80%fromtherstdayoftheseventhyearafterthecommencementdateofstatement
000 tothelastday attheendoftheeighthyear afterthecommencementdateof
statement000.
100%fromtherstdayoftheninthyearafterthecommencementdateofstatement000
to the last day at the end of the tenth year after the commencement date of
statement000.
A =1
25% x Dx x 20
B
C
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2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
CODE SERIES 200: MEASUREMENT OF ThE
MANAGEMENT CONTROL ELEMENT OF BROAD-BASED
BLACK ECONOMIC EMPOWERMENT
STATEMENT 200: ThE GENERAL PRINCIPLES FOR MEASURING
MANAGEMENT CONTROL
Issued under section 9 of the Broad-Based Black Economic Empowerment Act of 2003
Arrangement of this statement
Para Subject Page
1 Objectivesofthisstatement 2
2 Managementcontrolscorecard 2
3 CommonexamplesofTopManagement 2
4 Keymeasurementprinciples 2
5 CalculatingtheAdjustedRecognitionforGender 3
6 Calculatingcompliance 3
7 Annexe200(A) 4
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1 Objectives of tis Statement
Theobjectivesofthisstatementaretospecify:
1.1 thescorecardformeasuringtheManagementControlElementofB-BBEE;
1.2 dene the key measurement principles associated with the Management Control
ElementofB-BBEE;and
1.3 thecalculationsformeasuringcompliance.
2 Management Control Scorecard
ThefollowingtablerepresentstheindicatorsandmethodforcalculatingascoreforManagement
Controlunderthisstatement:
C ategor y ManagementControlindicator Weightingpoint s C omplianceTarget
2.1Boardparticipation::
2.1.1ExercisableVotingRightsofblackBoardmembersusingtheAdjustedRecognitionforGender
3 50%
2.1.2 Black Executive Directors using the AdjustedRecognitionforGender
2 50%
2.2.TopManagement:
2.2.1Black SeniorTopManagement usingthe AdjustedRecognitionforGender
3 40%
2.2.2BlackOtherTopManagementusingtheAdjustedRecognitionforGender
2 40%
2.3Bonuspoints:
BlackIndependentNon-ExecutiveBoardMembers 1 40%
3 Common Examples of top Management
TheinclusionofthefollowingexamplesofTopManagementisforguidancepurposesonly:
3.1 SeniorTopManagementpositionsincludethechiefexecutiveofcer,thechiefoperating
ofcer,thechiefnancialofcerandotherpeopleholdingsimilarpositions.
3.2 Other Top Managementpositionsincludethechief information ofcer,theheadof
marketing,theheadofsales,theheadofpublicrelations,theheadoftransformation,
theheadofhumanresourcesandotherpeopleholdingsimilarpositions.
4 Key Measurement Principles
4.1 AMeasuredEntity receivespoints by meeting thetargets forparticipationofblack
peopleandblackwomenatBoardandTopManagementlevel.
4.2 AMeasuredEntitymustusethedataincalculatingitsscoreundertheManagement
ControlscorecardusedinitsreturnsledwiththeDepartmentofLabourunderthe
EmploymentEquityAct.ThisdoesnotapplytoMeasuredEntitiesexemptfromling
suchreturns.
4.3 AMeasuredEntity thatdoesnotdistinguish betweenTopManagementandSenior
ManagementmayincludeitsSeniorManagementunderthisstatement.IfaMeasured
Entityadoptsthisapproach
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2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
4.3.1 thecorrespondingtargetsforSeniorManagementinCodeseries300willapplytothe
ManagementControlscorecard;
4.3.2 Senior Management included in thi s st atement is not measurable under
statement300.
4.4 IfaMeasuredEntitydoesnotdistinguishbetweenSeniorTopManagementandOther
TopManagement,thenTopManagementismeasurableasasingleindicatorwitha
Weightingof5pointsunderparagraphs2.2.1and2.2.2.
4.5 If Measured Entities do appoint Non-Executive Independent Board Members, they
areencouragedtoappointpersonswhodonotserveinthatcapacityforanyother
MeasuredEntity.
5 Calculating te Adjusted Recognition for Gender
TheAdjustedRecognitionforGenderiscalculatedintermsofformulaAinAnnexe200(A).
6 Calculating Compliance
6.1 TheManagementControlindicatorsprovidedforintheManagementControlScorecard
mustbecalculatedintermsofformulasBandCinAnnexe200(A).
6.2 IfaMeasuredEntitygainsascoreforaManagementControlindicatorthatismore
thanthe relevant weightingpoints, that Enterprise will only receivetheWeighting
points.
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A = B2
+ C
Cislimitedtoamaximumof50%ofthetarget
Where
A istheAdjustedRecognitionforGender
Bisthepercentageofemployeesinthemeasurementcategorythatareblackpeople
Cisthepercentageofemployeesinthemeasurementcategorythatareblackwomen
ANNEXE 200(A)
A: Calculation of te Adjusted Recognition for Gender
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2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
B: Calculating Compliance
Thecalculationofthemanagementindicatorsprovidedforinparagraphs2.1.1,2.1.2.,2.2.1
and2.2.2isasfollows:
A =B
CX D
Cislimitedtoamaximumof50%ofthetarget
Where
Aisthescoreformeasuredmanagementindicator
BistheAdjustedRecognitionforGendercalculatedinparagraph5
Cisthetargetforthatmeasurementcategoryasperparagraph2
DistheWeightingformeasuredindicatorasperparagraph2
C: The calculation of the management indicator provided for in paragraph 2.3 is as
follows:
A =B
CX D
Where
A isthescore for the managementindicator inparagraph2.3ofthenumberof blackIndependentNon-ExecutiveBoardMembersoftheMeasuredEntityasapercentageof
thetotalnumberofIndependentNon-ExecutiveBoardMembersoftheMeasuredEntity
CisthetargetforIndependentNon-ExecutiveBoardMembersoftheMeasuredEntityin
paragraph2.3
DistheWeightingpointsinparagraph2.3
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CODE SERIES 300: MEASUREMENT OF ThE
EMPLOYMENT EQUITY ELEMENT OF BROAD-BASED
BLACK ECONOMIC EMPOWERMENT
STATEMENT 300: ThE GENERAL PRINCIPLES FOR MEASURING
EMPLOYMENT EQUITY
Issued under section 9 of the Broad-Based Black Economic Empowerment Act of 2003
Arrangement of this statement
Para Subject Page
1 Objectivesofthisstatement 2
2 EmploymentEquityscorecard 2
3 Keymeasurementprinciples 2
4 CalculatingtheAdjustedRecognitionforGender 3
5 Measurementoftheemploymentequitycriteria 3
6 Annexe300(A) 4
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2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
1 Objectives of tis statement
Theobjectivesofthisstatementareto:
1.1 specifythescorecardformeasuringEmploymentEquitycontributionstoB-BBEE;
1.2 dene the key measurement principles for measuring the Employment Equity
contributionstoB-BBEE;and
1.3 denetheformulaforcalculatingthescoreforEmploymentEquity.
2 Employment Equity Scorecard
2.1 ThefollowingtablerepresentsthecriteriausedforderivingascoreforEmployment
Equityunderthisstatement:
MeasurementCategor y&Criteria Weightingpoints Compliancetargets
Years0-5 Years6-10
2.1.1 Black D isabled Emp loyeesas ap ercentage of all employeesusingtheAdjustedRecognitionforGender
2 2% 3%
2.1. 2 Black employees in Senior Management as apercentageofallsuchemployeesusingtheAdjustedRecognitionforGender
5 43% 60%
2.1. 3 Black employees in Middle Management as apercentageofallsuchemployeesusingtheAdjustedRecognitionforGender
4 63% 75%
2.1.4 Black employees in Junior Management as apercentageofallsuchemployeesusingtheAdjustedRecognitionforGender
4 68% 80%
2.1.5 BonuspointformeetingorexceedingtheEAPtargetsineachcategoryunder2.1.1to2.1.4
3
2.2 TheWeightingpointsin theEmploymentEquity scorecardrepresentthemaximum
numberofpointspossibleforeachofthecriteria.
3 Key Measurement Principles
3.1 Whereverpossible,aMeasuredEntitymustusethedatathatitleswiththeDepartment
of L abour under the Employment Equit y Act in calculating it s score under the
employmentequityscorecard.
3.1.1 NoMeasuredEntityshallreceiveanypointsundertheEmploymentEquityScorecard
unlesstheyhaveachievedasub-minimumof40%ofeachofthetargetssetoutonthe
EmploymentEquityScorecardinrespectofthebothveyearperiods.
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3.2 InorderforaMeasuredEntitytoachievebonuspointsataparticularlevel,theentity
needstomeetorexceedtheEAPtargets.
3.3 AMeasuredEntityexemptfromlingreturnsmustcompileitsdataforcalculatingits
score undertheEmployment Equity Scorecard usingthe guidelines setoutin the EmploymentEquityActanditsEERegulations.
3.4 If the organisational structure of a Measured Entity does not distinguishbetween
MiddleManagementandJuniorManagement,itcanconsolidatethoseMeasurement
CategoriesagainstthetargetsforJuniorManagement.Theweightingpointsforthe
MeasurementCategoriesmustbeadjustedasfollows:
3.4.1 SeniorManagement8points;
3.4.2 JuniorManagement6points.
3.5 Black women employees in each Measurement Category qualify for enhanced
recognitionusingtheAdjustedRecognitionforGender.
4 Calculating te Adjusted Recognition for Gender
TheAdjustedRecognitionforGenderiscalculatedintermsoftheformulasetoutinAnnex
(300A).
5 Measurement of te Employment Equity Criteria
ThecriteriaintheEmploymentEquityscorecardismeasuredintermsoftheformulasetoutin
Annex300(A).
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2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
ANNEX300(A)
A:CALCULATINGTHEADJUSTEDRECOGNITIONFORGENDER
ThecalculationoftheAdjustedRecognitionforGenderisasfollows:
A =B
2+ C
Cislimitedtoamaximumof50%ofthetarget
Where
AistheAdjustedRecognitionforGender
Bisthepercentageofemployeesinthemeasurementcategorythatareblackpeople
Cisthepercentageofemployeesinthemeasurementcategorythatareblackwomen
B: Measurement of te Employment Equity Criteria
Thisequationexplainsthemethodofmeasurementofthecriteriain theEmploymentEquity
scorecard:
A =B
CX D
Where
Aisthescoreformeasurementcategoryindicator
BistheAdjustedRecognitionforGendercalculatedinparagraph4
Cisthetargetforthatmeasurementcategoryasperparagraph2
DistheWeightingformeasuredindicatorasperparagraph2
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CODE SERIES 400: MEASUREMENT OF ThE SKILLS
DEVELOPMENT ELEMENT OF BROAD-BASED BLACK
ECONOMIC EMPOWERMENT
STATEMENT 400: ThE GENERAL PRINCIPLES FOR MEASURING SKILLS
DEVELOPMENT
Issued under section 9 of the Broad-Based Black Economic Empowerment Act of 2003
Arrangement of this statement
Para Subject Page
1 Objectivesofthisstatement 2
2 TheSkillsDevelopmentScorecard 2
3 Keymeasurementprinciples 2
4 CalculatingtheAdjustedRecognitionforGender 3
5 Measurementofskillsdevelopmentindicators 3
6 TheLearningProgrammeMatrix 3
7 Annexe400(A) 4
8 Annexe400(B) 5
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2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
1 Objectives of tis Statement
Theobjectivesofthisstatementaretospecify:
1.1 thescorecardformeasuringtheSkillsDevelopmentElementofB-BBEE;
1.2 dene the key measurement principles associated with the Skills Development
Element;and
1.3 theformulaformeasuringtheSkillsDevelopmentElementofB-BBEE.
2 Te Skills Development Scorecard
2.1 The following table represents the criteria used for deriving a score for Skills
Developmentunderthisstatement:
Categor y SkillsDevelopmentElement Weightingpoints ComplianceTarget
2.1.1 SkillsDevelopmentExpenditureonanyprogramspeciedintheLearningProgrammesMatrix:
2.1.1.1 Skills Development Expenditure on LearningProgrammes specied in the Learning ProgrammesMatrixforblackemployeesasapercentageofLeviableAmountusingtheAdjustedRecognitionforGender
6 3%
2.1.1.2 Skills Development Expenditure on LearningProgrammesspeciedintheLearningProgrammesMatrixfor black employees with disabilities as a percentageofLeviable Amount using theAdjustedRecognition forGender.r
3 0.3%
2.1. 2 Learner ships
2.1.2.1 Number of black emp loyees p articipatingin Learnerships or Category B, C and D Programmesasa percentageof totalemployeesusing theAdjustedRecognitionforGender
6 5%
2.2 TheWeightingpointsin the SkillsDevelopmentscorecard represent the maximum
numberofpointspossibleforeachofthecriteria.
3 Key Measurement Principles
3.1 MeasuredEntitiesreceivepointsontheSkillsDevelopmentscorecardonlyif:
3.1.1 theyareincompliancewiththerequirementsoftheSkillsDevelopmentActandthe
SkillsDevelopmentLeviesAct;
3.1.2 theyhaveregisteredwiththeapplicableSETA;
3.1.3 theyhavedevelopedaWorkplaceSkillsPlan;and
3.1.4 theyhave implementedprogrammes targetedat developingPrioritySkillsgenerally,
andspecically,forblackemployees.
3.2 Expenses on scholarships and bursaries for employees does not constitute Skills
Development Expenditureif theMeasuredEntity canrecoveranyportionof those
expensesfromtheemployeeorifthegrantofthescholarshiporbursaryisconditional.
Despitetheaforegoing,iftherightofrecoveryortheconditioninvolveseitherofthe
followingobligationsoftheemployee,theexpensesarerecognisable:
3.2.1 theobligationofsuccessfulcompletionintheirstudieswithinthetimeperiodallocated;
or
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3.2.2 theobligationofcontinuedemploymentbytheMeasuredEntityforaperiodfollowing
successfulcompletionoftheirstudiesisnotmorethantheperiodoftheirstudies.
3.3 AnySkillsDevelopmentExpenditurebyaMeasuredEntitythatisanABETprogrammeis
recognisable at amultipleof 1.25to theactual value of such Skills Development Expenditure.
3.4 Skills Development Expenditure includesany legitimate expenses incurred for any
LearningProgrammeofferedbyaMeasuredEntitytoitsemployeesevidencedbyan
invoiceorappropriateinternalaccountingrecord.
3.5 SkillsDevelopmentExpenditurearisingfromUncertiedLearningProgrammesorfrom
Category G Learning Programmes under the Learning Programmes Matrix cannot
representmorethan15%ofthetotalvalueofSkillsDevelopmentExpenditure.
3.6 Legitimatetrainingexpensesincludes:
3.6.1 costsoftrainingmaterials;
3.6.2 costsoftrainers;
3.6.3 costsoftrainingfacilitiesincludingcostsofcatering;
3.6.4 scholarshipsandbursaries;
3.6.5 coursefees;
3.6.6 accommodationandtravel;and
3.6.7 administrationcostssuchastheorganizationoftrainingincluding,whereappropriate,
thecost to theMeasured Entityof employing askills developmentfacilitator ora
trainingmanager.
3.7 Salaries or wages paid to an employee participating as alearner in anyLearning
ProgrammeonlyconstituteSkillsDevelopmentExpenditureiftheLearningProgramme
isaLearnershiporfallswithinCategoryB;C;orDoftheLearningProgrammeMatrix.
4 Calculating te Adjusted Recognition for Gender
The calculation ofthe Adjusted Recognition for Genderis setout informula A inAnnexe
400(B).
5 Measurement of Skills Development Indicators
TheformulathatexplainsthemethodofmeasurementofthecriteriaintheSkillsDevelopment
scorecardisintermsofformulaBinAnnexe400(B).
6 Te Learning Programme Matrix
TheMinistermayfromtimetotime,bynoticeinthegazette,reviseorsubstitutetheLearning
Programme Matrix. Any changes will only be applicable to Compliance Reports prepared
for a MeasuredEntityfor the rst 12-month period following the gazetting ofa revision or
substitution.
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2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
Annexe400A-LearningProgrammeMatrix
C at N ar rat iv eD es cri pti on D eli ver yMod e L ear ningSi te L ear ningAc hi ev ement
A Institution-basedtheoretical
instructionaloneformallyassessedbytheinstitution
Institutional
instruction
Institutionssuch
asuniversitiesandcolleges,
schools,ABET
providers
Recognisedtheoretical
knowledgeresultingintheachievementofadegree,
diplomaorcerticateissued
byanaccreditedorregistered
formalinstitutionoflearning
B Institution-basedtheoretical
instructionaswellassome
practicallearningwithan
employerorinasimulated
workenvironmentformally
assessedthroughthe
institution
Mixedmodedelivery
withinstitutional
instructionaswellas
supervisedlearning
inanappropriate
workplaceor
simulatedwork
environment
Institutionssuch
asuniversities
andcolleges,
schools,ABET
providersand
workplace
Theoreticalknowledgeand
workplaceexperiencewith
setrequirementsresultingin
theachievementofadegree,
diplomaorcerticateissued
byanaccreditedorregistered
formalinstitutionoflearning
C Recognisedorregistered
structuredexperiential
learningintheworkplacethatisrequiredafter
theachievementofa
qualicationformally
assessedbyastatutory
occupationalorprofessional
body
Structuredlearning
intheworkplace
withmentoringorcoaching
Workplace Occupationalorprofessional
knowledgeandexperience
formallyrecognisedthroughregistrationorlicensing
D Occupationally-directed
instructionalandwork-
basedlearningprogramme
thatrequiresaformal
contractformally
assessedbyanaccredited
body
Institutional
instructiontogether
withstructured,
supervised
experientiallearning
intheworkplace
Institutionand
workplace
Theoreticalknowledgeand
workplacelearning,resulting
intheachievementofaSouth
AfricanQualicationsAuthority
registeredqualication,a
certicateorothersimilar
occupationalorprofessional
qualicationissuedbyan
accreditedorregisteredformal
institutionoflearning
E Occupationally-directed
instructionalandwork-
basedlearningprogramme
thatdoesnotrequirea
formalcontractformally
assessedbyanaccredited
body
Structured,
supervised
experientiallearning
intheworkplace
whichmayinclude
someinstitutional
instruction
Workplace
andsome
institutionalas
wellasABET
providers
Creditsawardedforregistered
unitstandards
F Occupationally-directed
informalinstructional
programmes
Structured
informationsharing
ordirectinstruction
involvingworkshops,
seminarsand
conferencesand
shortcourses
Institutions,
conferences
andmeetings
Continuingprofessional
development,attendance
certicatesandcreditsagainst
registeredunitstandards(in
someinstances)
G Work-basedinformalprogrammes
Informaltraining Workplace Increasedunderstandofjoborworkcontextorimproved
performanceorskills
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ANNEXE400(B)
A: Calculating te Adjusted Recognition for Gender
ThecalculationoftheAdjustedRecognitionforGenderisasfollows:
A =B
2+ C
Cislimitedtoamaximumof50%ofthetarget
Where
AistheAdjustedRecognitionforGender
Bisthepercentageofemployeesinthemeasurementcategorythatareblackpeople
Cisthepercentageofemployeesinthemeasurementcategorythatareblackwomen
B: Measurement of Skills Development Indicators
ThisformulaexplainsthemethodofmeasurementofthecriteriaintheSkillsDevelopment
scorecard:
A =B
Cx D
Where
Aisthescoreforanygivencriteriaasreferredtointhescorecardunderstatement400
BistheAdjustedRecognitionforGendercalculatedunderthecalculationoftheadjusted
recognitionforgender
Cisthetargetfortheapplicablecriteriaasreferredtointhescorecardunderstatement
400
DistheWeightingfortheapplicablecriteriaasreferredinthescorecardunderstatement
400
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2 0 0 7 D E P A R T M E N T O F T R A D E A N D I N D U S T R Y
CODE SERIES 500: MEASUREMENT OF ThE
PREFERENTIAL PROCUREMENT ELEMENT OF
BROAD-BASED BLACK ECONOMIC EMPOWERMENT
STATEMENT 500: ThE GENERAL PRINCIPLES FOR MEASURING
PREFERENTIAL PROCUREMENT
Issued under section 9 of the Broad-Based Black Economic Empowerment Act of 2003
Arrangement of this statement
Para Subject Page
1 Objectivesofthisstatement 2
2 Preferenti