In the context of B-BBEE, when Black people incur debt as a result of buying shares in a company, it’s called acquisition debt.
Something that happens when a business helps learners without jobs by giving them education and training and then hires them.
Working and learning a trade for a certain period of time while earning an income.
B-BBEE Codes of Good Practice
The Codes or B-BBEE Codes provide clarity on what BBBEE is and how an enterprise’s contribution should be measured. The Codes should be applied in the development, evaluation and monitoring of B-BBEE Charters, initiatives, transactions and other implementation mechanisms.
To indicate a level of compliance, a business must score certain points on a B-BBEE Scorecard. These are called B-BBEE points.
A document that’s awarded by a SANAS accredited agency to indicate a company’s level of B-BBEE compliance. The certificate is valid for 1 year and companies must renew it and keep it valid. Businesses can use their B-BBEE certificate to claim procurement spend with B-BBEE compliant suppliers. In order to claim, a company has to buy from B-BBEE compliant suppliers to score points for B-BBEE procurement spend.
A tool used to measure a company’s level of B-BBEE compliance.
The scorecard determines a company’s B-BBEE preferential procurement level and gives guidelines on how a company can improve its current level.
Being in line with all B-BBEE requirements.
The points a company receives on its B-BBEE scorecard.
An indicator of a company’s B-BBEE points and level.
B-BBEE verification process
The process of becoming B-BBEE compliant.
Black new entrants
If Black individuals have not previously benefited financially from a B-BBEE transaction worth more than R50 million, they are considered Black new entrants.
B-BBEE procurement spend
When a company’s B-BBEE rating is being calculated, five B-BBEE elements are taken into consideration. The five elements of B-BBEE are:
- Management Control;
- Skills Development;
- Enterprise and Supplier Development;
- Socio-Economic Development.
Shows the amount of profit that goes to Black owners as a result of direct ownership, or to Black beneficiaries as a result of indirect ownership.
If someone is employed by a company and is on the company’s learning programme, they are considered an employed learner.
This is when shares are placed in a Trust (that is made up of Black people) and a portion of the company’s profits (the profits are used to benefit Black people) are then paid based on the number of shares in the Trust. While the people (beneficiaries) who benefit don’t have direct ownership, the company is seen as having Black ownership.
Being entitled to vote on decisions that affect the company simply because you own a share in a company.
A B-BBEE element that measures the number of Black South Africans who are key decision makers in a company and who form part of management.
A B-BBEE element that measures how much a company contributes towards developing and up-skilling Black South Africans.
General B-BBEE Codes that certain sectors have adapted to meet the needs that are specific to their industry. In terms of the updated B-BBEE Codes, sectors that chose to have Sector Codes must ensure their codes are in line with the new B-BBEE Codes.
There are five B-BBEE elements. Out of the five: Ownership, Skills Development and Enterprise and Supplier Development are considered priority elements. To achieve favourable B-BBEE score, a company must ensure that it earns a minimum number of points in each of the priority elements.
A person who is hired on a permanent basis to provide a service to a company in exchange for compensation.
Persons With Disabilities (PWDs)
Employees who have a long-term or recurring physical disability or mental impairment which significantly restricts their chances of employment as well as progression in employment.
When it comes to B-BBEE, there are certain types of entities. The thing that determines the type of entity a business is, is its revenue threshold (highest level of yearly income).
- Exempted Micro Enterprises (EMEs) have a revenue threshold of R10million;
- Qualifying Small Enterprises (QSEs) have a revenue threshold of R50 million; and
- Large companies have a revenue threshold of over R50 million.
Means Exempt Micro Enterprise. If a business has a yearly income of less than R10 million, it’s considered an EME.
If a company has a yearly income of more than R50 million, it’s considered a large company.
A firm that is being rated for B-BBEE compliance.
Total Measured Procurement Spend (TMPS)
The amount of money spent on goods or services by a measured entity in a 12-month period.
When a company specifically buys goods and services from a B-BBEE compliant supplier, it’s called preferential procurement.
A company that is B-BBEE compliant. EMEs are automatically considered to be empowering suppliers. QSEs and large companies must meet certain requirements (such as local content, job creation, transformation of raw materials, skills transfer and labour costs) to qualify as empowering suppliers. If a business buys goods from an empowering supplier, it is then able to claim procurement spend.
Enterprise Development (ED)
If a company commits itself to support small Black-owned businesses (with financial or non-financial means), it’s called Enterprise Development. In terms of legislation, the value of the support given needs to be equal to 1% of Net Profit After Tax of the company.
If a company helps a Black-owned business by giving it support (which has a financial value) such as products that cost less, free office space and training etc., this is considered non-financial support.
If, in terms of the new B-BBEE Codes, a contribution (financial or non-financial) qualifies as a Socio Economic Development contribution, Supplier Development contribution or an Enterprise Development contribution, it’s considered a qualifying contribution.
Enterprise Development (ED) beneficiaries
EMEs or QSEs that are at least 51% Black owned.
Industry specific initiatives
If an activity is specific to an industry and qualifies as a contribution in the B-BBEE scorecard, it’s considered an industry specific initiative.
This is when Black people have at least 25% of shares in a company and no loans are linked to the shares.
Rights of ownership
Refers to economic interest and being able to use voting rights.
Stands for South African National Accreditation System. SANAS is government agency that accredits companies in various industries. Amongst other things, the agency is responsible for accrediting companies to do B-BBEE certification.
SANAS accredited B-BBEE agency
In order for a B-BBEE verification company to be able to measure, rate and report on B-BBEE, it must have accreditation from SANAS.
Skills development expenditure
The amount of money a business spends on upskilling Black people.
Stands for Sector Education and Training Authority. There is a SETA for every sector in the country and these organisations are responsible for education and training and increasing the skills of people in their sector.
Enterprise and Supplier Development (ESD)
The growing of small and medium sized businesses through the provision of finance and support.
Stands for Small and Medium Enterprises.
Stands for Small, Micro and Medium Enterprises.
A company that is in the first stage of its operations.