If you’re considering undergoing Broad-Based Black Economic Empowerment (BBBEE or BEE for short) verification, you might be wondering what you are about to sign yourself up for. You’ve probably heard that BBBEE verification procedures can be prolonged and expensive, and that they are stressful and frustrating. In this post, we seek to dispel these myths – for myths they most certainly are, as long as you go through an accredited, reliable BBBEE verification agency.
The first step in BBBEE verification is a consultation with your chosen agency. They will confirm the size of your company and its classification, as the BBBEE requirements differ for Exempt Micro Enterprises (EMEs), Qualifying Small Enterprises (QSEs) and Generic Enterprises (GENs). To do this, they will look at your annual turnover. EMEs have an annual turnover of R10 million or less, while QSEs have an annual turnover in the range of R10 million to R50 million, and GENs are those entities bringing in above R50 million a year.
Once the classification has been confirmed, the next step in the verification process is to calculate your ranking on the BBBEE scorecard. There are eight levels, with one being the best in terms of the benefits it confers. EMEs, which many small, family-run businesses tend to be classified as, are subject to the lightest requirements when it comes to BBBEE compliance – as long as they operate in the general sector.
For a start, they are automatically awarded Level 4 BBBEE contributor status just by confirming their turnover. This can be done by providing a sworn oath to the effect, stamped by a Commissioner of Oaths. Thereafter they are upgraded to Level 2 if the percentage of black ownership is at least 51%, and Level 1 if it is 100%. As an added bonus, EMEs are deemed Empowering Suppliers, allowing them to participate in the lucrative chain of preferential procurement. EMEs operating in other sectors are subject to many of the same requirements as QSEs.
If you are determined to be a QSE or EME facing QSE requirements, the verification agency will guide you through the submission of paperwork needed to ensure BBBEE compliance. Like EMEs, QSEs with 51% or higher black ownership are awarded Level 2 status, while those with 100% black ownership are given Level 1 status. Other QSEs must show compliance with the five categories on the BBBEE scorecard: enterprise and supplier development, management control, socio-economic development, skills development and ownership. You get points for the efforts you are making in each category, and your BBBEE scorecard rating is then calculated.
To be classified as Empowering Suppliers, QSEs need to show compliance in a range of areas, including job creation, use of local suppliers and empowerment of smaller businesses. Your verification agency will show you what needs to be done to receive this classification. GENs are subject to similar requirements, with one key difference being that QSEs are subject to only a partial on-site audit, while GENs require a full on-site audit.
Once the BBBEE verification procedures are complete, the agency will provide you with your BBBEE certificate, which is valid for a year. They will also talk you through ways in which you can work to, at the very least, maintain, or upgrade your ranking.
To book a consultation, contact a Cenfed representative today.