Various B-BBEE related matters, including how to determine the validity of a B-BBEE Certificate

by | Jan 25, 2019 | B-BBEE, Newsletters

[vc_row][vc_column][vc_column_text]There have been several B-BBEE documents issued late last year, or early this year or which were gazetted while we were all enjoying a well-earned break. These include:

  • B-BBEE Commission – Explanatory notice 1 of 2019 – Submission of Information in Relation to a B-BBEE Compliance report for Section 13G (3). This was issued in January 2019 and can be downloaded here.
  • B-BBEE Commission – Practice Guide 1 of 2018 – Determining the validity of a Broad-Based Black Economic Empowerment Verification Certificate, B-BBEE Certificate and Sworn Affidavit. This was issued on 3 September 2018. To download click here.
  • Department of Mineral Resources – Gazette 42118 dated 19 December 2018 – Amendments to Mining Charter 2018 – Unsigned by the Minister – Download here
  • Department of Mineral Resources – Gazette 42122 dated 19 December 2018 –Implementation guides to Mineral Charter 2018 – Download here
  • Department of Mineral Resources – Gazette 42130 dated 20 December 2018 – Amendments to Mining Charter 2018 – Signed by the Minister – Download here
  • MOU between the B-BBEE Commission and the KZN Department of Economic Development, Tourism and Environmental Affairs – download here

I want to focus briefly on the two documents issued by the B-BBEE Commission.

Explanatory notice 1 of 2019 – Submission of Information in Relation to a B-BBEE Compliance report for Section 13G (3) – Effective 1 April 2019

  • This document is issued by the B-BBEE Commission in terms of section 13F(3)(b) of the B-BBEE Act to give guidance to SETAs on the documentation requirements and reporting formats to be used when submitting B-BBEE compliance reports to the B-BBEE Commission.
  • These reports are to be filed with the B-BBEE Commission to enable the Commission to review and monitor Skills Development spend, and programmes implemented by companies as disclosed in their Work Place Skills plans and Annual Training Reports (WSP and ATR).
  • The SETAs are to report within either 30 days of approval of their annual reports and financial statements, or 90 days of their financial year end.
  • Note that this Explanatory Note does not affect companies reporting to the SETAs. Each SETA will use the WSP and ATR filed by companies with the SETA as the source of the information included in the SETA report to the B-BBEE Commission.
  • The reports must include the following information in the layout attached to the explanatory note:
    • “Number of black persons trained by member entities per race classification, gender, age, location, disability indication and value thereof,
    • Indicate type of training provided to black people,
    • Provide list of skills development services offered by SETA to member entities,
    • Indicate implementation of the skills development scorecard by member entities as per the applicable codes,
    • Identify list of critical and priority skills for the sector(s) and implementation by member entities, and
    • Provide number of member entities who submitted and implemented the approved workplace skills plan.”
  • If the SETA does not comply then the B-BBEE Commission will issue a request to comply within 30 days.
  • In the event of the SETA still failing to comply the Commission must reject the report, give the reason for rejection and the SETA will then be deemed not to have complied with the terms of the B-BBEE Act.
  • This is reporting to be done by the SETA to the B-BBEE Commission. It is of interest for verification purposes and for WSP and ATR purposes as companies need to identify critical and priority skills.

 

Practice Guide 1 of 2018 – Determining the validity of a Broad-Based Black Economic Empowerment Verification Certificate, B-BBEE Certificate and Sworn Affidavit

This was issued on 3 September 2018. The Commission states that it is a non-binding document issued for interpretation purposes only, it is not a legal document or a ruling of the B-BBEE Commission though it does show “… approach that the B-BBEE Commission is likely to take…”

The document states that it is illegal to trade with an invalid or incorrect certificate.

Use of affidavits

The only time an EME (a company with revenue less than R10 million) will be verified by a SANAS accredited verification agency is if they believe they will achieve a better level using the QSE scorecard. There are the following exceptions:

  • The Transport Sector Codes have not been aligned with the amended Codes of Good Practice. EMEs operating in this sector must obtain B-BBEE certificates.
  • The Construction Sector code requires EME with turnover greater than R3 million (contractors) and R1.8 million (BEPs) to meet the 40% subminimum for Skills Development or be discounted a level. This requires verification by a SANAS accredited verification agency, and a B-BBEE certificate is issued.
  • The Financial Services Sector Code allows 51% and 100% black-owned QSE to obtain a certificate after verification by a SANAS accredited agency.
  • A Start-up or an EME tendering on contracts of greater than R10 million must be verified as a QSE and if the contract is for greater than R50 million, they must be verified using the Generic Scorecard.
  • If the company obtains a certificate from the CIPC.

The following must be considered when determining the validity of a sworn affidavit.

  1. “Name/s of deponent as they appear in the identity document and the identity number.
  2. Designation of the deponent as either the director, owner or member must be indicated in order to know that person is duly authorised to depose of an affidavit
  3. Name of enterprise as per enterprise registration documents issued by the CIPC, where applicable, and enterprise business address.
  4. Percentage of black ownership, black female ownership and designated group. In the case of specialised enterprises as per Statement 004, the percentage of black beneficiaries must be reflected.
  5. Indicate total revenue for the year under review and whether it is based on audited financial statements or management account.
  6. Financial year end as per the enterprise’s registration documents, which was used to determine the total revenue.
  7. B-BBEE Status level. An enterprise can only have one status level.
  8. Empowering supplier status must be indicated. For QSEs, the deponent must select the basis for the empowering supplier status.
  9. Date deponent signed and date of Commissioner of Oath must be the same.
  10. Commissioner of Oath cannot be an employee or ex officio of the enterprise because, a person cannot by law, commission a sworn affidavit in which they have an interest.” This, I believe, is quite widely ignored.

The following must be considered when determining the validity of a CIPC certificate for an EME. Note I have only seen 1 example of a CIPC certificate over the last 3 years.

  1. “Name of enterprise, registration number and business address.
  2. Date of issue and expiry adding to twelve months (e.g 9 June 2018 to 8 June 2019) must be indicated.
  3. Percentage of total black ownership, black female ownership and total white ownership.
  4. Certificate number.
  5. Barcode with tracking number.
  6. Barcode with enterprise number.
  7. B-BBEE Status and procurement recognition level.
  8. the dti logo on the top left corner, and CIPC logo on the top right corner.
  9. CIPC watermark.”

Contents of B-BBEE Certificates

B-BBEE certificates can only be issued by a verification agency accredited by SANAS, no other certificates can be accepted. These agencies undertake a rigorous accreditation process, are reviewed and tested on an annual basis and reaccredited every 3 to 5 years. The process is very stringent. I am aware of one company that has been working on their accreditation for over 2 years.

The certificate must show the following information:

  1. “Name of enterprise as per enterprise registration documents issued by CIPC, and enterprise business address.
  2. Value-Add Tax number, where applicable.
  3. The B-BBEE Scorecard against which the certificate is issued, indicating all elements and scores achieved for each element. The actual score achieved must be linked to the total points as per the relevant Codes.
  4. B-BBEE status with corresponding procurement recognition level.
  5. The relevant Codes used to issue the B-BBEE Verification Certificate.
  6. Date of issue and expiry (e.g. 9 June 2018 to 8 June 2019). Where a measured entity was subjected to a re-verification process, due to material change, the B-BBEE Verification Certificate must reflect the initial date of issue, date of re-issue and the initial date of expiry. Re-verification does not extend the lifespan of the B-BBEE Verification Certificate.
  7. Financial period which was used to issue the B-BBEE Verification Certificate. I have seen certificates issued by accredited verification agencies where this is not reflected on the face of the certificate, and some agencies disclose this information in a detailed report which is appended to the certificate
  8. Unique identification number of the B-BBEE verification professional or agency (e.g. BVA…).
  9. Name and logo/mark of the B-BBEE verification professional or agency.
  10. A B-BBEE Verification Certificate must be signed by the technical signatory at the bottom with full name and surname. The details of the technical signatory can be checked from the SANAS website www.sanas.co.za. No other person is allowed to sign the B-BBEE Verification Certificate apart from the technical signatory.
  11. The SANAS logo on the B-BBEE Verification Certificate.” This logo is unique to each agency as it shows that agencies BVA number required in terms of point h) above.

 

I hope you all had a great break over Christmas and New Year and that 2019 will be peaceful and prosperous for you.

If you need any B-BBEE consulting, please do not hesitate to contact Richard Ryding on 083 440 2130 or [email protected].

Richard Ryding[/vc_column_text][/vc_column][/vc_row]