New BEE regulations
THE state has unveiled revised Broad-based Black Economic Empowerment Codes of Good Practice that seek to give more muscle to how empowerment is done, while also punishing companies involved in fronting.
The public will be given 60 days, starting on Tuesday, to comment on the proposed codes.
The revised Codes of Good Practice proposes stringent measures that require companies to be empowered.
The document will also make life easier for wholly black-owned businesses by cutting red tape and exempting them from carrying out a BEE verification process.
Trade and Industry Minister Rob Davies said it was unfair for wholly black-owned companies, especially small businesses, to spend huge sums of money to prove that they were black.
He said some companies had to pay R40 000 to be verified as black.
Davies said the 100% black-owned companies would automatically be classified as BEE Level-one contributors, while those that are 50% black-owned will be classified as Level two contributors.
Level one is currently the highest score for companies wanting to supply goods and services to government departments, while Level six is the lowest.
Though the revised scorecard has nine contributor levels, the scoring will differ significantly.
Companies that sit on Level four after scoring 68 points are to be downgraded to Level seven in future.
Empowerment analyst Ajay Lalu said the new codes would overhaul how companies conducted empowerment.
"If, currently, a company is a Level four contributor the proposed codes will lead to the company with the same number of points jumping down to being a Level seven contributor," he said.
He said the codes were to create an economy in which productive assets will be in black hands and to make sure that the government's enterprise development programme is aligned to the state's key national priorities," Lalu said.
Davies also talked tough on fronting, saying there would be a commissioner to deal with those involved.