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Frequently Asked Questions
Q: What is BEE?
A: BEE or Black Economic Empowerment is a process by which companies undertake and/or engage in a number of different initiatives aimed at empowering black people and/or black women and/or black youth and/or black people living with disabilities and/or black community based organisations. There’re a set of rules that apply to complying with the requirements of the BEE Act and proving that you are complying with such requirements. Our Client Managers can be reached on 0861 EMPOWA for help.
Q: Do I have to give away my company or sell my shares?
A: NO! No private organisation is compelled to give away or sell its shares and/or assets to black individuals in order to comply with the requirements of the BEE Act. Depending on your circumstances, you could achieve 100% compliance without even taking the ownership of your company into consideration.
Q: How much shareholding Do I need to sell to be black empowered?
A: Businesses that are 50.01% Owned by Black People are referred to as Black Owned Businesses, 25.01% would be Black Empowered Businesses, 5.01% would be Black Influenced Businesses, 30.01% Owned by Black Women would be Black Women Owned Businesses.
Note that many people use black empowered and BEE compliant interchangeably. Your business can be 100% compliant with 0% Black Ownership and 0% compliant with 100% Black Ownership. The two are functions of different calculations.
Q: Where can I find a black/white partner for my business?
A: To find a black partner you could look at different possibilities, the following areas could be a starting point: Contact a BEE Consultant or Verification Agency; Black Employees; Black Civic Organisations; Black Suppliers (vertical integration); Black Clients; Black Consortiums (a Google search should suffice); etc.
If you want to buy into a white owned business, you can contact a BEE Consultant/Verification Agency scour databases of businesses for sale; speak to your clients; your suppliers; headhunt opportunities in industries you are interested in; etc.
Q: What is BEE Verification?
A: BEE Verification is the process by which a company’s BEE credentials are audited to measure it’s compliance with the requirements of the BEE Act. It is through this process that a company can achieve an independent BEE certificate and Scorecard.
Q: Why should I get my business verified?
A: There are three very good reasons why you should get an independent BEE Verification Certificate; (a) your competitors already have it and your customers are already requesting it, not having it will almost certainly lead to you losing market share and eventually your business. (b) It is now a requirement in tenders or public sector procurement that companies should provide proof of their BEE compliance as part of the tender evaluation. An independent BEE certificate provides you with the most suitable evidence. (c) Lastly, BEE certificates have become an integral part of doing business in South Africa, non-compliance or not having one will definitely hinder your ability to compete in the market.
Q: How long does BEE verification take?
A: As little as a day or two in the case of an Exempted Micro Enterprise and as much as two weeks to three months in the case of Qualifying Small Enterprises and Generic Enterprise. It is really a function of how ready a company is to get verified, how large a company is (Employees, Branches & Suppliers) and who is doing the verification.
Q: What is a procurement recognition level?
A: Companies are measured on a scale on 1 – 9 with 1 being the highest and 9 being the lowest. Your customers are mostly interested in your compliance level, if your compliance level is low then your customers will not be able to recognise the full value of the amount of money they spend with you company as part of their BEE spend. The larger the percentage of procurement expenditure they can recognise as BEE expenditure, the more point they can accumulate for their own procurement scorecard. So having a high level of procurement recognition [Level 1 – 3 can be considered high] is definitely an advantage over competitors.
The table below shows you the amount of point, out of 100, that you have to score in order to achieve a corresponding procurement recognition level and the percentage of expenditure that your customers can recognise as being their BEE procurement based on these procurement recognition levels.
Please note that, by default, Exempted Micro Enterprises have a Level 4 procurement recognition level and Level 3 if they are at-least 50% black owned.
|Score Achieved||Effective Level||Procurement Recognition|
|100 or more.||Level 1||135%|
|85 or more, but less than 100.||Level 2||125%|
|75 or more, but less than 85.||Level 3||110%|
|65 or more, but less than 75.||Level 4||100%|
|55 or more, but less than 65.||Level 5||80%|
|45 or more, but less than 55.||Level 6||60%|
|40 or more, but less than 45.||Level 7||50%|
|30 or more, but less than 40.||Level 8||10%|
|Less than 30.||Level 9||0%|
Q: How much does a BEE verification certificate cost?
A: There are no prescribed fees for BEE Verification. The price you pay will depend largely on two factors; (1) The size and complexity of your organisation and (2) The Verification Agency you choose. Based on evaluated prices of 10 verification agencies sampled; Exempted Micro Enterprises generally pay an average of R1 500-00 (Low: R500-00 High: R3 000-00), Qualifying Small Enterprises pay an average of R7 500-00 depending on the elements chosen (Low: R5 700-00 High: R17 100) and Generic Enterprises pay an average of R25 000-00 but this figure can increase considerably if your company is very large, listed or a multinational. Contact our Client Managers on 0861 EMPOWA for an Empower/yst quotation.
Q: What will happen if I don’t comply?
A: There is no law that compels you to comply with the requirements of BEE, in-fact BEE is a function of voluntary compliance. However, non-compliance will affect the ability of your customers to effectively calculate their own procurement compliance and might prejudice their scorecard. From experience, this can lead to immediate termination of contracts, affect payment for services already rendered and lead to adverse relations with verified competitors moving in to encroach on your customers.