• Date Posted: April 15, 2015
  • Author: Deon Oberholzer

The Amended B-BBEE and How Sector Codes Are Affected

In the latest development regarding the new deadline for implementation of the Amended B-BBEE Codes, it is now clear that it is highly unlikely that the Sector Codes will be ready for implementation by the end of the Transitional Period on the 1st of May 2015. The Sector Charter Councils received notification that sector-specific BEE Codes must be aligned to the Amended B-BBEE Codes of Good Practice by the end of the Transitional Period or face cancellation. The specific sector codes were initially excluded from compliance with the New B-BBEE Codes and dti originally stated that the scope of the amendments were limited to the general Codes.

With the original transitional deadline extended from October 2014 to the end of April 2015, many companies have benefitted, as they were able to be rated under the existing B-BBEE Codes while they got more time to ensure alignment of their transformation strategies in ownership, skills development and management to ensure better compliance with the New B-BBEE Codes. However, many companies have not yet been able to make the necessary restructuring and if they missed the opportunity to be rated under the current B-BBEE Codes, they will face a severe drop on their scorecard and subsequent B-BBEE status. This will affect their competitiveness in the market and thus put them at a severe disadvantage.

This extension, however, has also meant that dti allowed time for the alignment of the Sector Codes with the Amended B-BBEE Codes of Good Practice. However, the short timeframe that Sector Charter Councils have to ensure compliance is debatable. The question is whether the various Sector Charter Councils will be able to align their codes in time.

Sector Codes Affected Include:

  • Forestry
  • Tourism
  • Construction
  • Transport
  • Information and Communication Technology (ICT)
  • Financial Services
  • Agriculture
  • Property
  • Chartered Accountancy

These Sector Codes must thus align with the New Codes. The Marketing, Advertising and Communication Sector Charter has not yet been Gazetted as a Sector Code, but it too has to align with the Amended Codes prior to being gazetted as a Sector Code.

The New Codes are noticeably stricter and enterprises will find it challenging to meet the sub-minimum requirements for the ownership and other priority elements.

Many questions remain regarding the sector codes and the applicable transitional period. Without an extension to the transitional period for the sector codes, enterprises that operate in these sectors will have to be measured under the Amended B-BBEE Codes until the Amended Sector Codes have been gazetted. Another question asked by many enterprise owners is whether any of the sector codes will be repealed when the Amended Codes come into effect? Irrespective of the outcomes, one can expect that the sector codes will eventually be aligned with the New B-BBEE Codes.

Companies shouldn’t delay in reviewing their strategies and ensuring alignment of their business operations, ownership, management profile, skills development and procurement with the Amended Codes. The Revised Codes stipulate that where a sector code has been issued directly relating to and according to Section 9, the measured entities must be measured according to the specific codes of their sector. It implies that irrespective of the New Codes, the relevant Sector Charters will still form the measurement basis until full alignment with the Revised Codes for which the deadline has been set at the end of April 2015.

The sector codes must be fully aligned to all of the requirements for the Generic Scorecard. This means that the same definitions and application of calculation methods must be used. Where Councils have not succeeded in aligning their Codes within the allowable period, they will be required to cancel them.

How Gestalt Can Assist

Contact us to help you determine areas where you need to improve your business profile, in order to ensure compliance with the Amended B-BBEE Codes and sector codes. Gestalt offers unique solutions for maximum BEE compliance, using cost effective solutions while ensuring maximum business benefit.