BEE and Small Businesses

BEE and Small Businesses

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When starting a business, BEE certification may not be at the top of your list of priorities as your turnover will still be fairly low and you may not be going after Government tenders just yet. But it is important to understand how BEE can impact your business and the steps you can take to become certified.

While your annual turnover is under R5 million, your company automatically qualifies as an Exempted Micro Enterprise (EME) and obtains a Level 4 (100% B-BBEE compliance recognition) status. If the company is more than 50% black-owned, you can obtain a Level 3 status (110% compliance recognition).

The B-BBEE levels are as follows

Level BEE Score Recognition Level
1 >100 135%
2 85-99,9 125%
3 75-85 110%
4 65-75 100%
5 55-65 80%
6 45-55 60%
7 40-45 50%
8 30-40 10%
Not compliant <30 0%

The benefits of B-BBEE Certification

While having a B-BBEE Certificate will not necessarily make your organisation more successful, it could benefit your business by giving it the competitive edge you need when growing.

The advantages of receiving a B-BBEE Certificate include:

  • It provides a competitive edge
  • Large companies are encouraged to invest in smaller compliant companies
  • You will be able to apply for tenders
  • You can highlight your B-BBEE level in all marketing material

How to get your B-BBEE Certificate

Step 1: Complete the application form (available on the dti’s B-BBEE website) and make a nominal payment.
Step 2: Submit a letter from your accountant stating that your annual turnover is less than R5 million.
Step 3: You will be presented with your B-BBEE Certificate. This process can be completed within a 48 hour period.

The do’s and don’ts of BEE

Here are ten important points for both black and white partners to consider:

  1. You must not window dress i.e. falsely implying that you are BEE compliant. It cannot be denied that fronting happens, but if found out, your reputation could be badly tarnished.
  2. Do not put names on your business documents (letterheads etc), implying that you have a black director or shareholder, when you have not. This is fraud.
  3. A business with an African name does not mean that it is BEE compliant.
  4. Before entering into a BEE transaction ensure that you really understand all the requirements such as the scorecard, codes, charters etc.
  5. Do the parties add value to each other? Are they who they say they are?
  6. Is there a cultural fit and are you able to work with each other? It is important that the BEE partner does not have conflicting interests.
  7. Does the BEE partner have the right profile, a good reputation and credibility?
  8. Does the BEE partner have a long term view of the business? Is he/she available and accessible?  He/She should ensure that they have something to offer in order to stem any negative criticism, and preferably know the business environment they are entering.
  9. If a BEE partner contributes towards payment for the shares in a business, then he/she should aim for minority protection if it is less than 50% i.e. certain decisions need the consent of both parties. If there is no contribution then he/she cannot expect to get such protection. Be careful of deals with a buy now and pay later clause.
  10. Both parties must be genuine with each other. Both must get a fair deal.

Useful resources

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