Newsletter - Helping you and the Economy Grow

17Apr, 2022

Bridge the” GAP”

A gap analysis is a method of assessing the differences in performance between a business’ information to determine whether business requirements are being met and, if not, what steps should be taken to ensure they are met successfully. Below are some pointers where a B-BBEE “Gap Analysis” is concerned:

Supplier Development:

Supplier Development assists the financial and operational growth of a supplier from your database.
Once you have identified the “right fit” beneficiary for your business and you have established a mutually beneficial relationship, the next step is to identify the correct method of support.
There are many ways to support beneficiaries including monetary and non-monetary. Most businesses choose a monetary method due to time constraints.
Monetary contributions can be done in various ways. Grant contributions, discounts allowed in addition to normal business practice, overhead costs incurred in supporting enterprise development and supplier development as well as loans.
Regarding loans, you need to be vigilant about the benefit factor of the two different types of loan contributions. On interest-free loans you will get 70% recognition based on your outstanding amount and on standard loans you will get 50% recognition of your contributions.
The best way to manage a loan is to take the interest-free option and apply it over a period of 5 years. Due to the “outstanding loan amount” rule in the B-BBEE codes of good practice, you will receive recognition for the 5 years based on one contribution you have made.

Enterprise Development

Same as Supplier development, but this entity should not be on your supplier list yet but can graduate to become a Supplier for bonus points on the B-BBEE scorecard.

Skills Development:

The new codes demand far greater investment in skills development with a particular emphasis on accredited training and learnerships.
However, a business can make this work to the company’s benefit by:
- Using Skills development to develop the skills necessary to excel in business
- Invest in your people to retain them longer
- Create ladders of learning that create career paths
Choosing an experienced partner in implementing such programmes is essential to making these programmes a success.

EconoServices has advanced systems in place which specialize in minimizing these risks for our clients. We have only included a few examples above of what can be done – our dedicated consulting team is standing ready to help you and your company to “bridge the GAP”!

So, give us a call today on 011 483 1180 and let us help you put together and implement the best, most cost-effective, B-BBEE solutions and strategies for your business!

15Mar, 2022

EconoBEE wins a YES Programme related Case for our Client!

The YES4Youth Programme is a fantastic initiative that is focused on eradicating the high unemployment rate amongst South African Youth. The programme encourages companies to provide unemployed Youth with 12-month work experience (that can be added to their CVs), as well as possible permanent placement within their ranks. However, as it relates to B-BBEE, there are still a few points that need to be cleared up:

Can accommodations be made for extenuating circumstances?

EconoBEE recently experienced a unique situation in that a company had embarked on their second year of the YES Programme as a QSE. They had met all targets identified on the QSE Scorecard in order to maintain their Level 2. However, after the financial year ended, the financial statements stated that this company’s turnover exceeded the QSE threshold, therefore making them a Generic. As a result, this company had not been able to maintain the Level 2 as planned.
This resulted in the verification agency not awarding the company their YES Benefit.
EconoBEE decided to take this scenario to the DTI on our clients behalf, we presented the evidence to show that had the company’s turnover stayed in their QSE threshold, they would have maintained the Level 2.

We won the case, and our client was able to add the YES Benefit to their scorecard!

Who qualifies to use the YES Programme and obtain B-BBEE Benefit?

First time companies must achieve a compliant B-BBEE Certificate in order for the YES Programme to be applied at audit stage.
If a company would like to continue with the YES Programme for a second year, said company would need to maintain (or improve on) their previous B-BBEE Level. Therefore, if you achieved a Level 4 in your first year using the YES Programme, you will have to maintain the Level 4 in the second year.
Should the previous level not be maintained after verification, the YES Benefit will not be awarded.

Does the YES Programme work according to a Company’s Financial Year (much like B-BBEE does)?

Like B-BBEE, the YES programme does rely on a company’s Financial Year, however this is only in relation to the payments and registration. All payments to the YES Programme (Company Registration Fees as well as Youth Registration Fees), must be paid to the YES Programme before the end of a company’s financial year.
In addition to this, all Youth should also be registered on the system within the same Financial Year.
The financial year referenced above, would be the same financial year that a company would be verified on for B-BBEE purposes, which is why these payments need to be made in the same year.

Duration of the YES Programme:

The YES Programme is a 12-month Programme and the B-BBEE benefit can only be awarded in the below instances:
Year 1: any company that is implementing YES for the first time can be awarded the B-BBEE benefit immediately, without the Youth needing to complete a minimum number of months.
Year 2 and Beyond: any company that continues on the programme from year 2, will need to ensure that the YES candidate complete a minimum of 8 months on the programme (each year) in order to be awarded the Yes benefit.

Contact EconoBEE now to help guide your company with cost-effective strategies to maximise your scorecard and ensure your compliance to the objectives of the B-BBEE Act.

1Mar, 2022

Successful Submissions have an excellent Return on Investment!

Successful submissions of your Work Skills Plan and Annual Training Report can provide excellent Returns on your Investment!

The window period for submission of the WSP and ATR has opened for some of the SETAs, generally SETA submission window period is open until the 31^st of April annually. Without the approved WSP and ATR, Measured Entities will forfeit their skills development points.

Apart from B-BBEE , here are some of the ROI on successful WSP and ATR submission:

A mandatory grant to the value of 20% of your annual SDL.
The opportunity to apply for Discretionary Grants as the year unfolds.
It is an opportunity for companies to plan for and develop specific skill set requirements, ensuring both businesses and employees the opportunity to grow.

For measured entities without a skills development facilitator, EconoBEE is offering essential SDF services to help you manage the skills development element for you:

We can act as an external SDF for your company.
We can support your internal SDF with strategic insight and back-end administrative support.

9Feb, 2022

Transformation of the Property Sector

The Property Practitioners Act (No 22 of 2019) (PPA) seeks to ensure the transformation of the property industry by facilitating the inclusion of previously disadvantaged South Africans within the property sector. The Act also provides that once it commences, the Property Sector Transformation Charter will apply to all Property Practitioners. The Act was signed into law by President Cyril Ramaphosa in 2019 and came into effect on the 1^st of February 2022. Section 20 of the PPA states that when procuring property-related goods and services, all organs of state must utilise the services of property practitioners who comply with the Broad-Based Black Economic Empowerment and Employment Equity legislation and policies. Furthermore, the Property Sector Transformation Fund (PSTF) has been established to offer grants to further transformation within the property industry. Are you a property company committed to transformation? Unsure of how the Property Sector Transformation Charter and the Property Practitioners Act will affect you or your company? Please contact us on 011 483 1190 and let us help you become compliant, navigate PPA / PSTC, and implement cost-effective, B-BBEE solutions and strategies that make business sense!

21Jan, 2022

“Clarity” Regarding SANAS Letter

Any verification undertaken from the 15^th of August 2020, should be done so in such a manner that it does not exceed a period of 12 months from the most recent Financial Year – End. This was the subject of the SANAS clarification letter dated the 6^th of April 2021 (which referenced a supporting SANAS email clarification dated the 14^th of August 2020 and attempted to “clarify” said email). Unfortunately, this letter did not shed light on how companies should address the following real issue that several companies have and may still face: what happens if a company is in the middle of a verification and their current financial year, ends? Does the measured entity continue to finalize their verification or must the entity stop the verification immediately? You may say, that company should have planned the verification to start (and end) sooner! However, as consultants, we know that in certain instances, getting a company verified (and completing the verification quickly) is not always as easy as that, for instance:

In this “new normal” we find ourselves in, companies may have employees working from home and not always easily accessible.
Integral people to the verification may get sick and therefore be unable to provide information.
Loadshedding, internet connectivity and other factors also contribute to delays.

It is therefore necessary for SANAS to provide a comprehensive statement so that there is no uncertainty for measured entities, verification agencies or consultants. Failing that, consultants should also be given access to ask SANAS questions or perhaps there should be one body that regulates all consulting firms and who can then provide more guidance in terms of the clarification(s)? When it comes to understanding the B-BBEE legislation and implementing the interpretation thereof, EconoBEE is dedicated to coming up with innovative transformation strategies for our clients that make business sense. Please feel free to reach out to us on 011 483 1190 or info@econobee.co.za if you would like to hear more.

9Dec, 2021

Tis the season . . . for B-BEEE!

EconoBEE would like to wish our clients, suppliers and you, dear reader, a very safe, joyful and peaceful festive season and New Year.

We will be closing our offices on the 15^th of December 2021 and be back to championing B-BBEE, EE and SD for our clients on the 3^rd of January 2022. During this period, should you have any queries, please email us using: info@econobee.co.za

We have some exciting line-ups for 2022 . . . !!

We are launching our bespoke online / virtual and face-to-face workshops on Broad-Based Black Economic Empowerment, Employment Equity and Skills Development, tailored to your individual or corporate needs! We will provide more information regarding this in subsequent newsletters, in the meantime and should you have any queries, you are most welcome to give us a call on 011 483 1190 or email us using: info@econobee.co.za

9Nov, 2021

Happy News to end off 2021

It is with great pleasure that we announce that EconoBEE is officially 51% Black owned and is the leading Black Economic Empowerment (BEE) Strategy and Management Consulting firm in South Africa.

Founded in 2000, EconoBEE is a highly specialised, niche corporate advisory business that specialises in providing companies with Research, Advice and Structuring services in the areas of Corporate Regulatory Compliance within the Broad-Based Black Economic Empowerment (B-BBEE), Employment Equity (EE), Transformation, Enterprise and Supplier Development (ESD) and Skills Development (SD) ecosystem. As a 51% Black Owned EME, EconoBEE is a Level 2 BEE compliant company with a total recognition score of 125%. As a visionary organisation within the South African BEE context, the company’s strategic goal is to ease the legal, compliance and administrative burdens and legislative shortcomings of its clients, whilst assisting in their growth endeavours. EconoBEE makes use of highly sophisticated, state-of-the-art technology software to analyse their client’s corporate ownership structures. This is further bolstered by an in-depth set of Gap Analyses in the formulation of scorecards that essentially measure the success of their clients’ strategic endeavours and corporate goals. Our team is made up of a team of consultants with a mixture of legal and commercial qualifications. EconoBEE’s revolutionary consulting concepts and analytical management methodologies has resulted in the business, as well its brand, becoming one of the most recognized in the areas of Transformation and Broad-Based Black Economic Empowerment in South Africa.

We look forward to growing EconoBEE to greater heights as we begin this new journey.

27Oct, 2021

Sector-Specific EE Targets: Are You Ready?

The Commission of Employment Equity is currently in consultation with industry stakeholders to finalise the highly-anticipated Employment Equity Draft Amendment Bill. One of the key features of the bill will be introducing tailored Economically Active Population (EAP) targets. For employment equity compliance, this will be a simple exercise that may affect designated employers’ quantitative analysis and numerical targets for each occupational level.

Due to the inter-relatedness of B-BBEE legislation and employment equity regulations, there may also be changes in management control (Statement 200) and skills development (Statement 300), as these elements include EAP targets to allocate the points you may earn. As your consultants, we have deliberated on these amendments and have strategic ideas on how best you can manage these coming changes. Give us a call at 011 483 1190 or email: info@econobee.co.za to find out how we can prepare you in advance!

13Oct, 2021

Yes, Fronting is a Criminal Offence!

A recent ruling by the B-BBEE commissioner has brought into sharp focus the misunderstanding with regards to the legitimate beneficiaries of B-BBEE. https://www.bbbeecommission.co.za/vicky-adey-consulting-cc-withdraws-from-government-panels-and-surrenders-for-cancellation-its-cidb-grading-for-misrepresentation-of-b-bbee-status/ For B-BBEE purposes, the definition of black is very specific and in terms of the Broad-Based Black Economic Empowerment Act (B-BBEE Act) the definition of “black people” is given as follows: “Black people is a generic term which means Africans, Coloureds and Indians–

Who are citizens of the Republic of South Africa by birth or descent; or
Who became citizens of the Republic of South Africa by naturalization-
- Before 27 April 1994; or
- On or after 27 April 1994 and who would have been entitled to acquire citizenship by naturalization prior to that date.”

In the Vicky Adey consulting case, the facts were as follows: Vicky Adey Consulting CC claimed to be 100% black owned however, the alleged black ownership actually included a Nigerian national (40%), who does not qualify to benefit under the B-BBEE Act, if one considers the definition of black people in section 1 of the B-BBEE Act, as mentioned above. The B-BBEE Act specifically defines black people to exclude any non-black South African citizens, foreign nationals and those black people that acquired citizenship by naturalisation after 27 April 1994. Hence it is critical to track the background of an entity’s owner(s) in order to determine compliance with and status within the B-BBEE Act. Further, based on the information, it appears that Vicky Adey Consulting CC may have accessed opportunities within the government on the basis of the misunderstanding and this company is now bound by the consequences of that ruling. The B-BBEE commission is clear Including foreign nationals in ownership as black violates the B-BBEE Act, is contrary to the objectives of the B-BBEE Act and amounts to misrepresentation which is a form of fronting in terms of the B-BBEE Act. Another instance where the legitimate beneficiaries of B-BBEE may be confused is when two foreign nationals – who both have permanent residence – are married and have a child in South Africa. In terms of the above definition, the child is not a citizen of South Africa and would thus not be a beneficiary of B-BBEE. In summary Is fronting a criminal offence? Yes! Under the B-BBEE Codes of Good Practice, fronting is now recognised as a criminal offence. If found guilty, businesses could face a fine of up to 10% of their annual turnover or up to 10 years in prison. Want more information about ownership and what this means for your B-BBEE Scorecard? Contact EconoBEE now to help guide you with cost effective strategies to maximise your scorecard and ensure your compliance to the objectives of the B-BBEE Act.

29Sep, 2021

What is Socio-Economic Development and why is it different to Corporate Social Responsibility?

In recent months, there has been some confusion surrounding the activities relating to Socio-Economic Development (SED) from a B-BBEE perspective, and Corporate Social Responsibility (CSR). Let’s look at the definition of each of these elements. Socio-Economic Development (SED) is defined in the B-BBEE Codes, as monetary or non-monetary contributions implemented for communities, natural persons or groups of natural persons, where at least 75% of the beneficiaries are black people. The objective of SED is the promotion of sustainable access to the economy for the beneficiaries. The most common contributions under SED are as follows:

Development programmes for black women, black youth, black disabled people as well as black people living in rural areas.
Support for education programmes, resources and materials at primary, secondary and tertiary education levels, as well as bursaries and scholarships.

Corporate Social Responsibility (CSR) is a self-regulating business model that helps a company become more conscious of the impact that they can have on all aspects of society, including economic, social and environmental. This means that in the ordinary running of a business, a company should operate in ways that enhance the society and the environment in positive ways. From the above definitions, it can be seen that while there can be an overlap in some of the activities for CSR and SED, it does not mean that these are the same initiatives. The focus of SED is to uplift specific black people and communities through targeted contributions that will provide the beneficiaries with access to the economy, through either Skills Development, Healthcare, or Early Childhood Development Programmes. While the focus of CSR is to be a good corporate social citizen. This includes running the company in an environmentally friendly manner, providing assistance in the form of donations to NPOs as well as hosting social events which raise awareness to social issues. While some of the contributions made under CSR can qualify as SED, we must not get these initiatives confused. These are two very different initiatives and in order to not lose out on B-BBEE points, SED activities must be aligned with what is outlined in the B-BBEE codes. To find out if your CSR is aligned to SED as defined by B-BBEE, please don’t hesitate to contact us at EconoBEE.

14Sep, 2021

Employment Equity Compliance vs Government Business

A new amendment to the Employment Equity Act will have serious implications for companies who plan to do business with government going forward. In terms of section 53 of the Amendment Act, measured entities will be issued with a compliance certificate for Employment Equity which is valid for a period of twelve months from the date of issue. The EE compliance certificate will be a prerequisite for access to contracts with the State and any of its organs; it will therefore be impossible for companies to do business with the government going forward without this certificate. In terms of proposed Employment Equity amendments, the criterion for non-designated employers is to comply with the national minimum wage or prove that they have been granted exemption and have no CCMA unfair discrimination awards against them. The criteria for designated employers will be to submit annual Employment Equity Reports, comply with the national minimum wage or prove that they have been granted exemption not to pay the national minimum wage, comply with their own annual Employment Equity targets and work towards the five-year sector specific Employment Equity targets. Please feel free to reach out to us on 011 483 1190 or info@econobee.co.za if you would like to hear more.

31Aug, 2021

Are you a Designated Employer and have to submit your Employment Equity Forms?

Are you uncertain as to whether you are required, by law, to submit your employment equity forms? The submission window to submit your employment equity forms opens up on the 1^st of September 2021. What is the current definition of a designated employer?

An employer who employs 50 or more employees,
Or an employer who employs fewer than 50 employees, but has a total annual turnover as reflected in Schedule 4 of the Employment Equity Amendment Act No. 47 of 2013.
Municipalities and organs of State
Employers can also volunteer to become designated employers in terms of section 14 of the EE Act.

TURNOVER THRESHOLD APPLICABLE TO DESIGNATED EMPLOYERS

Sector or subsectors in accordance with the Standard Industrial Classification	Total Annual Turnover
Agriculture	R6,00 million
Mining and Quarrying	R22,50 million
Manufacturing	R30,00 million
Electricity, Gas and Water	R30.00 million
Construction	R15,00 million
Retail and Motor Trade and Repair Services	R45,00 million
Wholesale Trade, Commercial Agents and Allied Services	R75,00 million
Catering, Accommodation and other Trade	R15,00 million
Transport, Storage and Communications	R30,00 million
Finance and Business Services	R30,00 million
Community, Special and Personal Services	R15,00 million

All designated employers must submit their employment equity reports every year. If you qualify as a Designated Employer and either: Supply incorrect information, do not comply with the Employment Equity Act requirements, or do not submit the documents on time, then the following could occur:

You may be fined heavily by the DoL – up to 10% of turnover depending on the severity of contravention.
The DoL may visit you and do a full audit on your company.

If you need help in preparing and submitting your employment equity reports or ensuring that your employment equity committee and documents are in order, please feel free to contact us at EconoBEE to assist.

17Aug, 2021

The ICT Sector: the complexity of definitions

The relatively new Information and Communication Technology (ICT) sector is made up of the manufacturing and services sectors whose main activities are linked to development, production, commercialisation, and intensive use of new technology. This sector is the fastest-growing sector within South Africa, however, there does exist a scarcity of participation of Black female-owned entities. The Amended ICT Sector draft codes were gazetted on the 27^th of October 2015 and, subsequently, the finalized Amended Sector Code was published in the Government Gazette on the 7^th of November 2016. However, the most alarming fact about the Amended ICT Codes is that a lack of definition exists within it. Hence, in the areas where the Amended ICT sector is silent, we refer to the DTI Codes. This has sparked several debates as the DTI (Amended Codes of Good Practice) were again amended on the 31^st of May 2019. A few examples of areas in contention include:

The SDF calculation
The absorption definition
The 2.5% learnership indicator

We had a meeting with the ICT council to discuss the above issues of debate and we were able to get an acceptable consensus on these and other issues.

Do you fall under the ICT codes? Would you like to have guidance on the above in terms of the priority element of skills development and in other matters?

Contact us and we can help you maximise your scorecard with minimal fuss!

3Aug, 2021

No “one size fits all” at verification

Verification is an audit process that is required in order for you to be issued with a B-BBEE certificate. All five elements of the scorecard are verified with supporting evidence. Verification happens through a SANAS accredited agency which is empowered through legislation to issue you with a valid B-BBEE certificate. There is a code of conduct and checklist that verification agencies need to abide by before issuing a valid B-BBEE certificate. There is definitely no “one size fits all” process at verification due to different interpretations of the codes by verification agencies. Due to our close relationship with six of the top verification agencies in the country, we know the different interpretations out there in order to guide our clients appropriately. We will detail below what we have learnt through the 20 years of verification experience, the “must-do list” to ensuring a stress-free verification process. Planning

You need to have a verification project plan to guide the process of verification.
You need to track your turnover and NPAT every month to ensure are you still a QSE or Generic as this will impact your score due to the different targets between a QSE and Generic scorecard. Any discrepancy with your NPAT will negatively impact the score.
Verification planning is a year-long project. You need to have your verification file ready two months before your planned verification (also keeping it in line with when your current certificate will expire). Leaving it to the last minute is problematic.

Format of information

Due to the checklist that verification agencies have, we can tell you before your verification what information will be required from you to claim points. However, the information will be required in a specific format to meet the standard of the verification agency. For example, an ID copy must be certified.

Sampled evidence

Certain evidence will be requested at verification stage that is not known until the verification agency has sampled under the elements of management control, procurement and skills development. This means you need to have the information ready and on hand depending on which staff members are sampled under management control. As some companies are working virtually this can waste time at verification if information is not readily available when sampled.

Software

It’s important to have a mock scorecard before you go for verification so you know what your likely level will be.
We are able to easily pick up when points have not been adequately awarded as we use similar software to verification agencies. Unless you know where to look, you can lose out on valuable points and your desired level. The verification agency is not under an obligation as an auditor to show you where you can earn more points, consultants are needed to fight for your points.

Are you preparing for verification? Let us help you to generate a mock scorecard to show you the level you are likely to get. We can also assist you in the preparation of a verification file to submit to the verification agency.

19Jul, 2021

Have you read: The 21st CEE Report?

The 21^st Commission of Employment Equity Report has been issued and it shed light on some Employment Equity developments. These are also in line with the Draft Amendment Bill that is still being reviewed in parliament. As expected, the report has updated EAP targets which are useful in the quantitative analysis of each management level. These have changed slightly from last year:

The commission has consulted most of the business sectors to set sectorial targets. The finance and business sector has finalised the discussions. Based on these developments, all designated employers should be proactive and review their EEA12 and EEA13 to be prepared. More changes are yet to come; give us a call to find out how best you can stay compliant with Employment regulations. Did you Know?

You don’t have to sell your company shares in order for you to earn points on the ownership scorecard. The B-BBEE codes allow for various means in which to earn points on ownership.
There are tax benefits that you can claim through specific forms of skills development. Let us show you how.
Long term strategies for enterprise and supplier development ensure you will earn points over several years regardless of unexpected changes to your NPAT.
The Amendment to the Employment Equity Act, which was recently released, has far stricter penalties for employers who don’t take EE seriously. Employers that don’t comply can expect strict enforcement and harsher penalties – fines of up to R2. 7mil or 10% of annual turnover.
You can maximize on the skills development scorecard without having to meet the target spend.
For absorption points you do not have to absorb all the learners trained to claim your skills development. Let us show you how this can be achieved.

POPIA Compliance We take both your privacy and the POPI Act seriously, and would like to inform you that EconoServices will continue to ensure that all measures are taken to safeguard your personal information. We have put in place measures to ensure compliance with the requirements of the POPI act to prevent and stop the following:

No unauthorized access to personal information
No damage, accidental loss, misuse or destruction of any personal information on our records

This will allow us in turn to continuously improve our systems in use and ensure we operationally continue within the legal framework of the act. Should you however, feel you would like to change your consent or information on record please feel free to contact our information officer Dr Muriel Mushariwa. You have the right to the following options in terms of your personal information:

Provide any updates such as address changes or contact details
To delete or remove your information
To inform us to stop contacting you

Should we not hear from you by 23 July 2021, we will take it that permission has been given to us to continue to retain the information and to continue to communicate with you. Regarding our mailing list: No action is required if you are happy to stay on our mailing list and it will be accepted that you have consented to staying on. If you change your mind at any time in the future, you will always have the option to unsubscribe. Best wishes and keep safe. The EconoServ Team

17Jun, 2021

What to Expect from an Employment Equity Inspection

As we all know, the Department of Labour is constantly conducting inspections throughout the year with designated employers. These inspections are to ensure that the information submitted in the annual Employment Equity Submissions is correct and in line with the Employment Equity Act as well as the EEA Plan of companies. These inspections are done at random, with little to no time to prepare. As a result, we at EconoBEE recommend compiling the Employment Equity file throughout the year, and having it ready for inspection at any point. This will make the inspection process less painful. Here are some of the documents that will need to be in that Employment Equity File:

Letter of Assignment – this is to prove that the EE responsibility has been assigned to one or more senior manager(s), as required by Section 24
Proof of Consultation with Employees, as required by Sections 16 and 17
Proof of Analysis conducted, as required by Section 19
EEA 13 – this is your Employment Equity Plan, as required by Section 20
Proof of Record Keeping, as required by Section 26
If your organization is listed as a Public Company then you will also need to provide Proof of the Publication of your Annual Reports, as required by Section 22.

While the compiling of an Employment Equity File can be a very administrative and time consuming exercise, EconoBEE is happy to assist with this process. Please feel free to contact us directly for more details, our consultants are ready and willing to assist.

1Jun, 2021

The DTI’s new ruling on Trusts in B-BBEE Ownership Initiatives!

Dear Business Owner On the 29^th of November 2018 the BBBEE Commission came out with a guide entitled “Understanding the use of Trusts in B-BBEE Ownership Initiatives”. Two important issues were raised by the Commission in its guide: 1. The use of educational trusts as part of a BBBEE ownership Initiative. 2. The involvement of minors in BBBEE ownership trusts. The BBBEE commission held that the use of “under-age children as beneficiaries will be regarded as circumvention of the B-BBEE Act as they have no capacity to exercise rights flowing from such ownership.” With regard to educational trusts, the BBBEE commission held that “Beneficiaries cannot be selected each year to receive benefits in the form of dividends from the measured entity, for payment of their education, training or social upliftment projects which are matters that should be catered for under corporate skills development, social investments or socio-economic development” On the 17^th of May 2021 The Minister of Trade, Industry and Competition announced in a Practice Note on discretionary Collective Enterprises, such as employee share ownership plans (ESOPs) and broad-based ownership schemes (BBOS), a change to the above interpretation by the BEE commission. The Minister clarifies several issues of misalignment in interpretation on the issue of ownership. 1. Educational trusts can be used within ownership. The DTI has ruled that discretionary schemes making distributions in terms of skills development, training and education “to members of a defined class of natural persons does not in any way detract from the Economic Interest points claimable by or through these schemes” 2.In relation to ownership regarding minors, the DTI has ruled “without derogating from the generality of this statement, minors for example, are not restricted from being participants or beneficiaries in any way, whether as part of a defined class of natural persons or individually.” Clear rules of validity have been outlined for this form of ownership, in terms of the role of fiduciaries, discretionary powers, the class of persons, meaningful board participation; etc. As measured entities, you may have asked yourselves questions such as the following:

Since ownership is a priority element, how is the net value points going to be calculated or determined?
Will verification agencies interview minors as part of the B-BBEE verification process?
What is the balancing act that trustees need to ensure around net value and the purpose of the trust.

EconoBEE had a meeting with the DTI and we believe that the clarification received will address the queries above. Please contact us to hear what they said!

5May, 2021

MAY MADNESS!

During the month of May, EconoBEE will be running specially tailored full-day and half-day B-BBEE workshops with an added twist! Our Directors will be unpacking extra information which includes, but is not limited to, the following:

How the new measured period will impact measured entities
The debate around sale of assets and how it impacts ownership points
The B-BBEE Commission’s changes to non-compliant company reports
Recent rulings by the B-BBEE Commission around share option schemes
SANAS’s take on how to calculate the indicative profit margin
Communication from the ICT council with regard to the private contribution model
Annual fees that need to be paid to the ICT council
Discussion around the new absorption definition
Continued recognition complexities and how it impacts ownership points
ICT disability training and EAP targets

Please contact us on info@econobee.co.za or 011 483 1190 to hear more!

23Apr, 2021

SANAS Clarity on measured period

The governing body of verification agencies, the South African National Accreditation System (SANAS), have sent a letter of clarification to all verification agencies in relation to the issue of the measured period. The letter is as follows: “I refer to the correspondence issued by Mr Yuneal Padayachy on 14 August 2020 in respect of the above-mentioned matter.(clarity on measured period) We reiterate that the latest financial year end records must be verified for B-BBEE Verification purposes. The Verification Manual makes provision for the use of financial statements which are not audited and details the additional testing or requirements to be taken into consideration in reducing the risk to an acceptable level. These processes had been agreed to with the dtic and are not new requirements. If the intention of the legislature had been to allow for audited financial statements only, then it would not have allowed for the alternative testing or requirements on unaudited Financial Statements. As a consequence of that communication, all verifications not done in line with that guidance, effective 15 August 2020, should be corrected. SANAS assessors will sample to determine if the guidelines had been followed by all Rating Agencies” The impact of this communication is as follows:

Measured entities will not be allowed to use a measured period different to their financial period.
Management accounts need to be aligned to the financial period, therefore an unaligned rating period will not be used.
A measured entity is now required to use its most current financial information for a BBBEE audit. For example in 2021, a measured entity with a year end of February will need to use the financial information from March 2020 to February 2021. The measured entity being audited in 2021 will not be allowed to use the financial information of March 2019 to February 2020.

Talk to us about how this communication may impact you going forward.

30Mar, 2021

The Big Debate: Sale of Assets

Ownership in the B-BBEE codes is by far one of the most complex elements to get right. Some entities feel bringing in new shareholders might impact the strategic direction of the entity as a whole; some just want to sell a stake but keep it minimal. Sale of assets, as an option, provides the convenience of getting ownership points without selling shares, but instead selling “a qualifying asset”. At present, there is a big debate over how many points should be allocated in this scenario! One school of thought holds that a measured entity should get full points from this arrangement. The other school of thought feels the points should be capped at 40% of the scorecard because this is indirect ownership. EconoBEE has engaged the BEE Commission and the DTI on this matter to gain clarification.

Not only do we know how to set it up for you, but we also know the right side of this debate.

Send us an email or give us a call and find out what we know!

April Online Workshops

Date	Workshop Title	Price
06 Apr 2021	Skills Development Workshop	R1 550.00
08 Apr 2021	Half-Day Employment Equity Workshop	R1 550.00
13 Apr 2021	Half-Day B-BBEE Workshop	R1 550.00
15 Apr 2021	ICT Sector Code Workshop	R1 550.00
20 Apr 2021	FSC Sector Code Workshop	R1 550.00
22 Apr 2021	2-Hour YES Workshop	R750.00
29 Apr 2021	Full-Day B-BBEE Workshop	R3 700.00

16Mar, 2021

Are YOU being paid out your Mandatory and Discretionary Grants?

There are 2 types of Grants that are awarded to companies to assist with Training and Upskilling. These are the Mandatory Grants and Discretionary Grants. Let’s look at the difference between these Grants and the benefits of each: Mandatory Grants This Grant is payable to all levy paying companies upon submission and approval of the WSP/ATR Report. This is only paid after the WSP/ATR Report has been approved, which ensures that the SETA’s Quality Standards have been met in the submission. All submissions must be made before the deadline on 30 April, otherwise the Mandatory Grant will not be awarded. This Grant will award companies 20% of the total annual levies that are paid by the employer each month. These pay-outs are made quarterly. Discretionary Grants Discretionary Grants are awarded, as the name indicates, at the discretion of the SETA. Companies will need to apply for this grant when the window opens, which is usually a few weeks after the WSP/ATR submission. The application process is fairly lengthy, as each company will need to specify what type of training will be implemented, the training provider that will be used, and the details of the course will need to be provided. The total cost of this training will need to be provided, including the stipend amounts that will be paid to Learners (where applicable). Companies need to ensure that the training progammes chosen in the Discretionary Grant, address the Scarce and Critical skills shortages in their respective SETA. A complete list of these Scarce and Critical Skills can be obtained from the SETA’s websites. Successful Discretionary Grant applicants can get up to 49.5% of the total levies paid back annually. This grant must be used to pay for the training that was specified in the application. This grant will be paid out quarterly, and in order for payment to be made, companies must provide progress reports for each of the learners sent on training. Who can apply for Discretionary Grants:

NGOs and cooperatives in the Sector
A public education and training institution
A levy paying employer, who has submitted the WSP/ATR Report
A non-levy paying employer, within the jurisdiction of the SETA.

Do you need assistance with these Grants? EconoBEE is happy to help you understand these Grants and assist with these applications. The window for Mandatory Grants is now open for most SETAs.

Online Workshops – To peruse our 2021 Online Workshop List, please click here

2Mar, 2021

IMPORTANT changes to companies’ B-BBEE annual reports!

The B-BBEE Commission has recently sent out a notice that it may publish the reports of non-compliant companies! Please read the below to understand the context of the notice. JSE listed companies, public companies or organs of state and SETAs must submit annual compliance reports to the B-BBEE Commission in the prescribed FORM B-BBEE 1, within 30 days of the approval of such audited financial statements and annual report. JSE listed companies specifically, can submit to the B-BBEE Commission within 30 days of the approval of such audited financial statements and annual report or 90 days at the end of the financial period. SETAs must submit a report to the B-BBEE Commission annually on the skills development spending and programmes within 30 days of the approval of such audited financial statements and annual report or 90 days at the end of the financial period. In 2017, the B-BBEE Commissioner issued an explanatory notice requiring all reporting entities to provide additional information as outlined in a compliance report matrix required by the B-BBEE Commission. Companies faced challenges in reporting on the information required in the reporting matrix. In 2019 the B-BBEE Commission found that 18.1 percent of all B-BBEE certificates submitted, were rated as non-compliant for B-BBEE and, of the 161 listed entities that reported, 4.97 percent had no data for analysis.

The B-BBEE Commission issued another explanatory notice on the 3^rd of February 2021 which will take effect on the 1^st of April 2021, in an attempt to provide clarity on the matter in which to complete the reporting matrix.

Companies that are found to be non-compliant will be given 30 days to rectify their status. The B-BBEE Commission may publish the reports in a manner that it deems appropriate of companies that are not compliant.

Why not give us, at EconoBEE, a call on 011 483 1190 or email us and let us help simplify and expedite your transformation journey! Online Workshops – To peruse our 2021 Online Workshop List, please click here

16Feb, 2021

The deadline for the annual submission of the WSP is 30 April 2021!

The law states that a company with a payroll that exceeds R500 000 per annum must be registered to pay the Skills Development Levy (SDL). All companies with 50 or more employees need to establish a Skills Development Committee and consult with the Committee prior to the submission of the skills report. All companies need to appoint a suitably qualified Skills Development Facilitator (SDF) to facilitate the training needs within the organisation and liaise with the SETA. The WSP (Workplace Skills Plan) plays a significant role in the execution of education, training and development initiatives in the organization. An employer needs to establish a WSP, which is a strategic document that details how the employer will address the needs for development and training in the workplace. Remember to link this to your succession plan! This should be in line with the core and critical skills identified by the SETA. The ATR (Annual Training Report) is accurate documentation of all the training that has taken place in the reporting period in the organisation i.e.: the ATR is the past information and the WSP is the future planned training. Benefits of Submitting your Skills Development Reports:

The Skills Development Act aims to develop the skills of the South African workforce, thereby improving the quality of life for workers and giving them more prospects of work. It also aims to improve productivity in the workplace, the competitiveness of employers and to promote development.
The Skills Development Levies collected by the SETA are channelled towards skills development. This levy can be claimed back by an employer if they submit their WSP, ATR and Pivotal training report and achieve the goals set out
You can claim up to 20% of the SDL you pay by submitting your WSP and ATR in time
In order to maximise your B-BBEE points for skills development, you need to submit your skills development report to the SETA on time
You are able to access SETA grants to assist in training your employees

When skills development is structured in the best way, and core and critical skills are identified, implementation becomes sustainable and ends up saving you money. Learnerships are a key strategy to achieving your goals as well as enabling you to take advantage of the tax allowances, employee tax incentives and seta grants which reduces your overall cost. ECONOBEE is hosting a number of workshops on SKILLS DEVELOPMENT! Delegates will gain a better understanding of the requirements of the SD Act and SDL Act and will have more knowledge on how to submit your documents and how to maximise your skills development spend. We will explain how targeted skills development can actually save you money, via tax incentives, and maximise your B-BBEE skills development recognition. Can’t attend? Please contact us on 011 483 1190 and we can tailor a solution for you.

2Feb, 2021

Are your skills development goals aligned to your employment equity targets?

Recently the Parliament’s Portfolio Committee on Employment and Labour has called for public comment on the Employment Equity Amendment Bill. The bill has been described by President Cyril Ramaphosa as a ‘game changer’ for Black Economic Empowerment in South Africa. The Minister of Labour, after consulting with various sectors including the Commission for Employment Equity, will be empowered through the Bill to set numerical employment equity targets for any sector or part of a sector by notice in a gazette. The Labour department has clarified that the notice may set different numerical targets for different occupational levels, sub-sectors or regions. Some of the factors which the Minister will consider when setting sector targets include:

The qualification, skills and experience required to be employed in a particular occupational level;
The rate of turn-over and natural attrition in a sector;
Recruitment and promotional trends within a sector.

The Employment Equity Act is clear that “suitably qualified” candidates should be appointed. It is therefore important that designated employers align their skills development goals to their employment equity targets so that, should there be a specific qualification or skill required for a particular occupational level, there is proper alignment. Avoid the pitfalls of non-alignment and let us help you with your skills development planning. Why not give us, at EconoBEE, a call on 011 483 1190 or email us and let us help simplify and expedite your transformation journey! Online Workshops To peruse our 2021 Online Workshop List, please click here

18Jan, 2021

Are you being sold a dubious B-BBEE share option scheme? Hear what the B-BBEE Commission has to say……..

Firstly, compliments of the season to you all and here’s to wishing everyone a good 2021! I hope you have all managed to remain safe and hopefully had a decent break! Onto interesting business matters now……. Towards the latter part of 2020 we had a non-compliant QSE client come to EconoBEE and explain that they had a consultancy offer them an ownership option, which would make them an automatic B-BBEE level 2 (via the 51% affidavit route), and they wanted our view on it. We vehemently disagreed with the structure that was being “sold” to this client, and explained why, but we committed to get clarification from the B-BBEE Commission. Background:

The client is a QSE company (under R50m t/o) and they are non-compliant.
They were advised to set up a separate company that would have 100% black shareholders (either black employees or an NGO) and this company would have a 51% share option in the main company, which would mean that they receive an automatic B-BBEE level 2 (via the affidavit route) and would therefore also not be audited by a verification firm!
The devil’s in the detail and the detail here is the clarification of the “share option”!
The 51% share option showed a lack of real ownership and control, a lack of economic interest and lacked the authority to appoint the majority of the Directors in the main company.
At the end of the 5 year share option period, the owner would still be able to retain control of the company and the share option would fall away.
The B-BBEE Commission advised that where a “measured entity in an effort to comply with the B-BBEE ownership requirements, will establish share option structure not aligned to the requirements of the B-BBEE Act, such must be reported to the B-BBEE Commission” and this could lead to a serious fronting fine and/or criminal charges.

To read the full view of the B-BBEE Commission, please click here To listen to one of our Legal Directors discussing B-BBEE fronting issues on eNCA tv, please click here To peruse our 2021 Online Workshop List, please click here EconoBEE has been at the forefront of guiding some of South Africa’s largest generic firms to obtain their B-BBEE goals, and we are extremely adept at putting together the best, most cost-effective, B-BBEE solutions for your business. Why not give us, at EconoBEE, a call on 011 483 1190 or email us and let us help simplify and expedite your transformation journey!

11Jan, 2021

eNCA Corruption Scorecard Panel Discussion on B-BBEE Fronting with EconoBEE’s Muriel Mushariwa Part 3

11Jan, 2021

eNCA Corruption Scorecard Panel Discussion on B-BBEE Fronting with EconoBEE’s Muriel Mushariwa Part 2

11Jan, 2021

eNCA Corruption Scorecard Panel Discussion on B-BBEE Fronting with EconoBEE’s Muriel Mushariwa Part 1

25Nov, 2020

Has the ruling by the Supreme Court of Appeal in relation to the PPPFA changed B-BBEE ?

EconoBEE was recently asked to participate in a live, televised interview by eNCA in relation to the Supreme Court of Appeal’s ruling on the PPPFA (preferential procurement policy framework act). Headlines such as “Court rules BEE pre-disqualification in public procurement invalid, unconstitutional” got many interested parties talking about B-BBEE. Our Legal Director Dr Muriel Mushariwa, who is one of the top minds in the country when it comes to B-BBEE and lectures at Wits University on this and other transformational subjects, provided a detailed insight into this topic which you can view by clicking here EconoBEE has been at the forefront of guiding some of South Africa’s largest generic firms to obtain their B-BBEE goals, and we are extremely adept at putting together the best, most cost-effective, B-BBEE solutions for your business. Why not give us, at EconoBEE, a call on 011 483 1190 or email us and let us help simplify and expedite your transformation journey!

Category Archives: Newsletter