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The Legislative Framework
The legislative framework for the implementation and measurement of broad-based BEE in South Africa is contained in the Broad-Based Black Economic Empowerment Act No. 53 of 2003, the Department of Trade and Industry's (DTI's) Broad-Based Black Economic Empowerment Strategy Document, the Codes of Good Practice, and certain Transformation Charters. The issuing of Codes of Good Practice is provided for in terms of section 9 of the BEE Act.
These codes are intended to provide government and industry with a standard framework for the implementation and measurement of broad-based BEE. Included in the Codes is DTI's generic scorecard, which is also the basis for development of all other Transformation Charter scorecards.
The Codes, which were developed in two phases, were finalized and approved by Cabinet in December 2006, and gazetted on 9 February 2007.
The finalized Codes are as follows:
Pages 1 - 44 (Framework and Generic Scorecard)
Pages 45 - 77 (Framework and Generic Scorecard)
Pages 78 - 86 (Small enterprises)
Pages 87 - 96 (Schedule 1, Interpretation and definitions)
For an overview of the Codes (released by the DTI shortly after the approval of Codes by Cabinet in December 2006), click here.
Refer below for more information about the development of the Codes.
Verification Agencies:
Verification agencies, accredited by government, will through due diligence measures ensure that its procurement of goods and services from BEE compliant private sector entities, is free from any of the elements of fronting and window-dressing. Assessment of the BEE status of these entities will require to be performed on an annual basis. Verification of BEE compliance is encouraged, and to this end, the DTI will from time to time issue clear guidelines on the verification process.
The accreditation of these agencies will be conducted by SANAS, a national accreditation body, on behalf of the DTI.
The Codes, developed over a three year period, were released in two phases.
Phase One dealt with the following areas of broad-based BEE:
These codes were initially released for public commentary during December 2004. At the end of the 90-day commentary period in March 2005, submissions had been received from many large corporations, business chambers and other interested parties. During June 2005, a revised, embargoed version of the codes was released to selected industry stakeholders. The finalized draft version of the codes was released in November 2005.
Phase Two dealt with:
| Fronting Practices |
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- Code 000, Statement 001 |
| Verification Issues - Complex Structures |
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- Code 000, Statement 002 |
| Ownership - Warehousing Funds |
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- Code 100, Statement 102 |
| Ownership - Multinationals |
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- Code 100, Statement 103 |
| Ownership - Public Entities |
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- Code 100, Statement 104 |
| Ownership - Sec 21 Companies |
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- Code 100, Statement 105 |
| Employment Equity |
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- Code 300, Statement 300 |
| Skills Development |
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- Code 400, Statement 400 |
| Preferential Procurement |
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- Code 500, Statement 500 |
| Enterprise Development |
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- Code 600, Statement 600 |
| The Residual Element |
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- Code 700, Statement 700 |
As well as with:
Codes of Good Practice on Broad-Based Black Economic Empowerment for Qualifying Small Enterprises (QSEs):
These Codes were released during December 2005, with the commentary period closing at 31 March 2006. They were finalized in December 2006.
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