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Deadline for New BEE Codes looms

With the amended BEE Codes of Good Practice (New Codes) becoming effective in May this year there may be a tendency for many businesses to postpone dealing with the implications of the New Codes until after they have become effective. What many businesses may not realize is that their deadline to get everything in order for their first BEE rating under the new Codes could be less than a month away.

The end of February is traditionally the end of the financial year for many businesses which means that for these businesses all the necessary BEE plans and expenditure need to be in place before the end of this February. When obtaining a BEE certificate, the latest available financial statements are usually the financial statements that one will use when rating your business. This means that the current financial year will be the one which most entities will need to report under for their first BEE rating under the New Codes.

This situation is made particularly problematic for QSEs (businesses with a turnover of more than R10 million but less than R50 million) with less than 51% Black ownership. These businesses will need to have everything in place by the end of February, despite the fact that the BEE Codes applicable to them are still in their draft format and have not even been finalised. One would expect that these businesses would be given a transitional period after the finalisation of the BEE Codes to get everything in order, but all indications are that this will not be the case and that there will be no transitional period for these QSEs.

A similar problem is faced by businesses that traditionally fell under the various BEE Sector Charters. No new charters have been finalised yet and businesses still have no idea of what their targets will be for the various elements and what they may need to still spend. 

With the difficulty the New Codes present for businesses to score points and achieve a decent BEE contribution level, businesses cannot afford to not gain points under certain elements of the BEE Scorecard. Having said this, these businesses have a bottom line and also cannot afford to just spend large amounts of money in the hope that it will be enough to meet whatever targets will be imposed. 

Unfortunately, at the moment it appears that there are no easy answers as to what to do about these problems and businesses can only try and prepare themselves as best as possible with the available information to meet the requirements of the New Codes. One hopes that the situation may become clearer within the next few weeks and that businesses will not be punished because of the uncertainty that exists currently, but businesses should not rely on this assumption.

Despite the uncertainty around the New Codes there are definitely measures that can already be put in place and businesses should take the necessary steps as soon as possible to do so before it is too late. 

February 13, 2015
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