More confusion around new BEE codes

When the new BEE Codes where published in October last year there were many issues which required clarity leaving the business industry with numerous questions and uncertainty. New notices published in the Government Gazette recently have again highlighted this uncertainty and have shown that even within Goverment there still appears to be confusion around many facets of the new BEE Codes.

Some of the unanswered questions posed by the new BEE Codes at the end of 2013 include, “Can you still report under the old Codes after 11 October 2014 if your financial year ended before then?”; “How will the old BEE certificates be handled for procurement under the new Codes?” and “Who must give the affidavit required for EME’s and for QSE’s with more than 51% Black-Ownership?” These and many other questions led to the Association of BEE Verification Agencies (ABVA) directing 16 pages of queries to the Department of Trade and Industry (“DTI”) to try to obtain more clarity regarding the interpretation of new BEE Codes.

The confusion created by the new Codes was not, however, limited to the verification agencies alone. In Notice 27 and Notice 28 of 2014 (“the Notices”) published in a recent Government Gazette, the Department of Agriculture, Forestry and Fisheries (“DAFF”) dealt with the requirements for applications for various permits. One of the requirements for the permits deals with compliance with certain BEE criteria and shows just how much confusion the new BEE Codes have created.

Below are just a few of the contradictions between the Notices prepared by DAFF and the new BEE Codes:

  • The new BEE Codes specifically state that these codes are not applicable to entities which fall under a sector for which there is a Sector Charter. The Notices state, however, that both the new BEE Codes and the AgriBEE Charter are applicable. This cannot be correct and even if it were, it would be nearly impossible to implement in practice.
  • The new thresholds and levels for EME’s and QSE’s dealt with in the Notices are the same as those in the new BEE Codes, but as mentioned above the new BEE Codes are not applicable to entities falling under Sector Charters and these new levels and thresholds are therefore incorrect in relation to the levels contained in the existing AgriBEE Charter.
  • The Notices go on to state that a valid BEE certificate from a verification agency will be required for QSE’s. This creates a problem for QSE’s which have more than 51% Black ownership. In terms of both the new BEE Codes and the Notices (but not the AgriBEE Charter), these QSE’s will qualify automatically as level 2 or level 1 BEE Contributors (as the case may be). The Notices contradict the new BEE Codes in that the new BEE Codes state that an affidavit must be provided as proof of the entity’s BEE status, but the Notices require a certificate from a verification agency. ABVA have however prohibited their members from issuing these QSE certificates in terms of the new BEE Codes and a situation is therefore created where a certificate from a verification agency is required but cannot be obtained as the agencies supposed to issue them are prohibited from issuing them.

These are just some of the issues and contradictions the government and the verification agencies are grappling with in respect of the new BEE Codes. What is clear though is that we still have some ways to go before all the issues with the new BEE Codes are addressed and ironed out. Unfortunately the reality is also that the longer the DTI takes to provide clarity, the greater the level of uncertainty will become and the more issues will arise as the implementation date of the new BEE Codes approaches. For now it continues to remain a waiting game to see what answers Government will provide to address the questions that continue to arise around the new BEE Codes.

March 6, 2014
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