Firms race to comply with new BEE codes

COMPANIES face a race against time to comply by April 30 next year with recent amendments to the black economic empowerment (BEE) generic code of good practice and sector codes, which will have a dramatic impact on their current BEE ratings.

Murray Chabant, the managing director of empowerment consultancy Signa, said yesterday that many businesses were not prepared for the changes in the codes, which would typically result in a company trading with a level 4 BEE certificate in terms of the old codes automatically dropping to level 7.

If companies did not meet the thresholds for one of the priority elements in the new codes, they would drop a further level, Chabant said in a media briefing after a construction charter workshop organised by Consulting Engineers SA (Cesa).

“Most companies now trade with their large suppliers on the basis of contracts that are linked to their BEE status, which means they have to retain their BEE status or the contract will be cancelled,” he said.

“For many business owners this is a big risk and yet they are ignorant of these changes.”

Lefadi Makinbinyane, the chief executive of Cesa, said the current construction sector charter had to be amended and refined to align it with the Trade and Industry Department’s generic BEE code.

Makinbinyane said the construction sector charter council had done a baseline study that would give the industry direction on what it could emphasise in the code outside the mandatory targets set by the amended generic BEE code. He expressed confidence a new code for the construction sector would be gazetted long before the April 30 deadline, when the new generic code would be implemented.

Jacob Maphutha, the director for BEE at the Trade and Industry Department, said it had never previously had any transition period for the implementation of all the sector codes, which were implemented and applicable from the day they were gazetted.

“We are working with the various charter councils to ensure that by January all sector codes are aligned, which would give companies another four or five months to prepare for the implementation.

“Some of them are ready for the first phase of gazetting for public comment. So we are on top of the process so that alignment happens before the deadline,” Maphutha said.

Chabant stressed timing was critical for companies preparing themselves for the implementation of the new codes.

He said if everything went well, the construction sector would in February, at the earliest, have an amended code that was aligned to the new generic code.

But Chabant said the timing of companies assessing their BEE rating was critical because ratings could be done in terms of the old sector code and would be valid for 12 months thereafter provided their BEE certificate was issued before the April 30 deadline. Chabant said this would allow companies more time to align their internal policies to the new codes.

“That is really the only strategy companies can employ while there is so much uncertainty about the alignment of the construction sector charter with the generic codes. Most companies where it [BEE] is critical understand this and have planned to have their ratings done in March or April next year.” Most ratings agencies were thus fully booked.