Cabinet-approved BEE codes take flak

According to a senior Department of Trade and Industry official quoted in Business Report, the main elements of the new codes are that companies will get empowerment points for indirect ownership by black pension funds members, and the concept of ‘once empowered always empowered’ will be applied – meaning that if black shareholders exit a company and whites buy their shares, the company will still score empowerment points. Peter Vundla, chairman of the Presidential Black Business Working group, said: ‘This is the stupidest thing I’ve ever heard. All the gains we’ve made in the economic terrain, we’re just giving back.’ Another black business executive, who has been doing empowerment deals since the 1990s, said her problem with the ‘once empowered’ principle was that it confirmed the fears of some people that the be-all of BEE was equity ownership. Full report in Business Report

The codes offer good news for small business, with the threshold in terms of turnover size for companies that have to comply having being raised considerably. In the latest version, companies with annual revenues of R5m and less do not have to comply with any of the envisaged BEE requirements. Medium-sized companies have also received some relief. Companies with a turnover of between R5m and R35m a year may choose four from the seven components with which they wish to comply. The threshold for medium-sized companies was previously set at R25m in annual turnover. Furthermore, multinational companies with a global policy on sole ownership of their subsidiaries in other countries will be exempted from the equity component of the scorecard, but will have to make up for the allowance with alternative measures. Full Business Day report

Cabinet’s approval of the codes will enable the Minister of Trade and Industry to gazette Phase 1 and 2 of the codes early in 2007, as well as gazette sector transformation charters for BEE. A report on the DTI site says the full details of the contents of the codes will be released next week and the final gazetted document will be made available early in 2007. Full DTI report