Monthly Archives: December 2012

B-BBEE: TWO THINGS WORTH KNOWING

B-BBEE (Broad Based Black Economic Empowerment) has been with us for quite some time. The process of including the previously disadvantaged into the economy has not been without controversy but the reality is that it will not be going away any time soon.

  1. Exempted Micro Enterprises: B-BBEE Certificates can be issued for you by your Independent Reviewer, Auditor or Accounting Officer
    EMEs (Exempted Micro Enterprises) are enterprises with annual turnover of R5 million or less (possibly increasing to R10 million shortly – see below). Some sectors’ codes have prescribed different turnover thresholds to qualify as an EME – for example, the Tourism Sector Code is R2.5 million or less while the Construction Sector is set at R1.5 million or less.EMEs automatically qualify as B-BBEE level 4 contributors and thus have B-BBEE procurement recognition level of 100%. Those EMEs that are more than 50% black owned can get promoted to a level 3 contributor status.A recent joint notice issued by SAICA (South African Institute of Chartered Accountants) and the Department of Trade and Industry, confirmed that chartered accountants, auditors or any person that qualifies to act as an accounting officer may issue a certificate confirming your business qualifies as an EME.Thus, if you are a business that qualifies as an EME, it will be both time efficient and cost-effective to use your independent reviewer, auditor or accounting officer for your certificate.

  2. What we can expect in the future

    Minister of Trade and Industry, Rob Davies, has asked for comment on proposed changes to the B-BBEE Codes of Good Practice.The number of elements in the scorecard will be reduced from seven to five – employment equity would be joined with management control whilst preferential procurement and enterprise development would also merge and be called enterprise and supplier development.  Ownership, skills development and socio-economic development would remain as the other three elements. The stated aim of these intended amendments is to broaden the base of black participation in the economy. It is worth looking at the consequences that some of these proposed codes may have on your business.

    • The qualifying turnover
      This is scheduled to change. For EMEs, the proposed threshold would increase from R5 million to R10 million. This will take pressure off businesses with turnover from R5 million to R10 million as they are spared doing the B-BBEE scorecard and they can obtain exemption certificates as in 1 above. QSEs’ (Qualifying Small Enterprises)   turnover threshold increases from R10 million to R50 million versus R5 million to R35 million in terms of the current code.
    • Procurement
      One avenue open to businesses to bolster their B-BBEE points is to buy from B-BBEE accredited suppliers. In fact many of these businesses have pressurised their suppliers to get B-BBEE certification which has considerably increased the number of B-BBEE compliant businesses. The new codes propose that B-BBEE procurement points can only be claimed from value adding suppliers – defined as “entities whose profit before tax added to their salary costs is to exceed 25% of their turnover”. In essence, the codes are favouring businesses with high labour content. A survey estimates that around 30% of businesses will be value adding.  Many of the 70% who will not be value adding will have no incentive to remain B-BBEE compliant as their customers cannot get B-BBEE points from buying from them. Not only will entities lose B-BBEE points if they cannot buy from value adding suppliers but non-compliance with this element could result in the measured entities’ B-BBEE status level being discounted by two levels.
    • Ownership
      This element is given priority in the suggested codes. Under the current codes, businesses can make up points in other elements if they do not meet the ownership criteria. In terms of the proposed codes, businesses’ B-BBEE contributor status will drop two levels if they fail to get 40% compliance in this element. Groups, such as multi-nationals will face some very difficult decisions and it could potentially affect investment in South Africa.
    • QSEs
      In terms of the current codes, QSEs can choose the best four of the seven elements when having their B-BBEE compliance measured. The proposed codes require QSEs to comply with all fiveelements. This will make the process more difficult for QSEs. As opposed to larger entities which stand to drop two contributor levels when they do not meet compliance targets in priority elements, QSEs will only drop one level.

If you want to contact us in respect of any matter mentioned herein, please send an email to Anze Pienaar at anze@newtons-sa.co.za.

© DotNews, 2005-2012. This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.

YEAR END MESSAGE FROM CEDRIC


It is this time of the year again when we reflect on the past twelve months and draw up personal balance sheets and income statements of goals achieved, promises kept and achievements accomplished.

Although the year has by no means been easy, I reflect on happy memories as new “Newtons”, the wonderful staff that we have and the privilege of being associated with YOU, our clients.

Our slogan of “YOUR SUCCESS IS OUR SUCCESS” is a motto we live by and try to ensure that this is true for each and every client.

I wish you all a blessed, happy and relaxing festive season.

Kind Regards

Cedric Peterson

NEWTONS YEAR END AWARDS

Janeske du Toit was awarded the 1/4 Apple Award (4th Quarter) by our Managing Partner Mr Cedric Peterson for dedication, excellence and commitment to Newtons.

Léhan van Rooyen was awarded the 1/4 Apple Award (3rd Quarter) by our Managing Partner Mr Cedric Peterson for dedication, excellence and commitment to Newtons.

At our annual closing function, staff received Long Service Awards. Hannetjie Els received hers for 10 years’ service from our Managing Partner Mr Cedric Peterson.

At our annual closing function, staff received Long Service Awards. Willie van der Merwe received his for 15 years “11 months and 6 days” service from our Managing Partner Mr Cedric Peterson.

At our annual closing function, staff received Long Service Awards. Linda Swartz received hers for 25 years’ service from our Managing Partner Mr Cedric Peterson.

IC Marais was congratulated by our Managing Partner Mr Cedric Peterson for winning the Mr Movember competition for 2012!

MEMORANDUM OF INCORPORATION (MOI): THE 30 APRIL DEADLINE IS APPROACHING!


One of the transitional arrangements of the 2008 Companies Act (the Act) was that businesses had two years to migrate from their constitutional documents (‘Memorandum and Articles of Association’ for a company) to the new MOI.

If you haven’t yet completed this exercise, there are good reasons why you should now consider your MOI without delay:

  1. The Act differs from the previous Companies Act and understanding these differences and the impact they may have on your business is a time consuming exercise
  2. During the two year transitional period your Memorandum and Articles of Association will take precedence over the Act (subject to certain transactions such as a take-over or duties of directors) but from 1 May 2013, if parts of your Memorandum and Articles of Association conflict with the Act, these parts will be void.

How will the MOI affect my business?

It depends on the complexity of your business – for example owner-managed entities may well be able to use the default MOI in the Act, but even in simple operations you should have your accountant review your MOI and Shareholders Agreement as any provisions in them that conflict with the Act will have no legal force after 30 April next year. Finally, check your old Memorandum and Articles of Association to see if any specific clauses were inserted. If so and if they are still relevant you may choose to include them in your MOI (provided they do not clash with the Act).
As you can see, even with a simple business there is quite a bit to think about.

If your business has more layers in it – for example, you may have directors or managers running the business – there is more to consider. Alterable provisions come into play and there are more than forty of them in the Act. These may be curbed or removed by the owners of the business when drafting the MOI. Typically, alterable provisions give wide powers to directors to, for example, issue shares or take on business debt. The old Act gave extensive powers to the owners of the business whereas the new Act gives widespread powers to directors and/or senior managers and it is up to the owners to accept these powers or restrict them when doing the MOI.

Take advice!

There are other issues to take into account, so it is worth getting expert advice – there is plenty at stake.
Remember the deadline for completing your MOI is looming. As an extra incentive if you miss the deadline of 30 April, you will have to pay the Companies and Intellectual Property Commission (CIPC) a fee when submitting your MOI – there is no CIPC charge until then.

If you want to contact us in respect of any matter mentioned herein, please send an email to Carel Barkhuizen at

carel@newtons-sa.co.za.

© DotNews, 2005-2012. This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.