STAATSKOERANT, 10 JUNIE 2011 No.
I. Dr Rob Davies.
Issues for public comment, the DRAFT INFORMATION AND COMMUNICATION TECHNOLOGY SECTOR CHARTER (The Draft Code) as provided for in Code 000 Statement 003 of the Codes of Good Practice under Section 9 (5) of the Broad Based Black Economic Empowerment Act (Act No.
Invite interested persons and the public to submit comments on the draft code within 60_days from the date of this publication.
Dr Rob Davies.
The ICT Sector stakeholders compnstng the Broadcasting, Electronics, Information Technology and Telecommunications sub-sectors; together with participants from the social partners, namely Government, Labour, Community, and ICASA, initiated a process of developing a Black Economic Empowerment Charter for the ICT Sector.
The Broad Based Black Economic Empowerment Act 53 of 2003 (BBBEE Act) and government's generic Black Economic Empowerment Codes of Good Practice, aims to address inequities resulting from the systematic exclusion of black people from meaningful participation in the economy. The ICT Code of Good Practice aims to do this for the ICT sector.
Comply with the requirements of the ICT Sector Code as defmed hereunder and where possible meet and exceed targets across the sector.
Having initiated the process of developing the BEE Charter for the ICT sector, we therefore propose this Draft ICT Sector Charter to be gazetted as a Code of Good Practice for the ICT sector in terms of Section 9(5) of the BBBEE Act, (BBBEE Act 53 of 2003), before it is finally gazetted as a Sector Code in terms of Section 9 (1) of the BBBEE Act.
Once gazetted as the Sector Code, it shall remain effect until amended substituted or repeal under section 9 of the Act.
000 Framework for measuring Broad-Based Black Economic Empowermen!
800 Measurement ofQualifying Small Enterprises of Broad-Based Black Economic Enlpvwu.
300 ~-400 -ICT Code series 300 The general principles for measuring Employment Equity -ICT Code series 400 The general principles for measuring Skills Development i !
1.9 Define the duration for the applicability of the Draft ICT Sector Charter.
COE-ICT-0309-03 6-60 2.
2.1 The fundamental principle for measuring B-BBEE compliance is that substance takes precedence over legal form.
2.2 In interpreting the provisions of the Draft ICT Sector Charter any reasonable interpretation consistent with the objectives of the Act and the B-BBEE Strategy must take precedence.
2.3 The basis for measuring B-BBEE initiatives under the Draft ICT Sector Charter is the BBBEE compliance of the measured entities at the time of measurement.
2.4 Any misrepresentation or attempt to misrepresent any enterprise's true B-BBEE Status may lead to the disqualification of the entire scorecard of that enterprise.
2.5 Initiatives whlch split, separate or divide enterprises as a means of ensuring eligibility as an Exempted Micro-Enterprise, a Qualifying Small Enterprises or a Start-Up Enterprise are a circumvention of the Act and may lead to the disqualification of the entire scorecard of those enterprises concerned.
2.6 Any representation made by an Entity about its B-BBEE compliance must be supported by suitable evidence or documentation. An Entity that does not provide evidence or documentation supporting any initiative, must not receive any recognition for that initiative.
2.7 Wherever a Standard Valuation Method applies to measuring an indicator, the same standard should apply, as far as reasonably possible, consistendy in all other applicable calculations in this statement.
\XThere the Draft ICT Sector Charter is silent on certain provisions, the provisions of the Generic Code shall take precedence.
All public entities listed in schedule 2 or schedule 3 \."
3.2 The basis for measuring the B-BBEE compliance ofan entity in terms of paragraph 3.
The Scorecard, in the case ofother enterprises.
4.1 Any enterprise with an annual Total Revenue of R 5 million or less qualifies as an Exempted Micro-Enterprises.
4.2 Exempted Micro-Enterprises are deemed to have B-BBEE Status of "Level Four Contributor" having a B-BBEE procurement recognition of 100% under paragraph 6.3.
4.3 Despite paragraph 4.2, an Exempted Micro-Enterprise qualifies for a promotion to a BBBEE Status of "Level Three Contributor" having a B-BBEE procurement recognition of 110% under paragraph 6.3 if it is -more than 50% owned by black people or by black women.
4.4 Exempted Micro-Enterprises are allowed to be measured in terms of the QSE scorecard should they wish to maximise their points and move to the next procurement recognition level.
4.5 Sufficient evidence of qualification as an Exempted Micro-Enterprise is an auditor's certificate or similar certificate issued by an accounting officer or verification agency.
5.1 Any enterprise with an annual Total Revenue of between R5 million and R35 million qualifies as a Qualifying Small Enterprise.
5.2 A Qualifying Small Enterprise must select any four of the seven Elements of B-BBEE for the purposes of measurement under the Qualifying Small Enterprise Scorecard contained in Code 800. Where a Qualifying Small Enterprise does not make a selection, its four best element scores will be used for the purposes of measurement.
6.1 Start-up enterprises must be measured as Exempted l\ficro-Enterprises under this statement for the first year following their formation or incorporation. This provision applies regardless of the expected total revenue of the start-up enterprise.
6.3 In order to qualify as a Start-up Enterprise, the enterprise must provide an independent confirmation of its status.
6.4 Despite paragraph 6.1 and 6.2, Start-up Enterprises must submit a QSE Scorecard when tendering for any contract, or seeking any other business covered by section 10 of the Act, with a value higher than R 5 million but less than R35 million. For contracts above R35 million they should submit the scorecard. The preparation of such scorecards must use annualised data.
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7.1 The Ownership Element, as set out in Code series 100, measures the effective ownership of enterprises by black people.
7.2 The Management Control Element, as set out in Code series 200, measures the effective control of enterprises by black people.
7.3 The Employment Equity Element, as set out in Code series 300, measures initiatives intended to achieve equity in the workplace under the Act, and the Employment Equity Act.
7.4 The Skills Development Element, as set out in Code series 400, measures the extent to which employers carry out initiatives designed to develop the competencies of black employees.
7.5 The Preferential Procurement Element, as set out in Code series 500, measures the extent to which enterprises buy goods and services from suppliers with strong B-BBEE procurement recognition levels.
7.6 The Enterprise Development Element, as set out in Code series 600, measures the extent to which Enterprises carry out initiatives intended to assist and accelerate the development and sustainability of other Enterprises.
The Socio-Economic Development and Sector Specific Contributions Element, as set out in Code series 700, measures the extent to which enterprises carry out general and ICT sector specific initiatives that contribute towards Socio-Economic Development and that promote access to the economy for black people. Two-thirds of such spend must be spent on ICT sector specific initiatives.
Based on the overall performance of a Measured Entity using the Scorecard.
Level Eight Contributor ~30 but <40 on the Scorecard.
Throughout the Draft ICT Sector Charter, various criteria appear which advance the interests of certain categories of black people.
9.2 Black people with disabilities, black youth, black people living in rural areas and black unemployed people who must form between 2 and 3% of the beneficiaries of all Elements of the Scorecard.
10.1 Verification of BEE compliance is encouraged and to this end, the dti will from time to time issue dear guidelines on the verification process.
10.2 SANAS is a national accreditation body that operates in compliance with d1e requirements for accreditation bodies as defined in d1e International ISO /IEC Guide 62 and ISO 17011.
10.3 Accreditation of BEE verification agencies will be conducted by SANAS on behalf of the dti in terms of the accreditation criteria that will be developed, maintained and enforced by SANAS.
10.4 Such Accreditation Standards govern the terms and conditions, on which the Accreditation Body may grant, refuse to grant, revoke or suspend an accreditation of a Verification Agency.
10.5 Those verification agencies wishing to apply for accreditation will do so through SANAS.
10.6 The dti encourages the establishment of an independent industry Body that will provide guidance to the verification industry through the development and maintenance of high quality and reliable BEE verification services.
10.7 The dti together with the relevant Industry Body will from time to time develop Verification Methodology and other relevant practices d1at will be used as standards by all verification agencies.
COE-ICT-0309-03 10-60 10.8 The dti together with the Accreditation Body will implement such mechanisms as may be necessary to ensure that Verification Certificates are accurate and reliable.
The transitional scorecard.
11.2 Thereafter, all B-BBEE compliance measurement under the ICT Sector Codes for Medium and Large enterprises is subject to the use of the ICT Scorecard.
B is the total score achieved under Code series 100 and 200 12.
The Minister of Trade and Industry may, by notice in the Gazette, adjust the thresholds in paragraphs 4 to 6. Any such changes apply to compliance reports prepared for enterprises after a 12-month period following the gazetting of the adjustment.
13.1 The ICT Codes shall be affective and legally binding from the date of gazette to 31't March 2026 with a midterm five year review on the 31st March 2016 or until amended, substituted or repealed under of the Act.
13.2 111e process for the amendment of the ICT Codes will follow the process set out in the Generic Codes for the development of Sector Codes. Any amendments to the Generic Codes must result in a review of the ICT Codes for purposes of harmonisation.
13.3 1b.e Minister of Trade and Industry will review the Generic Codes following the end of the tenth year following the commencement date of the Generic Codes. Despite the aforementioned, annual reviews will take place to monitor the implementation of B-BBEE throughout the economy. If, as a result of such review any changes are made to the Generic Codes, the ICT Codes will also be harmonised with the Generic Codes following the same process set out in 13.
1.2 SpecifY scorecards applicable to Measured Entities subject to this statement.
2.1 Public entities and other Enterprises wholly owned by organs of state are incapable of evaluation of black ownership under Code series 100 2.2 Higher Education Institutions are not public entities under the Public Finance Management Act of 1999. They are incapable of evaluation of black ownership under Code series 100.
2.3 Companies limited by guarantee and section 21 companies have no shareholding. They are incapable of evaluation of black ownership under Code series 100.
COE-ICT-0309-03 12-60 companies limited by guarantee and section 21 companies sharing in the ownership of other Enterprises cannot contribute towards black ownership to such Enterprises as provided for in Statement 100.
1bis does not imply that Non-profit Organisations and Public Benefit Organisations sharing in the ownership of other Enterprises as broad-based ownership schemes cannot contribute towards black ownership to such Enterprises as provided for in Statement 100.
2.5 Wherever any of the entities listed in paragraphs 1 and 2 require evidence of their own BBBEE compliance, they will use the Adjusted Scorecard. If those entities are also Qualifying Small Enterprises, they will use the Adjusted Qualifying Small Enterprises Scorecard.
Code series reference that specifies the mechanisms for measurement and calculation of each of the Elements of the scorecard (Code series 100-700).
Socio-Economic Development 22 points 20 points 11 points 22 points 400 500 600 700 3.
All other terms of statement 000 apply to Measured Entities subject to this statement. mutatis mutandis.
Code series reference that specify the mechanisms for measurement and calculation of each of the Elements of the scorecard (Code series 100-700).
A Measured Entity, subject to this statement, that is a Qualifying Small Enterprise must choose any four of the six Elements of B-BBEE against which their B-BBEE compliance will be measured under the Adjusted Qualifying Small Enterprise Scorecard.
The status of Socio-Economic Development Contributions made to any of the types of entities in paragraphs 1 and 2 under Code series 700 is not dependent on such entity's scorecard result, but rather the nature of the contribution itself and the identity of that contribution's beneficiaries.
1.5 Specify the formula for measuring Voting Rights, Economic Interest, Realisation Points and bonus points.
COE-ICT-0309-03 15-60 2.
Exercisable Voting Rights in the Enterprise in the hands of black people 3 30%.
Economic Interest of black people in the Enterprise 4 30%.
Economic Interest of the following black natural people in the Enterprise: 1 2.
Ownership fulfilment 1 Refer to paragraph 10.
Net Value 7 Refer to Annexe C paragraph 4 2.
An Enterprise receives points for parttclpation by black people in its rights of ownership, using the ownership scorecard in paragraph 2.
To be read with paragraph 6.
3.1.1.8 A Trust.
As a general principle, when measuring the rights of ownership of any category of black people in a Measured Enterprise, only rights held by natural persons are relevant. If the rights of ownership of black people pass dttough a juristic person, then the rights of ownership of black people in that juristic person are measurable. This principle applies across every tier of ownership in a multi-tiered chain of ownership until that chain ends with a black person holding rights of ownership.
3.2.2.2 TI1e result of this calculation represents the percentage of rights of ownership held by the Participant.
The Modified Flow-Through Principle applies to any BEE owned or controlled company in the ownership of the Measured Enterprise.
In calculating Exercisable Voting Rights under paragraph 2.1.1. and Economic Interest under paragraph 2.2.1 the following applies: \Xlhere in the chain of ownership, black people have a flow-through level of participation in excess of 50%, then only once in that chain may such black participation be treated as if it were 100% black.
The Modified Flow-Through Principle may only be applied in the calculation of the indicators in paragraphs 2.1.1 and 2.2.1. In all other instances, the Flow-Through Principle applies.
COE-ICT -0309-03 17-60 3.
When determining ownership in a measured entity, ownership held direcdy by organs of state or public entities must be excluded.
Despite paragraph 3.4.1 and 3.4.2, the Minister of Trade and Industry may by notice in the gazette, designate certain Public Entities as BEE Facilitators.
3.4.3.5 Without any third-party rights.
When determining ownership in a measured entity, rights of ownership of Mandated Investments may be excluded. The maximum percentage of the ownership of any measured entity thatmay be so excluded is 40%.
A Measured Entity electing not to exclude Mandated Investments when it is entided to do so, may either treat all of that ownership as non-black or obtain a competent person's report estimating the extent of black rights of ownership measurable in the Measured Entity and originating from that Mandated Investment.
A Measured Entity cannot selectively include or exclude Mandated Investments and an election to exclude one mandated investment is an election to exclude all Mandated Investments and visa versa.
3.5.1.3 Transformation has taken place within the measured enterprise.
Black participation arising from continued recognition of black ownership cannot contribute more than 40% of the score on the ownership scorecard.
3.5.3.2 The period over which the points were allocated or recognised will not exceed the period over which the shares were held.
3.5.4.3 The ownership points that were attributable to the Measured Enterprise on the date of sale or loss.
A maximum of 40% of the total points on the ownership scorecard of the Measured Entity if they meet the qualification criteria set out in Annexe 100(B).
100% of the total points on the ownership scorecard of the Measured Entity if they meet the additional qualification criteria set out in Annex 100(B).
More than 50% of the value of funds invested by any Private Equity Fund must at all times be invested in black owned enterprises that were at least 25% black owned before the investment of the Private Equity Fund.
COE-ICT-0309-03 19-60 6.
6.1 A Section 21 company or company limited by guarantee that houses a Broad-Based Ownership Scheme or an Employee Ownership Scheme is subject to the provisions governing those types of schemes and not to this paragraph.
6.2 When a Measured Entity elects to exclude such companies, it can do so by excluding up to 40% of the level of their ownership completely from the determination of its compliance with the ownership target.
6.3 A Measured Entity electing not to exclude section 21 companies or companies limited by guarantee when it is entitled to do so, may either treat all of that ownership as non-black or obtain a competent person's report estimating the extent of black rights of ownership measurable in the Measured Entity and originating from those section 21 companies or companies limited by guarantee.
a maximum of 40% of the total points on the ownership scorecard of the Measured Entity if they meet the qualification criteria for Broad-Based Ownership Schemes set out in Annexe 100(B).
100% of tl1e total points on the ownership scorecard of the Measured Entity if they meet the additional qualification criteria set out for Broad-Based Ownership Schemes in Annex 100(B).
6.5 If tl1e rand value of the total BEE stake is in e.>:cess of R7.5billion, then the company will be considered to be compliant with the equity target in the scorecard. In tl1e case of listed companies, the prescribed minimum free float (20%) will be excluded from computation of the target, subject to a minimum of 25.1% for the purposes of minority protection; In the case of SOE's, the target is 30% of that component of equity that is not in government hands.
The Draft ICT Sector Codes deviates from the Generic Codes on tl1e ownership target which has been increased to 30%. The substance of the deviation of the draft ICT sector Code from the Codes of Good Practice (25.1% +1) is the recognition by the ICT sector to accelerate the pace of transformation in the sector, thus ensuring more companies in the hands of black people. The ICT sector believes that given the pace of transformation and black ownership in the sector, it may take longer to bring about real transformation in the sector if the sector is to adopt the 25%+1 compliance target. This is also to recognize the uniqueness of the ICf sector and tl1at it cannot be treated as any other sector, hence the deviation from the compliance target in the codes ofgood practice.
The R 7.5 Billion figure was agreed position by the industry as a catalyst to accelerate transformation. The figure was agreed for taking into consideration the size of entities in the sector. However, this is not a static figure it could change after a period of time in the process of transformation to ensure the targeted figure of 30% black ownership is achieved.
With regard to the free float of 20 percent, the Electronic Communications Act requires that for each company to be granted a license, 30% must be owned by HDis. With regard to companies listed in the JSE, they are required to maintain a minimum of 20% free float, i.e. shares that are freely available to the investing public. This means that 20% of the issued share capital is not under the control of the officers of the company. It was then agreed that listed companies should have 30% of the issued share capital that could be under the control of the officers, meaning that 30% of the 80% of the issued share capital. This translates to 24% of the issued share capital. It was also agreed that black investors should have their position strengthened as they are minority shareholders. It was therefore agree that they should have 25.
a maximum of 40% of the total points on the ownership scorecard of the Measured Entity if the trust meets the qualification criteria for Trusts set out in Annexe 1 OO(B).
100% of the total points on the ownership scorecard of the Measured Entity if they meet the additional qualification criteria set out for Trusts in Annex 100(B).
the value of any Economic Interest is irrevocably transferred for the option period and paid to the holder of that instrument before the exercise of that right.
The value of an instrument must be determined by using a Standard valuation method for calculating the Net value.
9.1 An Equity Instrument carrying preferent rights is measurable in the same manner as an ordinary Equity Instrument.
9.2 An Equity Instrument carrying preferent rights that has the characteristics of a debt, regardless of whether the debt is that of an Enterprise or of a Participant, is an ordinary loan. If the debt is that of a black Participant, it may be subject to measurement under Current Equity Interest.
9.3 In evaluating an instrument that has a hybrid nature including the characteristics of a debt, only that portion that represents a debt, will be measured under current equity interest. The remainder is measurable as an ordinary equity instrument.
10.1 Ownership FulfJ.
on the release of all black Participants in a Measured Entity from all third-party rights arising from the fmancing their transaction with the Measured Entity; or if all black Participants in the Enterprise have never been subject to any such third-party rights.
11.1 A Measured Entity with 25% black Economic Interest, can receive a maximum of 2 bonus points for a 10% holding of Economic Interest by black new entrants.
1.1 Set out the conditions where the Sale of Assets, Equity Instruments and other Businesses will be recognised.
Set out how the Ownership points will be deterrnined.
Equity Instruments in an Enterprise.
A Seller that has concluded a transaction involving a sale of asset, Equity Instrument or business with an Associated Enterprise may claim the benefits provided for in this statement in its own Ownership Scorecard.
Where a Seller has claimed benefit in terms of the Ownership scorecard for the Sale of Asset, Equity Instrument or Business it may not claim benefits under the Enterprise Development Element.
COE-ICT-0309-03 24-60 3.2.1.
3.2.1.2 Result in the transfer of specialised skills or productive capacity to black people.
3.2.2.2 Clients, customers or suppliers other than the Seller.
Any operational outsourcing arrangements between the Seller and the Associated Enterprise must be negotiated at arms-length on a fair and reasonable basis.
3.2.4.2 Sales of franchises by franchisors to franchisees, but includes sales of franchises from franchisees to other franchisees or to new franchisees.
4.1 The calculation of the ownership points in terms of paragraph 2.3.2.
The value of the transaction.
4.2 All calculations in terms of paragraph 4.1.1 to 4.1.3 must use a Standard valuation method.
4.3 The Seller may claim the point for Ownership Fulfihnent only if both the Seller and the Associated Enterprise comply with the requirements for the award of that point.
Apply only to the ownership indicators in paragraphs 2.1 and 2.
Do not apply to the ownership indicators ill paragraphs 2.3 and 2.4 of the Ownership Scorecard.
4.5 The Seller must include the Equivalency Percentages in its own Ownerslup Scorecard as if those percentages arose from black ownership of Equity Instruments in the Seller.
Equivalency Percentages for the indicators in paragraphs 2.1 and 2.2 of the Ownership Scorecard can be calculated in terms of Annexe 102(A).
5.1 A Seller seeking recognition of a Transaction in its Ownership Scorecard must determine that recognition under paragraph 4 in compliance with paragraph 2.
5.1.2.2 The values of the Qualifying Transaction and benefit to the Seller at the date of measurement in the third year after the transaction.
Any Equity Equivalent Contributions towards the Ownership Element of B-BBEE made by entity applying for recognition of equity equivalents are measurable against the value of their operations in the Republic of South Africa.
3.1 The Minister of Trade and Industry may, approve certain Equity Equivalent Programmes after the entity applying for recognition of equity equivalents has consulted with the Minister of Communications with respect to their equity equivalent proposal and the 1\finister of Communications has forwarded a recommendation to the Minister of Trade & Industry.
3.2 Any Equity Equivalent Programme forming part of a Sector Code constitutes an approved programme.
3.3 Equity Equivalent Programmes are preferably Sector Specific, but the Minister of Communications may consider requests for approval of programmes that are not Sector Specific.
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3.4.1.1.4 Establishing partnerships with black owned, black empowered, black engendered entities or S:MMEs' in the placing of substantial new investments in global markets.
Any other programmes that promote Socio-Economic advancement or contribute to the overall soda development of the Republic of Soud1 Africa.
Details about the sponsors of the programme.
Communities, natural persons or groups of natural persons where at least 75% of the beneficiaries are black people and the same percentage of economic value is derived by black people.
4.1 The ownership score of a Multinational participating in an Equity Equivalent Programme is calculated in terms of paragraph 4.3. A Multinational participating in an Equity Equivalent Programme cannot receive any points for ownership under any statement in Code Series 100 other than this statement.
The Ownership Score under an Equity Equivalent Programme using either of the targets in paragraphs 4.2 must be calculated in terms ofAnnexe 1 03(A).
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5.1.1.4 The equity equivalent contribution must involve the provision of interest free loans, No-Gain Grants or Human Capital Investments to the new Enterprise equivalent in value to 50% of the new Enterprise's projected operational costs for the first 3 years following its establishment.
An equity equivalent contribution of the entity applying for recognition of Equity Equivalents that involves enhanced Socio-Economic Development.
5.2.1.2 Cannot form part of the score of the entity applying for recognition of Equity Equivalents under Code series 700.
6.1 Any contributions towards the ownership Element of B-BB-BBEE made by ent1t1es applying for recognition of Equity Equivalents are measurable against the value of their operations in the Republic of South Africa.
6.2 In calculating their ownership score, entities applying for recognition ofEquity Equivalents must apply the Exclusion Principle to any portion of the business value of their South African operations gained from non-South African sources. A Standard valuation method must be used to determine the value of the South African operations.
The rights of ownership in the Equity Instnunents are comparable to rights that would have accrued had the Equity Instnunent B-BBEE in the business of the entity applying for recognition of Equity Equivalents.
The calculations for measuring compliance.
Exercisable Voting Rights of black Board members I3 50% using the Adjusted Recognition for Gender . 2.1.
Bonus points: !
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3.1 Senior Top Management positions include the chief executive officer, the chief operating officer, the chief financial officer and other people holding similar positions.
Other Top Management positions include the chief information officer, the head of marketing, the head of sales, the head of public relations, the head of transformation, the head of human resources and other people holding similar positions.
4.1 A Measured Entity receives points by meeting the targets for participation of black people and black women at Board and Top Management level.
4.2 A Measured Entity must use the data in calculating its score under the Management Control scorecard used in its returns flied with the Department of Labour under the Employment Equity Act. This does not apply to Measured Entities exempt from flling such returns.
4.3 A Measured Entity that does not distinguish between Top Management and Senior Management may include its Senior I\1anagement under this statement.
4.4 If a Measured Entity does not distinguish between Senior Top lvianagement and Other Top Management, then Top Management is measurable as a single indicator with a Weighting of 5 points under paragraphs 2.2.1 and 2.2.2.
If Measured Entities do appoint Non-Executive Independent Board Members, they are encouraged to appoint persons who do not serve in that capacity for any other Measured Entity.
The Adjusted Recognition for Gender is calculated in terms of formula "A" in Annexe 200(A).
6.1 The Management Control indicators provided for in the Management Control Scorecard must be calculated in terms of formulas "B" and "C" in Annexe 200(A).
6.2 If a Measured Entity gains a score for a Management Control indicator that is more than the relevant weighting points, that Enterprise will only receive the Weighting points.
Define the formula for calculating the score for Employment Equity.
Compliance targets point~ !
I Black employees in l\1iddle Management as a 3 63% 75% percentage of all such employees using the -0-djusted Recognition for Gend!
EAP targets in each category under 2.1.
The Weighting points in the Employment Equity scorecard represent the maximum number ofpoints possible for each of the criteria.
3.1 Wherever possible, a Measured Entity must use the data that it ftles with the Department of Labour under the Employment Equity Act in calculating its score under the employment equity scorecard.
No Measured Entity shall receive any points under the Employment Equity Scorecard unless they have achieved a sub-minimum of 40% of each of the targets set out on the Employment Equity Scorecard in respect of the both five year periods.
3.2 In order for a Measured Entity to achieve bonus points at a particular levd, the entity needs to meet or exceed the EAP targets.
3.3 A Measured Entity exempt from filing returns must compile its data for calculating its score under the Employment Equity Scorecard using the guidelines set out in the Employment Equity Act and its EE Regulations.
3.4 If the organisational structure of a Measured Entity does not distinguish between Middle Management and Junior Management, it can consolidate those Measurement Categories against the targets for Junior Management.
Junior Management-3 points.
Black women employees in each Measurement Category qualify for enhanced recognition using the Adjusted Recognition for Gender.
The Adjusted Recognition for Gender is calculated in terms of the formula set out in Annex (300A).
The criteria in the Employment Equity scorecard is measured in terms of the formula set out in Annex 300(A).
The formula for measuring the Skills Development Element ofB-BBEE.
0.3% Programmes specified in the Learning Programmes J\.
Number of black.
2.2 The Weighting points in the Skills Development scorecard represent the maximum number of points possible for each of the criteria.
They have implemented programmes targeted at developing Priority Skills generally, and specifically, for black employees.
3.2 Expenses on scholarships and bursaries for employees does not constitute Skills Development Expenditure if the Measured Enttty can recover any portion of those expenses from the employee or if the grant of the scholarship or bursary is conditional.
The obligation of continued employment by the Measured Entity for a period following successful completion of their studies is not more than the period of their studies.
3.3 Any Skills Development Expenditure by a Measured Entity that is an ABET programme is recognisable at a multiple of 1.25 to the actual value of such Skills Development Expenditure.
3.4 Skills Development Expenditure includes any legitimate expenses incurred for any Learning Programme offered by a Measured Entity to its employees evidenced by an invoice or appropriate internal accounting record.
3.5 Skills Development Expenditure arising from Uncertified Learrung Programmes or from Category G Learning Programmes under the Learning Programmes Matrix cannot represent more than 15% of the total value of Skills Development Expenditure.
Administration costs such as the organization of traltl11lg including, where appropriate, the cost to the Measured Entity of employing a skills development facilitator or a training manager.
Salaries or wages paid to an employee participating as a learner in any Learning Programme only constitute Skills Development Expenditure if the Learning Programme is a Leamership or falls within Category B; C; or D of the Learning Programme Matrix.
The calculation of the Adjusted Recognition for Gender is set out in formula "A" in Annexe 400(B).
The formula that explains the method of measurement of the criteria in the Skills Development scorecard is in terms of formula "B" in Annexe 400(B).
The Minister of Trade and Industry may from time to time, by notice in the gazette, revise or substitute the Learning Programme Matrix. Any changes will only be applicable to Compliance Reports prepared for a Measured Entity for the first 2-month period following the gazetting of a revision or substitution.
1.5 111e formula for calculating d1e individual criteria specified in the Preferential Procurement scorecard.
I 2.1.5 Bonus points allocated up to a maximum of 2 points for B-BBEE spend from enterprises referred to in 2.1.
to in 2.1.
3.1 The Weighting points in the Preferential Procurement scorecard represent the maximum number ofpoints possible for each of the criteria.
3.2 All goods and services procured by the Measured Entity, other than any portion specifically excluded in terms of this statement, is measurable in calculating its Total Measured Procurement Spend.
a recipient of enterprise development contributions from the Measured Entity under Code series 600, the recognisable B-BBEE Procurement Spend that can be attributed to that Supplier is multiplied by a factor of 1.
COE-ICT-0309-03 40-60 a Value-Adding Supplier, the recognisable B-BBEE Procurement Spend that can be attributed to that Supplier is multiplied by a factor of 1.25.
This statement applies to all areas of procurement.
4-.1 A key intention of this statement is to promote the use by MeastLted Entities, of black owned professional service providers and entreprenetLts as suppliers.
qualify as value-adding suppliers thereby attracting the benefits in paragraph 3.3.2.
5.8 Pension and medical aid contributions: payments made to any post retirement funding scheme or to a medical aid or similar medical insurer by a Measured Entity for its employees, excluding any portions of such payments which are a contribution to a capital investment of the employee.
5.10 Empowerment related expenditure: all goods and services procured in carrying out BBBEE.
5.12 Intra-group procurement: except as provided in statement 002, all goods and services procured from subsidiaries or holding companies of the Measured Entity.
all goods and services procured from organs of state and public entities listed in Schedule 1 of the Public Finance Management Act of 1999.
COE-ICT-0309-03 42-60 6.6.1.
imported goods and services other than those listed in paragraph 6.6.
6.6.2.2 have different technical specifications to the locally produced goods or services.
7.1 B-BBEE Procurement Spend is the value of the procurement falling within paragraph 5 and not excluded by paragraph 6. If a supplier falls within a category of supplier listed in paragraph 3.3 or 4, the value of procurement from that supplier is multiplied by the applicable factor listed in paragraph 3.3.
7.2 B-BBEE Procurement Spend can be measured in terms of formula "A" in Annexe 500(A).
7.3 The B-BBEE Procurement Spend for a Measured Entity in respect of a supplier is calculated by multiplying the spend contemplated by paragraph 5 (and not excluded by paragraph 6) in respect of that supplier by the supplier's B-BBEE Recognition Level.
7.4 A Measured Entity's Total Procurement Spend is the total of all amounts calculated in terms of paragraph 7.3.
8.2 The Measured Entity's score for Preferential Procurement contributions to B-BBEE under the preferential procurement scorecard can be calculated in terms of formula "B" in Annexe 500(A).
1.3 The formula for calculating the individual criteria specified in the ED scorecard.
Measured Entity as~ ~ercentage of the target.
2.3 The weighting points in the ED scorecard represent the maximum number of points possible for each of the criteria.
The ICT sector has set the target of 5% Net Profit After Tax (NPA T) for Enterprise Development to accelerate transformation in the sector by developing black owned ICT companies. The Enterprise Development spend shall include fmancial and non-financial spend on enterprises including transfer of business skills to black owned ICT businesses in order to grow the sector.
Measured Entities receive recognition for any Qualifying Enterprise Development Contributions that are quantifiable as a monetary value using a Standard Valuation Method.
Enterprise Development Contributions consist of monetary or non-monetary, recoverable or non-recoverable contributions actually initiated and implemented in favour of beneficiary entities by a Measured Entity with the specific objective of assisting or accelerating the development sustainability and ultimate financial and operational independence of that beneficiary. This is commonly accomplished through d1e expansion of those beneficiaries' financial and/or operational capacity.
The full value of Category A Enterprise Development Contributions, adjusted using the Benefit Factor, multiplied by 1,25 is recognisable.
The full value of Category B Enterprise Development Contributions is recognisable.
Recognition of Enterprise Development Contribution is limited to Qualifying Enterprise Development Contributions made to beneficiary entities.
3.2.4.1 Those contributions were initiated by the Measured Entity in favour of the beneficiary on the understanding that the beneficiary, as a result of those Enterprise Development Contributions, would over time meet the requirements of a beneficiary entity.
3.2.4.2 the beneficiary has met the definitional requirements of a beneficiary entity.
COE-ICT-0309-03 46-60 3.2.5.
3.2.5.17 <BR>the maintenance by the Measured Entity of an enterprise development unit which focuses exclusively on support of beneficiary entities or candidate beneficiary entities.
3.2.1.3 Providing skills development, training and mentoring in order to develop management skills through partnerships and skills transfer.
TI1e creation or development of the capacity of beneficiary entities which will enable them to manufacture and produce goods or provide services previously not available in d1e Republic of South Africa, may constitute an Enterprise Development Contribution.
New projects promoting beneficiation may constitute an Enterprise Development Contribution.
Provision of preferential credit facilities to a beneficiary entity by a Measured Entity may constitute an Enterprise Development Contribution.
providing training or mentoring to beneficiary communities by a Measured Entity. (Such contributions are measurable by quantifying the cost of tinle (excluding travel or commuting time) spent by staff or management of the Measured Entity in carrying out such initiatives.
COE-ICT-0309-03 47-60 and expertise of the trainer or mentor, must support any claim for time costs incurred.
3.2.9.1 Maintaining an enterprise development unit by the Measured Entity. (Only that portion of salaries and wages attributable to time spent by the staff in, and the other expenses related to, promoting or implementing enterprise development constitute contributions.
3.2.9.2 Payments made by the Measured Entity to third parties to perform enterprise development on the Measured Entity's behalf.
The Minister of Trade and Industry may from time to time, by notice in the gazette, revise or substitute the Benefit Factor Matrix. Any changes will only be applicable to Compliance Reports prepared for a Measured Entity in respect of the first 12-month period following the gazetting of a revision or substitution.
1.3 the formula for calculating the individual criteria specified in the SED scorecard.
the company does not make a profit last year or on average over the last five years the net profit margin is less than a quarter of the norm in the industry.
Indicative profit margin is the profit margin in the last year where the company's profit margin is at least one quarter of the industry norm.
Points Targetf-A-:--v_er_a__g_e_a_n_n-ua_l_v_acc-lu--e-o-:f:--ac-cll-S-oc_i_oEc---o-n_o_ffil---.c_D_e_v_e....,.lo--p-m_en_t+-,1-:-2-------t-:-1.5% of NPAT.
Contributions by the Measured Entity as a percentage of the I . target 1 2.4 The weighting points in the SED scorecard represent the maximum number of points possible for each of the criteria.
2.5 The ICT sector recognizes that bridging the digital divide requires enterprises to undertake certain obligations in terms of access to ICT's so as to improve the lives of the people. Such programmes could be in the form of providing ICT's in education, health and programmes aimed at enhancing the lives of black communities or people. Consideration will also be to enterprises operating within the regulated sub-sector, to the existing license obligations placed on these enterprises.
Measured Entities receive recogrunon for any Socio-Economic Development Contributions that are quantifiable as a monetary value using a Standard Valuation Method.
Socio-Economic Development Contributions consist of monetary or non-monetary contributions actually initiated and implemented in favour of beneficiaries by a Measured Entity with the specific objective of facilitating sustainable access to the economy for those beneficiaries.
The full value of Socio-Economic Development Contributions made to beneficiaries is recognisable if at least 75% of the value directly benefits black people.
If less than 75% of the full value of Socio-Economic Development Contributions directly benefits black people, the value of the contribution made multiplied by the percentage that benefits black people, is recognisable.
COE-ICT-0309-03 50-60 3.2.4.
3.2.4.8 subject to paragraph 3.2.5.
3.2.4.9 subject to paragraph 3.2.5.2, the maintenance by the Measured Entity of a socioeconomic development unit which focuses only on support of beneficiaries and beneficiary communities.
providing training or mentoring to beneficiary communities by a Measured Entity. (Such contributions are measurable by quantifYing the cost of time (excluding travel or commuting time) spent by staff or management of the Measured Entity in carrying out such initiatives. A clear justification must support any claim for time costs incurred, commensurate with the seniority and expertise of the trainer or mentor).
Maintaining a socio-economic development unit by the Measured Entity. (Only that portion of salaries and wages attributable to time spent by tl1e staff in, and the other expenses related to, promoting and implementing socio-economic development constitute contributions.
Payments made by the Measured Entity to third parties to perform socio-economic development on the Measured Entity's behalf.
A measured entity who as a result of sector legislation is subject to obligations aimed at enhancing the socio-economic development of black people, and/or annual payments to a body tasked with socio economic development may count that contribution as part ofits compliance with the target.
Socio-Economic Development Contributions are measurable using the formula in Annexe 700 (B).
COE-ICf-0309-03 51-60 5.
The Minister of Trade and Industry may from rime to rime, by notice in the gazette, revise or substitute the Benefit Factor Matrix. Any changes will only be applicable to Compliance Reports prepared for a Measured Entity in respect of the first 12-month period following the gazetting of a revision or substitution.
1.1.1.3 specifY the principles in the Statements (100 700) applicable to QualifYing Small Enterprises.
Any enterprise with an annual Total Revenue of between R5million and R35million qualifies as a QSE, if its qualification does not result from circumvention of the ICT Codes.
The following table represents the QSE Scorecard and contains the Elements of the scorecard and the Weighri.
Preferential procurement ~points 80?
A QSE must select any four of the seven Elements of B-BBEE for the pUrJ:>Oses of measurement under the QSE Scorecard. If a QSE does not make a selection, its four best element scores will be used for the purJ:>oses of measurement.
A QSE will be scored in proportion to the extent that it meets the compliance targets for those four elements.
The Weighting points in respect of any element in the scorecard represent the maxinlllm number ofpoints possible fot each of the criteria.
Wherever a Standard Valuation Method applies to measuring an indicator, the same standard should apply, as far as reasonably possible, in all other applicable calculations in this statement.
The Adjusted Recognition for Gender must be used for the purposes of calculating the Employment Equity, Skills Development and Management Control element of the QSE scorecard.
Any matter concerning the application of the QSE scorecard that is not dealt with explicitly in this scorecard must be dealt with in terms ofiCT Codes 100-700.
Thereafter, all BEE compliance measurement under the ICT Codes for QSEs is subject to the use of the QSE Scorecard or, if applicable, a Sector Code.
A= Bx 1.
Where A is the indicative BEE Status during the transitional period B is the total score achieved under Code series 801 and 802 2.
2.1.3.1 Ownership fulfilment ·--······· 2.1.3.
2.2.1.1 An Enterprise receives points for participation by black people in its rights of ownership, using the QSE ownership scorecard.
COE-ICT -0309-03 54-60 an Employee Share Ownership Scheme; a Broad-Based Ownership Scheme; and a trust.
2.3.1.2 if black Participants have never been subject to any third-party rights.
2.3.1.3 A minimum score of 7 points for Net Value is a requirement for the award of the Ownership Fulfilment point.
A Measured Enterprise with 30% black Economic Interest, can receive a maximum of 2 bonus points for a 10% holding of Economic Interest by black women.
2.4.1.3 Broad-Based Ownership Schemes.
A Qualifying Small Enterprise may benefit from any of the other statements in the Code series 100. When electing to benefit from any of those statements, the provisions of those statements apply to the Qualifying Small Enterprise.
The Qualifying Small Enterprise Ownership Scorecard remains applicable to Qualifying Small Enterprise's even if they benefit from other statements in the Code series 100.
Any interpretation or calculation of a QSE's score for ownership must be made in accordance with statement 100.
Specific rules on certain types of enterprises (Broad-Based Ownership Schemes; Employee Share Ownership Schemes and Trusts).
COE-ICT-0309-03 55-60 3.
Black representation a~Jop-Management level. 25 150.
A Measured Entity receives points in proportion to the extent that it meets the targets for participation of black people and black women at Top-Management level.
Senior Top Management pos1t1ons include the chief executive officer, the chief operating officer, the chief financial officer and other people holding similar positions.
A Measured Entity receives points in proportion to the extent that it meets the targets for participation of black people and black women at Management level.
Wherever possible, a Measured Entity must use the data that it ftles with the Department of Labour under the Employment Equity Act in calculating its score under the employment equity scorecard.
In order for a measured entity to achieve bonus points at a particular level, the entity needs to meet or exceed the EAP targets.
A Measured Entity exempt from £iling returns must compile its data for calculating its score under the Employment Equity Scorecard using the guidelines set out in the Employment Equity Act and its EE Regulations.
The following table represents the criteria used for deriving a score for skills development under this statement: I Skills Develop:in_e_n_t_E_Ie-m--en-t---------~---···----,-iW==:-e""""'i-g--,-h-,ti:-n-g----,--,C,-o_m_p_l,.,..
Adjusted skills development spend on learning programmes 25 2% for black etn_pl<:lyees as a perce~tage of leviable arn.
Any Skills Development Spend by a Measured Entity that is an ABET programme is recognisable at a multiple of 1.25 to the actual value of such Skills Development Spend.
Skills Development Spend includes any legitimate expenses incurred for any Learning Programme offered by a Measured Entity to its employees evidenced by an invoice or appropriate internal accounting record.
5.2.3.7 administration costs such as organization of training including, where appropriate, the cost to the Measured Entity of employing a skills development facilitator or a training manager.
No portion of any salary or wage paid to any employee participating as a learner in any Learning Programme constitutes Skills Development Spend unless the Learning Programme is an In-service Training Programme.
All procurement of goods and services by the Measured Entity, other than such portion specifically excluded in this statement, is measurable in calculating Total Measured Procurement Spend of the Measured Entity.
6.2.2.1 a ree1p1ent of enterprise development contributions from the Measured Entity under Code series 600, the BEE Procurement Spend attributable to that Supplier multiplied by a factor of 1.
6.2.2.2 a Value-Adding Supplier, the BEE Procurement Spend attributable to that Supplier multiplied by a factor of 1.25 is recognisable.
Total Measured Procurement Spend of a Measured Entity and the Exclusions from Total Measured Procurement Spend must be determined in accordance with Statement 500.
7.1.1.1 the company does not make a profit last year or on average over the last five years.
7 .1.1.2 the net profit margin is less than a quarter of the norm in the industry.
7 .1.1.3 Ifthe Turnover is to be used, the target will be set at: 2% x Indicative Profit Margin (NPAT/Turnover) x Turnover. Indicative profit margin is the profit margin in the last year where the company's profit margin is at least one quarter of the industry norm.
Measured Entities receive recogmtton for any Qualifying Contributions that are quantifiable as a monetary value using a Standard valuation method.
7 .2.2.2 until the date of measurement.
No portion of the value of any Qualifying Contribution that is payable to the beneficiary after the date of measurement can form part of any calculation under this statement.
The recognition of Enterprise Development contributions must be determined in accordance with statement 600.
8.1.1.1 the company does not make a profit last year or on average over the last five years.
8.1.1.2 the net profit margin is less than a quarter of the norm in the industry.
8.1.2.1 1.5 %x Indicative Profit Margin (NPAT /Turnover) x Turnover.
Average annual value of all Socio-Economic Development Contributions and Approved Socio-Economic Development Contributions-made by the Measured Entity as a percentage of the target. 25 1.
Qualifying Contributions of any.
Payments made by the Measured Entity to third parties to perform social development on the Measured Entity's behalf may constitute a SED Contribution.
Sector Specific Contributions are recognised on the basis set forth in the Sector Code governing them.
accounting, calculating, data processing, data transmission, duplicating, text processing, document reproduction, document ·transmission, record keeping and record retrieval, broadcasting or transmission for entertainment or information purposes of voice and/or image and/or text or any combination thereof and/or; the provision of services relating to the above.