The Basics of a Reasonable BEE Score and Why the Certificate Matters
It is essential to understand how the BEE scoring works to ensure that your company complies with the various requirements. The calculation of the BEE score changed in 2013 when a new B-BBEE scorecard came into effect. The same principles as with the old BEE regulations apply, but the calculations have changed.
Becoming BEE certified holds various benefits. Larger corporations with high BEE scores are more likely to secure contracts with government entities. Do keep in mind, though, that a company cannot be penalised for not having a BEE score, but can face penalties for fronting or for any type of BEE fraud.
The BEE score and certification related to it, however, indicate how committed a firm is to transformation in South Africa. Thus, a company with a good BEE score is preferred in government tenders over a company with a low score.
The size of the company matters when it comes to the BEE score. Customers are able to claim points towards their scorecards when using a company that has a high score. The company sizes:
- Exempted Micro Enterprise (EME) is a business entity with an annual turnover below the R10 million threshold. EMEs automatically receive a minimum score of 100%, but they are able to increase their score to 135% with black ownership.
- Qualifying Small Enterprise (QSE) is a business entity with an annual turnover of between R10 million and R50 million. QSEs have to comply with all five of the elements of the new scorecard in terms of scoring points.
- Medium to Large Enterprises (MLEs) have turnovers of R50 million plus per annum, and they must comply with all the requirements of the new scorecard.
Various criteria apply in getting a good BEE score, including Equity Ownership which accounts for 25% of the weight, Management Control accounting for 15% of the weight and a 4% bonus on specific criteria, Skills Development accounting for 20% of the weight with 5% bonus points applicable, Enterprise Development carrying 40% of the weight with 4% bonus, and Socio-Economic Development that carries 5% of the weight.
The question is whether you need a BEE certificate if you own a Small to Medium Enterprise (SME). No, you do not, but getting your BEE score and having the certificate at hand will be beneficial if you want to compete favourably with larger firms for business tenders.
We can help you to determine your company’s BEE score and guide you regarding aspects to address should you wish to increase the score before getting your B-BBEE certificate.