If you’re planning to open a business or are already a firm owner in South Africa, then you must know the term BBE (Black Economic Empowerment). It is a policy by the government to empower black people by promoting their rights and participation in the economy. 

As a novice or having no background in legal affairs, it’s difficult to grasp the basic understanding, requirements, and legal action in terms of violation of BBE. The blog will share core information about Black Economic Empowerment Litigation in easy and simple words.

Objectives of BEE for Businesses

The main aim of BEE is to develop South Africa’s economy. If a business complies with Black Economic Empowerment, the government provides tax incentives and other preferences in form of contracts. 

Moreover, it helps to create and build an environment to encourage financial assistance and interpersonal development of black people. It also focuses on the growth and role of women, particularly black women in businesses. 

Conditions Necessary for Businesses to have BBE Status

Businesses or enterprises must have BBE status and need to provide proof in the following cases:

  • Enterprises that need licences, or any concessions from the state
  • Want to deliver products or services to any public organisation
  • Purchase any state-owned company
  • Build a partnership with the government

Exemptions 

In certain cases, Exempted Micro Enterprises that have a turnaround of less than R10 million per year, are exempted from following the BBE compliances. They are automatically given a score of 100% on the scorecard. Previously, small enterprises earning between R10 million and R50 million were also considered to be free from the regulations if they’re following certain clauses.

Criteria to Get BBE

For your business to have BBE status, it must meet the following criteria:

  • Equity holding (25%) — it refers to the shareholders and holding rights. While estimating this, there are two factors to take into account i.e. black female ownership. 
  • Management control (15%, 4% bonus) — Management control is determined by voting rights, black members involved in senior administration, and the authority of the executive board.
  • Skills learning (20%, 5% bonus) — how much organisation is involved in the skill development of its black members. 
  • Enterprise growth (40%, 4% bonus) — it measures the role of the company in expanding the small black-owned businesses.
  • Socio-economic advancement (5%) — the interest of a corporation in social development. 

Importance of Obtaining Professional BEE Status

BBE status is quite useful for businesses as this can bring and keep more clients. The more the enterprises have a BEE rating, the greater chances of businesses having financial success. That’s why more and more companies are now putting effort to have a good rating. 

Moreover, it’s critical to consult a legal professional, as they will help you to better understand the norms of it and appropriately carry out the process. They will also help you to avoid any claims that can arise if your business doesn’t comply with the laws. 

Final Takeaway

Whether you’re a foreign investor, manager, board executive or company’s head, it is crucial to understand the basic objectives, conditions, and scorecard of the Black Economic Empowerment Litigation. Additionally, it’s best that you must contact a professional litigation expert to help you take care of your business matters effectively. Get your business Black Economic Empowerment registered and avail all the benefits it offers!