In efforts to make South Africa a more equal society, the South African government introduced B-BBEE accreditation. This accreditation is based on the legislation that South African companies – and foreign companies operating in South Africa – need to follow.
To encourage companies to comply with this legislation, the government introduced the BEE certificate. The certification makes it easier for businesses to make opportunities available for previously disadvantaged South Africans and youth in previously disadvantaged groups, as it defines the success of their efforts by making compliance quantifiable.
What is a BEE Certificate in South Africa?
A BEE certificate is an authorised certificate that shows your company has black ownership and is compliant with other BEE regulations. Companies with a BEE certificate are assigned a B-BBEE level based on a scorecard system that assigns points for various activities. The total value of the points are 105 and includes:
- Enterprise development and supplier development: 40 points
- Enterprise development (5)
- Supplier development (10)
- Preferential procurement (25)
- Ownership: 25 points
- Skills Development: 20 points
- Management control: 15 points
- Socio-economic development: 5 points
A business can be awarded up to the total amount of points for one activity. Then based on the sum of all their points, they are assigned a B-BBEE level. These levels are important as they dictate the public – and private – procurement opportunities available to businesses.
Level 1: 100 points or more
Level 2: 85 to 99 points
Level 3: 75 to 84 points
Level 4: 65 to 74 points
Level 5: 55 to 64 points
Level 6: 45 to 54 points
Level 7: 40 to 44 points
Level 8: 31 to 39 points
Non-Compliant: Businesses with a total score of less than 30 are non-compliant and will be unable to access many of the benefits that come with B-BBEE compliance.
What is the Use of a BEE Certificate?
A BEE certificate shows that your business has adequate black – this definition includes Indian, African, Coloured individuals – and black youth ownership and equity. The purpose of BEE is to bridge the gap for South Africans who previously did not have access to this equity and who were excluded from the formal economy.
Businesses are issued with the certificate once a year, after which they need to reapply for a new certificate.
Additionally, having a BEE certificate ensures that private companies and government entities can make informed decisions during their tender and supplier processes.
Some of the benefits of having a BEE certificate include:
- The Ability to Transact with the Government and Private Sector
The government has issued procurement guidelines that set out terms that dictate what the B-BBEE level of a company needs to be for them to transact with the state.
Private entities have also adopted many of these terms because when an entity uses a B-BBEE accredited supplier, it is credited to their overall BEE score.
- Favourable Tax Deductions
BEE compliant businesses can also benefit from tax deductions and incentives through the Skills Development Levy when it comes to skills development.
- Access To Licenses
In some industries, businesses that are not BEE compliant are unable to obtain the licenses required to operate. One such industry is the mining industry, where, to be eligible to operate, businesses are required to have at least 26 per cent Black ownership to receive a mining right.
How to apply for BEE certificate in South Africa
If your business has an annual turnover of more than R10 million, you will need to complete the following steps to get your BEE certificate.
Step 1: Sign into your CIPC eServices Profile
Visit www.cipc.co.za and click on “OnlineTransacting” at the top of the page. From the drop-down menu, select “eServices”.
You will then be redirected to the CIPC services portal. From there, click customer login.
After this, you will be required to sign in using your customer code and password.
Step 2: Select BEE Certificate
Once you’re in your profile, click “Transact” at the top right of the page. Then click on BEE certificates.
Step 3: Select the Company That is Submitting the Application
The CIPC will show you a complete list of companies you have access to on your profile.
Remember, to submit your BEE Certificate application; you need to be a director of the company.
Select the company that is applying.
Step 4: Complete Director and Relative Verification
Now you’ll be required to confirm the name, surname and ID number of every director. While you are confirming each director, you will also need to input the director’s relative’s details that share the same surname. You must input the first names of each director’s relatives – as they appear on the relative’s ID document – alongside their ID number and click verify.
During this stage, each director will also receive an OTP to continue the process.
Step 5: Answer Questions Regarding Black Ownership
When you’ve completed the director verification process, you will need to answer questions regarding the black ownership of the company.
You will be asked to answer the following questions:
- How many shareholders does the enterprise have?
- How many of those shareholders are BLACK?
(By black, the CIPC is referring to shareholders that are either African, Coloured, or Indian)
- Out of the BLACK shareholders, how many are FEMALE?
Once you’ve answered these questions, you can click “Continue”.
Step 6: Confirm That the Information is Correct
Now you need to confirm that the calculation the CIPC has made is correct before clicking continue. If it is not, you’ll need to make changes.
Step 7: Submit the BEE Certificate Application
If the information is correct, you can submit your application for a BEE certificate.
How to Renew your BEE Certificate
Since a BEE certificate is only valid for a year, you will need to “renew” your certification. However, it’s important to note that while it may be referred to as a renewal – since you’ve held B-BBEE accreditation in the past – you are technically completing a new B-BBEE certificate application. Therefore, you can follow the same step-by-step guide detailing how to apply for a BEE certificate in South Africa.
How Small Businesses can Get BEE Certification
It’s important to note that small businesses – those earning less than R10 million a year – do not need to follow the process to achieve BEE accreditation. Because they are exempted micro businesses, they can complete an affidavit which will need to be signed by the commissioner of oaths and states that they are BEE compliant. The steps to get a BEE certificate for a small business are explained in detail below.
Step 1: Visit the CIPC Website
Step 2: Navigate BEE Certificates
Once you’re on the home page, navigate to the “B-BBEE Certificates” at the top right of the screen.
Step 3: Download and Complete the B-BBEE Certificate
You’ll be redirected to a page where you’ll be able to download the B-BBEE certificate. Once you’ve downloaded it, fill in the fields on the form. The information on this certificate is binding so ensure that you meet the definition of “black people” as referenced in the documentation as well as “Black Designated Groups”.
If you do not meet these definitions by signing the affidavit, you are committing fraud.
Step 4: Get the Certificate Signed by the Commissioner of Oaths
Once the B-BBEE certificate for micro-businesses is signed by the commissioner of oaths, the document can be used in place of the formal BEE certificate.
Given that more than 90% of South Africa’s population is black according to legislation that defines being black as either being African, Coloured, or Indian, getting a BEE certificate should be a no-brainer for any company operating in South Africa.
But, if you still have questions about BEE certification and if you need it, you can visit the CIPC website for all the information you need.