B-BBEE Compliance In The Property Sector

B-BBEE Compliance In The Property Sector

What does compliance mean?

Who Must Comply?

What are the Scorecard Elements for the Property Sector?

How are the Scorecard elements measured?

What is the definition of “Black People”?

What are the Criteria for a valid B-BBEE Certificate?

 

What does compliance mean?

As part of the new Property Practitioners Act, which came into operation on 1 February 2022, the PPRA requires that a B-BBEE Certificate must be included in the application for either the first application or renewal of an FFC. Real estate agencies have until the end of October 2022 to obtain a B-BBEE certificate to be eligible for their Fidelity Fund Certificates (FFCs). It is therefore vital that all owners of estate agencies start preparing themselves for compliance.

At this stage, the Property Practitioners Act is not clear on what exactly a “valid BEE certificate” means for Estate Agencies. In terms of the B-BBEE Act, status levels 1 – 8 are compliant.

It is also probable that estate agencies will have to show a strategic commitment to transformation through continuous improvement of their B-BBEE status. 

B-BBEE Status

What is certain, at the very least, is that agencies will be required to:

  • Have a B-BBEE status level of Level 8 or above; and
  • Establish a status level baseline, and thereafter show evidence of continuous monitoring and improvement of the enterprise’s B-BBEE Scorecard.

 

Who Must Comply?

There is a specific property charter within the B-BBEE codes. This means that property practitioners will not be evaluated under the general charter codes but are subject to additional requirements and lower thresholds: 

B-BBEE Classification

An Exempt Micro Enterprise (EME) and a >51% ‘Black’-owned Qualifying Small Enterprise (QSE) are only required to issue an affidavit as proof of their B-BBEE credentials. All other organisations must be verified by a SANAS accredited verification agency. 

What are the Scorecard Elements for the Property Sector?

A brief overview of the scorecard elements specific to the property sector include:

  • The Ownership element, measures effective ownership of entities by Black people.
  • The Management Control element for the Amended Property Sector Code has been split into Management Control and Employment Equity. Management Control measures the effective control of entities Black people and the Employment Equity measures initiatives intended to achieve equity in the workplace under the Act, and the Employment Equity Act.
  • The Skills Development element, measures the extent to which employers carry out initiatives designed to develop the competencies of Black employees and Black people internally and externally.
  • The Enterprise and Supplier Development element, measures the extent to which entities buy goods and services from Empowering Suppliers which are EME or QSE Suppliers with at least 51% Black Ownership. This element also measures the extent to which enterprises carry out supplier development and enterprise development initiatives intended to assist and accelerate the growth and sustainability of black enterprises.
  • The Socio-Economic Development and sector specific contributions element, measures the extent to which entities carry out initiatives that promote access to the economy for Black people contributing towards Socio-Economic Development or sector specific initiatives.
  • The Economic Development element is the unique element of the amended Property sector code, measures the extent to which entities contribute towards development in under resourced areas. Not that estate agents are exempt from the Economic Development indicator in the scorecard because of the nature of their trade. Overall performance will be based on total maximum points minus the weighting allocated to this indicator.

How are the Scorecard elements measured?

The Measured Entity will be assessed by a B-BBEE Verification Agency based on a 12-month period (the “measurement period”). The B-BBEE audit date must be set no longer than 6 months after the 12 -month measurement period has ended.

The below table reflects the measurement of initiatives per element in the B-BBEE Scorecard: 

B-BBEE Elements

* Priority elements for Estate Agents

Priority elements have the greatest weighting and apply subminimum targets that must be met in order for the entity to avoid being discounted down a level. A large enterprise (LE) is required to comply with all priority elements. A qualifying small enterprise (QSE) must only comply with Ownership, and one of the others.

What is the definition of “Black People”?

Black People is a generic term which means African, Coloureds and Indians

  1. who are citizens of the Republic of South Africa by birth or descent; or
  2. Who became citizens of the Republic of South Africa by naturalization;
    1. Before 27 April 1994
    2. On or after 27 April 1994 who would have been entitled to acquire citizenship by naturalization prior to that date

 

Chinese were declared as part of the definition of Black by a court ruling and is included under the category of Coloured. This sub-group constitutes less than 10,000 people nationwide.

What are the Criteria for a valid B-BBEE Certificate?

The South African National Accreditation System (SANAS) drafted a guideline relating to the accreditation of B-BBEE Rating Agencies, also known as R 47-03 ACCREDITATION OF B-BBEE RATING AGENCIES. The document aims to clarify B-BBEE Rating Agencies’ roles and specify the criteria by which SANAS shall accredit them on behalf of the Department of Trade Industry and Competition.

SANAS specifies the following criteria relating to a valid B-BBEE Verification Certificate:

  • Company name
  • Physical address
  • Registration and VAT number of the Measured Entity
  • With a Consolidated certificate, including all relevant entities’ Registration and VAT numbers
  • Issue Date, Re-issue Date, and Expiry Date of the certificate
  • Unique identification number (certificate number)
  • Measured on the Amended B-BBEE Code, Specialised Code, or respective Sector Code
  • B-BBEE Rating Agency’s name and/or logo (mark)
  • SANAS Accreditation Symbol
  • The Scorecard against the Measured Entity has been verified (Generic/QSE)
  • The Broad-based BEE Status level
  • The B-BBEE Procurement Recognition Level
  • Score per Element including the Total Points
  • Name and signature of the Technical Signatory

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