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Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003)

Codes of Good Practice on Black Economic Empowerment

Integrated Transport Sector Codes

Definitions

 

For purposes of clarification and for avoidance of ambiguity, the following terms apply to the all the gazetted Broad Based Economic Empowerment (B-BBEE) Sub-Sector Codes:

 

TERM

DEFINITION

Acceptable Valuation Standard

Means a valuation of an asset, an Economic Interest, an Enterprise or another instrument or right relevant to measurement under the ownership indicator undertaken in accordance with normal valuation methodologies which represent standard market practice in the context of the nature as well as the stage of development of the asset, Equity Interest or Enterprise being valued.

Aged Persons Act

Means the Aged Persons Act 81 of 1967, as amended.

Airline Service Providers

Are those service providers that give services to airlines companies e.g catering services, travel news magazines etc

Allowable Exclusions From Total Procurement

Refers to procurement by a measured entity as defined in Code 500 of the Generic Codes of Good Practice gazetted on February 2007 and subsequent amendments.

Associated Enterprise

Means  any  black  Enterprise  other  than  the  Measured Enterprise with which the Measured Enterprise has concluded a Qualifying Transaction

Black  aged  people

Black people who are also aged people as defined in the Aged Persons Act 81 of 1967, as amended or substituted

Black designated groups

(a) means unemployed black people not attending and not required by law to attend an educational institution and not awaiting admission to an educational institution.
(b) Black people who are youth as defined in the National Youth Commission Act of 1996.
(c) Black people who are persons with disabilities as defined in the Code of Good Practise on employment of people with disabilities issued under the  Employment Equity Act.
(d) Black people living in rural and under-developed areas.

Black Enterprise

Is one that is 50,1% owned by black persons and where there is substantial management control.

Black Empowered Enterprise

Is one that is at least 25.1% owned by black persons and where there is substantial management control

Black New Entrants

Means  a  black  Partnership(s)  (which  includes  without limitation, black Participants in Broad-Based Ownership Schemes) holding in aggregate in excess of 5% of  the total Voting Rights and Economic Interest in a Measured Enterprise who has not, prior to their acquisition of  their Equity Interest in the Measured Enterprise, concluded similar transactions in respect of any other Enterprise, which    in    aggregate    have    a    cumulative    value    of R20,000,000.00 measured in accordance with an Acceptable Valuation.

Black People

has the meaning defined in the Act qualified as including only natural persons who are citizens of the Republic of South Africa by birth or descent; or are citizens of the Republic of South Africa by naturalisation:

(a) occurring before the commencement date of the constitution of the Republic of South Africa Act of 1993; or
(b) occurring after the commencement date of the Constitution of the Republic of South Africa Act of 1993, but who, without the Apartheid policy would have qualified for naturalisation before then.

Black unemployed people

Black people who are unemployed, are not attending or are not required by law to attend an educational institution and who are not awaiting admission to an educational institution

Black Women-Owned Enterprise

is one with a minimum of 50,1% representation of black women in the ownership structure, which includes related economic interest and exercisable voting  rights.

Black workers

Black Persons employed in market production activities are those (aged 15-64 years) who during the reference week, even if it was for only one hour, did any of the following:

(a) Worked for a wage, salary, commission or payment in kind (including paid domestic work).
(b) Ran any kind of business, big or small, on their own or with one or more partners.
(c) Helped without being paid in a business run by another household member.
(d) Were temporarily absent from their jobs or businesses to which they would definitely return.

Black youth

Black persons who are also youth as defined in the National Youth Commission Act 19 of 1996, as amended or substituted.

Broad  Based  Black  Economic Empowerment (B-BBEE)

Government defines B-BBEE as an integrated and coherent socio-economic process that directly contributes to the economic transformation of South Africa and brings about significant increases in the numbers of black people that manage, own and control the country's economy, as well as significant decreases in income inequalities. Thus the B-BBEE process will include elements of human resource development, employment equity, enterprise development, preferential procurement, as well as investment, ownership and control of enterprises and economic assets.

Community or broad based enterprise

has an empowerment shareholder who represents a broad base of members such as a local community or where the benefits support a target group, for example black women, people living with disabilities, the  youth and workers.

Control

of a business entity can be achieved in a number of ways:

(a) a majority shareholding position i.e. 50% + 1 share;
(b) an effective controlling shareholding;
(c) a majority of a board of directors; and/or
(d) a shareholders agreement.

Co-operative or Collective Enterprise

An autonomous association of persons who voluntarily join together to meet their economic, social and cultural needs and aspirations through the formation of a jointly-owned enterprise and democratically controlled enterprise.

Development

Includes but not limited to Joint Ventures, sub-contracting, and supplier development initiatives. It also includes but not limited to the facilitation provided by established company to its B-BBEE partners e.g. discounts, access to cash flow, guarantees or put options deferred payments, and other vendor financing  models.

Direct Empowerment

The process of BEE should/may result in an increase in the ownership and control of the economy by black persons. This means that a significant  portion of a black persons ownership of assets and enterprises must be a controlling interest, reflecting genuine participation in decision   making  at  board  executive   management  and operational  levels,  and the assumption  of  real risk.  In this Charter, direct empowerment focuses on ownership of enterprises and assets through shares and  other instruments that provide the holder thereof with voting rights and economic benefits such as dividends or interest payments.

Disabled employees

For   the purpose of   this Charter, the definition of employees with disabilities as contained  in  the Employment Equity Act is used. It means employees who have a long-term or recurring physical or mental impairment, which substantially limits their prospects of entry into or  advancement in employment. The total number of employees with disabilities (irrespective of race or gender) is expressed as a percentage of the total number of employees (irrespective of race or gender) in all levels of the organisation.

Enterprise Development ventures

Includes business ventures such as sub-contracting, joint ventures, driver owner schemes, twinning, etc, which involves   the   development   or   setting up of  business ventures which involves black operators, suppliers and especially or black SMME's (small, medium and micro enterprises).

Exclusions from Total Measured Procurement

Generally has the same meaning as that contained in the Codes of Goods Practice gazetted on the 9 February 2007 and as amended however the list of inclusions/exclusions as per Annexure A of this Charter takes  precedence.

Executive Management

Means the most senior position in the organisation as well as the overall heads of major divisions or functions (e.g. finance, engineering, operations, human resources etc.) responsible for planning, policymaking and directing of such functions.

Exempted Micro Enterprises

These are enterprises with a turnover of R5 million or less for the purposes of this charter. They have an automatic recognition level of Level 4 in the B-BBEE Recognition Levels in the B-BBEE Codes  of Good Practice. This affords companies procuring from these entities 100% B-BBEE recognition of spend.

Fronting

The deliberate misrepresentation of information in order to gain an advantage over another individual or entity. In addition, it includes the use of questionable ownership structures in order to unjustifiably gain points to get preference points in any business/tender adjudication recess.

Growth

Relates to the National Economic Growth, Industry Growth as well as Enterprise Development growth.

Indicator

The indicator represent the key measurement yardstick included to determine the BEE contribution made by taxi enterprises within each broad-based BEE factor of Ownership, Strategic Representation (Management), Employment Equity, Skills Development, Preferential Procurement,    Enterprise     Development,     Social Development and lndustry   Specific.

Indirect Empowerment

a core component of this BEE Strategy is the creation and nurturing of new enterprises established or owned by black people. Preferential procurement by the State, Parastatals and the private sector is an effective and efficient instrument to drive BEE. A second element of indirect empowerment is  enterprise  development.  This can take two forms:

Investment in black owned and black empowered enterprises.
Joint Ventures with black owned and black empowered enterprises that result in substantive skills transfers.

Indirect ownership

Occurs where a company or any other institution owns equity in a company on behalf of beneficiaries and there is no direct participation by the beneficiaries in the voting rights.

Job Creation

Refers  to  the  creation  of  opportunities  for  sustainable permanent employment.

Job Creation Target

This is not a payroll tax but refers to a stakeholder commitment to create opportunities for unemployed learners for which there is a tax rebate from government. These employees must account for 5% of the workforce.

Learners

Refers to the people participating in learnerships or other learning interventions.

Leviable Amount

Bears the meaning as defined in the Skills Development Levies Act of 1999 as determined using the Fourth Schedule to the Income Tax Act.

Locally-owned Enterprise

A commercial undertaking or business where 50% or more of shareholding is held within the borders of the Republic of South Africa.

Management

Refers to the effective control of economic activities and resources. This involves the power to determine policies as well as the direction of economic activities and resources. Management control measures black representation at board of directors' level and executive management level.

Managerial or Supervisory Employees

Means employees who are working in supervisory or managerial positions i.e. those who have other employees reporting to them and who are responsible to oversee and supervise subordinates and/or processes.

Midibus

Minibus means a motor vehicle designed, or lawfully adapted by a registered manufacturer in compliance with Road Traffic Act, 1989 (Act No. 29 of 1989), to carry from nine to 18 seated persons, excluding  the driver.

Net Asset Value

Within the context of this Sub-Sector Code this term refers to Total Asset less Liabilities.

Net Value

This is the portion of equity in the hands of black shareholders that is fully paid up. Essentially  it  is the value of the shareholding, less the outstanding amounts owed  by  that  shareholder  to  third  party  funders  or  the  principle entity in which the stake was acquired.

Net Economic Interest

Is the percentage of the shareholding by black shareholders that is unencumbered by any financial obligations to third parties or to the principle company in which the stake is held.

Non-Discretionary spend

Non-discretionary spending is spending that is required and by law.

Ownership

refers to equity  participation and the ability  to exercise rights and obligations that accrue under such ownership. These rights and obligations include the right the economic interest flowing from the shareholding and the right to exercisable voting rights in proportion to that shareholding. It also refers to the net economic interest, in other words paid up capital. The parties to this Charter agree that the measurement of the extent of the achievement of this target of the aggregate value of the equity will be based on the asset values per the audited accounts of the entities concerned and that the net economic interest will be calculated according to the market value of the shareholding less the outstanding amounts owing to third parties or the principle company by the black shareholders.

People Living With Disabilities

Disabled employees. For the purpose of this Charter, the definition of employees with disabilities as contained in the Employment Equity Act is used. It means employees who have a long-term or recurring physical or mental impairment, which substantially limits their prospects of entry into or advancement in employment. The total number of employees with disabilities (irrespective of race or gender) is expressed as a percentage of the total number of employees (irrespective of race or gender) in all levels of the organisation.

Types of disabilities include:

Spinal injuries –  quadriplegic, paraplegic;

Physical disabilities and deformities –  post polio, amputations, arthritis, cerebral palsy;

Epilepsy;

Traumatic brain injuries & neurological disorders, strokes;

Visual impairments –  blind, degrees of blindness, retinitis pigment, albinism;

Hearing impairments –  deaf, degrees of deafness;

Psychiatric  conditions –  depression,  bi-polar,  personality disorders, mood disorders;

Learning disabilities –  dyslexia, downs syndrome; and

Communication/speech  problems

Preferential Procurement

Is a measure designed to widen market access for entities, in order to integrate them into mainstream of the economy. Preferential Procurement will create economic empowerment benefits indirectly but meaningfully as it multiplies the  effects of private and public sector intervention to promote broad-based BEE

Scorecard

means the standard B-BBEE scorecard used by the transport sector.

Skills Development

Refers to  all expenditure  on  Black  skills  development; education and training (including   the Skills Development Levy). The actual expenditure on Black skills development, education and training that has been conducted during the last completed financial year to be used as a basis for the calculation. The total expenditure on Black skills development,  education  and  training  is expressed  as  a percentage  of the total  payroll  costs. Total  payroll  costs include all remuneration related expenditure such as basic wages/salaries,  overtime,  and  employment  related company  contributions.

Socio-economic Development

Specifically aimed at targeted socio-economic development projects or initiatives. Organisations are encouraged to support, develop and invest in targeted community projects - this includes e.g. poverty alleviation initiatives, HIV/ Aids programmes, study bursaries, programmes or  projects for the disabled, occupational health programmes, youth camps, crime prevention programmes, alcohol and  drug  awareness,  and internships.

Stakeholders

Refers to a range of interest groups who directly and indirectly participated in this process.   These groups included Government, Private Industry, Parastatals, Agencies, Financial Institutions (Private and Public), Organised Labour, Civil Society Associations, B-BBEE operators, suppliers, SMME's as well as individuals.

Taxi  Recapitalisation

The overall goal of the  Taxi  Recapitalisation  (TRP) initiated by Government in 1999 is the replacement of the current ageing fleet that constitute the bulk of the taxi industry with new vehicles that are safe and reliable. The programme also sought to ensure the sustainability of the industry as a business, as well as ensure its formalisation and effective regulation.

Total Measured Procurement Spend

Generally has the same meaning as that contained in the Codes of Good Practice gazetted on 9 February 2007 and as amended however the list of exclusions  as  per Annexure A of this Charter takes precedence.

 

Definitions of terms and concepts not captured in this Charter are contained in the Codes of Good Practice gazetted on 9 February 2007.