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

Sector Codes

Defence Sector Code

Schedule1

 

1. LEGITIMATE ENTERPRISE AND SUPPLIER DEVELOPMENT CONTRIBUTIONS

 

1.1 The following is a non-exhaustive list of Enterprise Development and Supplier Development Contributions—
1.1.1 investment in beneficiary Entities;
1.1.2 loans made to beneficiary Entities; - guarantees given or security provided on behalf beneficiaries; credit facilities made available to beneficiary Entities grant Contributions to beneficiary Entities; direct costs incurred by a measured Entity in assisting and hastening development of beneficiary Entities; overhead costs of a Measured Entity directly attributable to Enterprise Development and Supplier Development Contributions preferential credit terms granted by a Measured Entity to beneficiary Entities;
1.1.3 preferential terms granted by a Measured Entity in respect of its supply of goods to beneficiary Entities;
1.1.4 contributions made to beneficiary to settling service costs relating to the supply of goods or services to beneficiary Entities;
1.1.5 discounts given to beneficiary Entities in relation to the acquisition and maintenance costs associated with the grant to those beneficiary Entities of franchise, license, Agency, distribution or other similar business rights;
1.1.6 the creation or development of capacity and expertise for beneficiary Entities needed to manufacture or produce goods or services previously not manufactured, produces or provided in the Republic of South Africa is provide for in Government’s economic growth and local supplier development policies and initiatives ; facilitating access to credit for beneficiary Entities without access to similar credit facilities through traditional means owing to a lack of credit history, high-risk or lack of collateral;
1.1.7 provision of training or mentoring by suitably qualified Entities or individuals to beneficiary Entities which will assist the beneficiary Entities to increase their operational or financial capacity;
1.1.8 the maintenance by the Measured Entity of an Enterprise Development and Supplier Development unit which focuses exclusively on support of beneficiary Entities or candidate beneficiary Entities;
1.1.9 provision of preferential credit facilities to a beneficiary by a Measured entity may constitute an Enterprise Development and Supplier Development Contribution. Examples of such contributions include without limitation;
1.1.10 provision of finance to beneficiary Entities at lower than commercial rates of interest relaxed security requirement or absence of security requirements for beneficiary Entities unable to provide security for loans; and settlement of accounts with beneficiary Entities over a shorter period of time in relation to the Measured Entity’s normal payment period, provided the shorter period is no longer than 15 days;
1.1.11 providing training or mentoring to beneficiary communities by a Measured Entity. Such contributions are measurable by quantifying the cost of time (excluding travel or commuting time) spent by staff or management of the Measured Entity in carrying out such initiatives. A clear justification, commensurate with the seniority and expertise of the trainer or mentor, must support any claim for time costs incurred). By the Measured Entity. (only that portion of salaries and wages attributable to time spent by the staff in, and the other expenses related to. Promoting or implementing Enterprise Development and Supplier Development constitute contributions; or
1.1.12 payments made by the Measured Entity to suitably qualified and experienced third parties to perform Enterprise Development and Supplier Development on the Measured Entity’s behalf.

 

2. MONETARY AND NON-MONETARY CONTRIBUTIONS

 

2.1 Subject always to the definitions of qualifying Enterprise Development and Supplier Development Contributions, the following monetary/non-monetary contributions will, without limitation, be considered:
2.1.1 the provision of seed or development capital;
2.1.2 contributions made towards the settlement of the cost of services relating to the operational or financial capacity and/or efficiency levels of a Qualifying Enterprise Development and Supplier Development Beneficiary including, without limitation;
2.1.3 professional and consulting services;
2.1.4 licensing and/or registration fees;
2.1.5 industry specific levies and/or other such fees;
2.1.6 IT services;
2.1.7 creation or development of capacity and expertise for Beneficiary Entities to manufacture or produce goods and/or services previously not manufactured, produced or provided in the Republic of South Africa;
2.1.8 facilitation of access to credit for Beneficiary Entities unable to access similar credit facilities through traditional means owing to a lack of credit history, high risk and/or lack of collateral;
2.1.9 provision of training and/or mentoring to Beneficiary Entities which will assist the Beneficiary Entities to increase their operational and/or financial capacity; and
2.1.10 the maintenance by the Measured Entity of an Enterprise Development and Supplier Development unit which focuses exclusively on support of Beneficiary Entities or candidate Beneficiary Entities or candidate beneficiary Entities.

 

2.2 The creation and/or development of the capacity of Beneficiary Entities which will enable them to manufacture and produce goods and/or provide services previously not available in the Republic of South Africa, may constitutes a Qualifying Enterprise development and Supplier Development contribution, and will be measured as the rand value of monetary contributions made as well as investments into, loans made to or guarantees given for a Beneficiary Entity.

 

2.3 Provision of preferential credit facilities to a beneficiary Entity by a Measured Entity may constitute a Qualifying Enterprise Development and Supplier Development Contribution. Examples of such contributions include without limitation—
2.3.1 provision of finance to Beneficiary Entities at rates of interest below the applicable rate. Such contributions will be measured as the value of the differential between the actual interest rate provided to the Beneficiary Entity and the applicable rate;
2.3.2 relaxed security requirements or absence of security requirements for Beneficiary Entities unable to provide security for loans. Such contributions shall be measured as being 3% (three percent) of any positive differential between the initial capital value of the loan and the value of security taken; and
2.3.3 settlement of accounts with Beneficiary Entities over a shorter period of time in relation to the Measured Entity’s normal payment period, provided that the shorter period is no longer than 15 days. Preferential payment terms which extend beyond 15 days will not qualify as Qualifying Enterprise Development and Supplier Development Contributions. Provision of training and/or mentoring to a Beneficiary Entity by a Measured Entity may constitute a Qualifying Enterprise Development and Supplier Development Contribution. Such contributions will be measured by quantifying the cost of time spent by their staff or management of the Measured Entity in carrying out such initiatives. Any travel or commuting time may not be included in this cost. Furthermore, a clear justification must be supplied with respect to the calculation of such time costs incurred, commensurate with the level of seniority and expertise of the trainer or mentor. Common forms of such contribution include without limitation:
2.3.3.1 professional and consulting services;
2.3.3.2 IT services; and
2.3.3.3 any other services which help to increase the entity’s financial and/or operational capacity and which have not also been accounted for under skills development. The maintenance of an Enterprise Development and Supplier Development unit by the Measured Entity may constitute a Qualifying Enterprise Development and Supplier Development Contribution. Common examples of such contributions include without limitation the salaries and wages of staff and other expenses involves in the operation of such Enterprise Development and Supplier Development unit. Notwithstanding the foregoing, only that portion of salaries and wages which relate to time spent by the staff in the other expenses related to the promotion and implementation of Enterprise Development and Supplier Development in respect of Beneficiary Entities or candidate Beneficiary Entities should be taken into consideration under Enterprise Development and Supplier Development contributions.