“I recently saw an article about the B-BBEE Commission requiring BEE compliance reports to be submitted to it. I don’t really know what a compliance report is or who must submit such. Will my business have to do this?”
The B-BBEE Commission is established in terms of the Broad-Based Black Economic Empowerment Act (Act) and is required to oversee the implementation of the Act and provide guidance to the public as to compliance with the Act and regulations, codes and charters published in terms of the Act.
You are correct in that the B-BBEE Commission recently published a third notice on compliance reports. The first two notices were published in 2017 and 2018 respectively. The latest notice provides guidelines for the completion of information required in respect of a compliance matrix which forms part of a compliance report in terms of Section 13G (1) and (2) of the Act. The compliance matrix is an overview of the B-BBEE scorecard initiatives of an entity.
In terms of the Act, the following entities are required to submit a B-BBEE compliance report:
All spheres of government, public entities and organs of state must report on their B-BBEE compliance in their audited annual financial statements and annual reports, within 30 days after approval of such annual financial statements and reports.
All public companies listed on the Johannesburg Stock Exchange must also report on their B-BBEE compliance, within 30 days after approval of their annual financial statements and annual reports, or within 90 days after their financial year end.
All Sectoral Education and Training Authorities must report to the B-BBEE Commission on specifically their skills development spending and programmes within 30 days after approval of the annual financial statements and annual report, or within 90 days after financial year end.
Such entities, which exclude private companies, are required to report on their B-BBEE compliance and must provide the following information on their compliance matrix:Ownership and Management Control Elements
Information on the race, gender, age, disability status and geographical area of all shareholders and directors in line with the information submitted to the Department of Labour. Detail must also be provided on dividends declared by the entity as well as the method or formula of distribution thereof.Skills Development Element
The Rand value of their Skills Development targets - 6% of the leviable amount in the case of generic entities and 3% of the leviable amount in the case of QSE entities. Information must be provided on the number of black persons trained, including race, gender, disability status and geographical area, as well as the Rand value of training for each trainee.Enterprise and Supplier Development Element
A list of B-BBEE compliant suppliers with total expenditure on each supplier, including information on the B-BBEE status, type of enterprise, percentage of black ownership and black women ownership and nature of goods or services provided by each supplier, must be provided. Also, entities must report on all Enterprise and Supplier Development beneficiaries they assisted, including information on the value of the support and level of black ownership and black women ownership of each beneficiary.Socio-Economic Development Element
The value of all socio-economic development initiatives needs to be reported, including information relating to the race, gender and geographical area of the beneficiaries.
The compliance matrix enables the B-BBEE Commission to measure the level of transformation within these important entities. A failure to comply may result in the submission of a compliance report of an entity not being acknowledged, resulting in contravention of the Act.