Statement 600 of the Codes of Good Practice deals with the framework for the Qualifying Small Enterprise Scorecard. In terms of the statement, a Qualifying Small Enterprise (QSE) is an Enterprise with an annual turnover between R10m -R50m. If the turnover is up to R10 the Enterprise will be called an Exempt Micro Enterprise (EME) and if the annual turnover amounts to R50m per annum or more it is classified as a Generic Enterprise.
QSE’s are scored on all five the B-BBEE elements of Ownership, Skills Development, Management Control, Enterprise and Supplier Development (that includes Procurement) and Socio-Economic Development. The weighting points in the table in respect of each element represent the maximum number of points possible to obtain for each criteria. As a QSE, an Entity has to meet the sub-minimum score of 40% of the maximum number of points available under two of the three priority elements (Ownership. Skills Development and Enterprise and Supplier Development) of which Ownership is compulsory and any one of the other two elements can be chosen, otherwise the ultimate score will be discounted by one level after the verification has been completed.
Qualifying Small Enterprises (QSE SCORECARD)
Ownership
Ownership counts for 25 points on the scorecard. Full points under Ownership is obtained firstly on the basis of 25,1% of a company’s exercisable voting rights being in the hands of black people (5 points), of which 10% (2 points) has to be owned by a black woman. Voting rights add up to 7/25 points. Economic Interest adds another 7/25 points based on 5 points attributed to 25% of the economic interest (dividends being paid) to black people, of which 10% has to be paid to black woman, contributing another 2 points and the final 3 points for 2% black ownership being in the hands of New Entrant of members of a Black Designated Group.
Black Designated Groups are defined as Black Youth, Black People with Disabilities, Unemployed Black People, Black People from rural areas and War Veterans. New Entrants are individuals who have not previously benefited more than R50m from B-BBEE transactions.
The last 8/25 is obtained under Net Value that requires the shares in the hands of black people to have vested according to a predetermined sliding scale.
Management Control
This element adds 15 points to the scorecard and is based on the number of black people, black woman and disabled black people in a company’s management structure as a percentage of all employees. The first 7/15 points is allocated based on a sliding scale on which maximum points are earned for 50% black representation at Executive Management level (5 points) of which 25% (2 points) has to be a black woman.
Full points for the outstanding 8/15 points are scored for 60% of Senior, Middle or Junior Management being black people (6 points) and 30% (2 points) are a black woman.
Skills Development
To qualify for any points under Skills Development an enterprise has to submit an annual Workplace Skills Plan, an Annual Training Report and a Pivotal Report which is approved by their SETA as well as the implementation of a Priority Skills program, generally and more specifically for black people. Points are scored as per the learning program matrix under code series 300 linked to this statement.
There is 25 points available under skills development for which 15/25 point are scored for specific learning programs for black people based on 3x the Entities leviable amount. Another 7/25 points are scored for spending 1x the leviable amount for training black woman and 3/25 points for spending 0,15x the leviable amount on the training of disabled black people. If all the Learners on Learnership programs are absorbed into permanent employment after completing their Learnerships another 5 bonus points can be obtained.
Enterprise and Supplier Development
Procurement: The element of Enterprise and Supplier Development includes procurement. The compliance target for procurement, called Total Measured Procurement Spend is based on 60% of the total of all qualifying annual procurement. This element adds 21/33 points is based on 60% of Total Procurement Measure Spend. Under Procurement 15/21 points are scored for procuring 60% of the Total Procurement Measure Spend from suppliers based on their B-BBEE scorecard levels and 15% of the spend (5 points) based on procurement from suppliers that are at least 51% black. An additional bonus point can be obtained by spending 1% of Total Measured Procurement Spend on a Designated Group Supplier.
Enterprise Development:
The 5/33 points available are based on a 1% of Net Profit after Tax grant contribution to Entities that are at least 51% black-owned with an annual turnover of less than R50m per annum or Sector-Specific Programs. The entity is not allowed to provide the grantor with any product or service.
Supplier Development:
The 5/33 points available are based on a 1% of Net Profit after Tax grant contribution to Entities that are at least 51% black-owned with an annual turnover of less than R50m per annum. The entity has to provide the grantor with a product or a service.
There are 2/33 bonus points available, one under either of these categories if a new job has been created in a beneficiary entity, or if the Enterprise Development Entity Beneficiary has been graduated to a Supplier Development beneficiary in the following year.
Socio-Economic Development
Under Socio-Economic Development, 5 points are available based on a grant-based contribution of 1% of Net Profit after Tax to a qualifying black beneficiary of the institution where at least 75% of the beneficiaries are black.
