South Africa: Revision Of The BEE Codes - Revision Of Attitude

Last Updated: 31 March 2014
Article by   KPMG

The Broad-Based Black Economic Act and its Codes, gazetted in 2007, are said to have achieved a measure of success. The marked increase in the South African black middle class is argued to be a direct result of companies complying with the provisions of the Act. Under the provisions of this legislation, organisations were tasked with meeting black ownership targets, supporting and developing black-owned businesses, up-skilling and employment of black people in their organisations amongst other requirements.

However, the legislation has also received much criticism from organisations, politicians and the public. The old B-BBEE Codes of Good Practice were criticised for various reasons including:

  • The benefits of the legislation appeared to accrue to a select few individuals
  • Companies said the associated rise in bureaucracy increased cost of doing business
  • Ambiguous provisions in the legislation led to many different interpretations of some of the key provisions of B-BBEE

As a result the Minister gazetted the Revised B-BBEE Codes of Good Practice on 11 October 2013, effective 11 October 2014.

Reasons for the revision

The Department of Trade and Industry (dti), at various public meetings, notified attendees that the codes needed to be revised because many companies were achieving high ratings without engaging in any meaningful transformation of their organisations and the country at large. Using the Stats SA 2011 census as a tool to benchmark compliance levels, the dti argued that unemployment levels, particularly amongst Africans, are still unacceptably high, and that this demonstrates that the codes have not been producing the desired results. That is, if the majority of companies claim above-average compliance with codes (or legislation), why is there still a vast discrepancy in the levels of employment, especially insofar as African people?

The dti has indicated that the Revised Codes will tighten compliance and promote the objectives of B-BBEE as intended by the Act. In an economy that has a high unemployment rate, skills shortage and less than 2% GDP growth in its latest quarter, the business environment needs to improve. B-BBEE can play a significant role in addressing these challenges if correctly applied and monitored.

Changes to the Codes

The Revised Codes bring about many positive changes; one of which is that Companies with turnover below R10 million are now exempt from having to comply with BEE provisions. The inclusion of unemployed people as part of skills development initiatives is another significant win as companies will now able to earn points from training individual outside their organisation.

In addition, the new enterprise development criteria will encourage entrepreneurship and innovation in the South African environment.

In the new Codes, the overall weighting for management control and employment equity has been reduced from 25 percent to 15 percent.

It is important to note that the Department of Labour already monitors employment equity under separate legislation, and companies are held accountable to targets they have set.

Another important change has been the removal of adjusted recognition for gender. There are now specific targets and weights for female representation. In addition, the percentage representation by race is weighted equally. The equal weighting of Africans with other black groups may have an unintended consequence of less emphasis been given to employment of the African group because companies will still achieve a sufficiently high rating without necessarily filling positions with Africans.

As a result of the changes in the Codes, industry charters must also be revised within a year in order to comply with the new minimum requirements. Some of the charters written were not in alignment with the Codes gazetted in 2007. A prime example is the mining charter. It refers to historically-disadvantaged groups which include white women.

Which elements will be challenging to address?

Some companies have actively supported the Codes and we expect those companies will move quickly to align themselves with the new Codes. However, Supplier Development and Enterprise Development may be quite challenging to implement. Government requires potential suppliers of services and products to identify and 'mentor' smaller companies including competitors in some instances. In a capitalist environment, many companies would prefer to dominate, if not monopolise, their segment of the market. What is appreciated is that it will give companies an opportunity to be innovative, without compromising on intellectual property to ensure compliance with this element. This is one of the elements that if the subminimum is not met will result in discounting of the rating. We expect that companies will look for alternatives in the legislation that will allow them to obtain the maximum number of points with minimal negative impact to business.

One of the biggest gaps these revisions aim to address is fronting, defined by the dti as a deliberate circumvention of the B-BBEE Act or Codes.

It is only with the specific legislation against fronting that companies are now looking closely at their practices to ensure that this isn't happening.

How often should the codes be revised?

The Companies Act was revised for the first time after 35 years, while the Tax Act is reviewed and revised annually to ensure that the Act's intentions are faithfully preserved and that it adapts to meet continual changes in the environment. The Codes were revised five years after gazetting. Sufficient time has elapsed to allow legislators to identify loopholes and unintended consequences, and this revision is a first attempt at addressing potential gaps.

The dti is expected to establish a commission that will operate as ombudsman which will identify the gaps and monitor compliance with the Codes. One of the roles of the commission, we hope, will be to guide companies and verification agents, to ensure consistent application of the legislation as well as to review these unintended gaps and ensure that these are addressed appropriately. We believe this constant monitoring and periodic readjustment, as necessary, will help to bring clarity to the way in which the Act and Codes must be applied. However, once the Codes have achieved their objective of representative participation in the economy of the country for all South Africans, they may no longer be necessary.

This article first appeared in Financial Mail - Essentials, 2014 Issue.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.