Why the need for the codes?

For B-BBEE to work properly consistently, visible and clearer direction is needed. BEE initiatives to date have been characterised by:

• Lack of understanding leading to inconsistent application and appreciation of B-BBEE.
• Lack of clarity resulting in delays in the implementation of B- BBEE initiatives.
• Disparity in Charter definitions and targets between various sectors of the economy.
• Lack of implementation guidelines resulting in ‘Most going to few’, ‘fronting’ or ‘Sham’ transactions.
• Lack of underlying economic substance to many BEE transactions.
• Focus on narrow based BEE leading to a narrow base of beneficiaries.

Arrangement of the Codes of Good Practice

Code 000 (1000)
This outlines the general framework of BBBEE and includes specific detail on elements of BBBEE; guidelines for developing Industry Charters; the accreditation of BBBEE verification agencies; how to identify and report fronting practices and other misrepresentations; how the BBBEE status of complex structures such as joint ventures will be verified; and how BBBEE contributions are transferred in the event of the sale of a business.

Code 100 (1100)
This outlines how black ownership will be measured, including ownership resulting from sales of equity instruments or assets in BBBEE transactions; the recognition of contributions by public and state owned entities, multinations, guaranteed and section 21 companies; and recognition of investments by BBBEE targeted warehousing funds. Warehousing funds are a recent addition to the draft Codes and are designed to provide a way for black shareholders to sell their interest in a business without immediately losing its BBBEE ownership points.

Code 200 (1200)
This describes the measurement of BBBEE management and control within an organization.

Code 300 (1300)
This outlines how employment equity is recognized and measured. While code 300 focuses on the appointment of black people in management positions, code 1300 (which is especially for QSEs) emphasises the inclusion of black people in non- managerial and unskilled positions, as well as the role of black woman at senior to middle management levels.

Code 400 (1400)
This describes how skills development is measured, with specific detail on the recognized of skill development and organisational transformation contributions.

Code 500 (1500)
This is perhaps the most difficult code to understand, and deals with the recognition and measurement of preferential procurement contributions, ie, the extent to which enterprises procure from companies that are BBBEE-compliant.

Code 600 (1600)
This outlines how enterprise development is recognised and measured. It focuses on initiatives that assist or accelerate sustainable development and job creation.

Code 700 (1700)
This describes the measurement and recognition of residual BBBEE contributions (corporate social investment) that provide black people with a means of generating income for themselves.

Code 800 (1800)
This allows for the inclusion of Industry Charters, as and when each Charter is passed into law, after the codes are gazetted.

Rating Benefits

BEE Ratings can be used for the following purposes:
Increased procurement opportunities by entities wishing to enhance their own broad based BEE status through preferential procurement
Government licensing eligibility or licensing renewal process Financing decisions, where empowerment is a key criterion for sourcing the fund, e.g. BEE Funds
Independent, reliable proof of contributions made towards economic empowerment

WHAT DO I GET? – Rating Outcome
Once you have gone through the rating process, you will be awarded a rating report with a rating certificate. The overall rating score is equivalent to a rating status ,i.e. BBB, which in turn, is equivalent to a level contribution status, as per the guidelines in the Codes of Good Practice.
Below is a table showing what would be on your report and what it means:

	Total BEE Score	BEE Contributor status
Ratings	Above 100%	Level One Contributor
	85%~100%	Level Two Contributor
	75%~85%	Level Three Contributor
	65%~75%	Level Four Contributor
	55%~65%	Level Five Contributor
	45%~55%	Level Six Contributor
	40%~45%	Level Seven Contributor
	30%~40%	Level Eight Contributor
	0%~30%	Non Compliant Contributor