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1 The lng awaited amendments t the Brad-Based Black Ecnmic Empwerment ( B-BBEE ) Cdes f Gd Practice ( Cdes r COGP ) were gazetted n 11 Octber The majr changes are summarised belw: Reductin f elements frm 7 t 5 thrugh the merging f: Management Cntrl and Emplyment Equity under Management Cntrl; and Preferential Prcurement and Enterprise Develpment under Enterprise and Supplier Develpment Creatin f 3 pririty elements, Ownership, Skills Develpment and Enterprise and Supplier Develpment; The discunting f the Entity s B-BBEE status by ne level if the gazetted sub-minima fr these pririty elements are nt met; The remval f Value Adding Supplier and its replacement with Empwering Supplier; EME and QSE that are 100% black wned will qualify as level 1, and EME and QSE that are mre than 51% black wned will qualify as level 2; EME and QSE will nly need t prduce an annual swrn affidavit cnfirming revenue and black wnership if they are mre than 51% black wned; A QSE with less than 51% black wnership is required t cmply with all 5 elements f the screcard, and is subject t discunting if sub-minima are nt met; N separate QSE screcard is supplied in the amended cdes, s QSE with less than 51% black wnership will be scred n the same screcard as cmpanies with turnver in excess f R50 millin; Adjusted Recgnitin fr Gender has been remved. Instead black wmen are separately scred; One year transitin perid frm 11 Octber In the first year after the Gazette, Measured Entities can elect t use: The amended Cdes; r The riginal cdes issued n 09 February Threshlds have been adjusted as shwn belw: Existing Cdes (R millin) Updated Cdes (R millin) Exempted Micr-Enterprise (EME) Qualifying Small Enterprise (QSE) Generic Gldberg, De Villiers & Myburgh Reg. N. 1993/092511/07 Directrs - Jnathan Gldberg B.Cmm LLB MBA, Mphathi Mgqalis B.Sc. M.Sc.MBA, Thembi Chagnda B.Sc.Sci, Diplma in Labur Law East Lndn - PO Bx 19289, Tecma 5214 Tel: Fax: jhnny@iafrica.cm Jhannesburg - PO Bx 274, Auckland Park, 2006 Tel: Fax: thembi@glbalbusiness.c.za Prt Elizabeth 274 Cape Rad, Newtn Park, 6055 Tel: Fax: cynthia@glbalbusiness.c.za Cape Twn Office 2018, 20 th Flr, ABSA Centre, 2 Riebeeck St, Cape Twn, 8001 Tel: Fax: grant@glbalbusiness.c.za Durban - PO Bx 274, Auckland Park, 2006 Tel: Fax: dbnmarketing@glbalbusiness.c.za

2 1. Ownership Meet 40% sub minimum f Net Value r level will be discunted by 1 level; The wnership scre will be increased frm 20 t 25; Ownership by Organs f State and State Owned Entities must be excluded, unless treated as B-BBEE Facilitatrs; Entities applying the Mdified Flw thrugh cannt als apply the Exclusin principle; Treatment f share wnership thrugh family trusts has been clarified. This will make it easier t recgnise wnership thrugh family trusts; Only Suth Africa based and regulated mandated investments will qualify fr exclusin; There will be enhanced prvisins fr sharehldings thrugh private equity funds; Ownership will include designated grups (Emplyee share wnership schemes, brad-based wnership schemes, and c-peratives) under the main. Previusly treated as bnus ; New Entrants will be included in the main, nt as bnus pint as in the past, and the amunt t qualify as a New Entrant has been increased frm R20 millin t R50 millin; Ownership fulfilment and net value (the realisatin ) have been cnslidated. 2. Management cntrl The amalgamatin f Management and Cntrl and Emplyment Equity elements n the current screcard; Paragraph 8 f Cde series 000 states that Management and cntrl will be ut f a ttal f 15. The detailed screcard fr cdes series 200, Management Cntrl details 19. An adjustment will be required; Junir Management has been included. Pints hwever have been reduced frm the existing screcard; The element has been aligned with the Ecnmically Active Ppulatin (EAP) s published annually; Targets are required t be brken dwn int the differing subcategries f Black, n an equitable representatin and apprpriately weighted; s have been aligned t the Cmmissin fr Emplyment Equity reprt. 3. Skills Develpment Pririty element subminimum f 40% f applies; Targets are required t be brken dwn int the differing subcategries f Black, n an equitable representatin and apprpriately weighted; Categry F and G training are bth recgnisable but capped at 15% f the ttal value f skills expenditure; The 6% cmpliance fr Skills Develpment has been retained and includes external training fr unemplyed black peple; A 15% cap n nn-cre training expenses has been intrduced. This will be applied t expenditure such as accmmdatin and travel; Internatinal training can be recgnised prvided it meets SAQA standards. 4. Enterprise and Supplier Develpment Pririty element subminimum f 40% f applies fr each f the Preferential Prcurement and Enterprise and Supplier Develpment elements; The imprts exclusin can still be applied, but it will nt be applicable t sectrs designated by the Department f Trade and Industry; 2

3 If imprts are excluded as there is n lcal prductin, this is subject t the develpment and implementatin f an Enterprise Develpment and Supplier Develpment plan fr imprted gds and services; The Value Adding Supplier has been replaced with an Empwering Supplier (ES); Suppliers must be ES t be claimed fr the entities B-BBEE prcurement claim; An ES is a BEE cmpliant entity which demnstrates that it is a gd citizen Suth African entity cmplying with all regulatry requirements f the cuntry. A large enterprise must cmply with 3 f the fllwing criteria, r 1 if a QSE: 25% f Cst f Sales, excluding Labur and Depreciatin, must be prcured frm Suth African suppliers r lcal prducers. Fr the service industry labur csts are included but capped at 15%; 50% f the jbs created must be fr black peple prvided the number f Black emplyees since the immediate prir B-BBEE certificate is maintained; 25% must be lcal prductin including lcal manufacturing, prductin, and/r assembly, and/r packaging At least 12 days a year must be spent n skills transfer t assist beneficiaries t increase their knwledge in peratins, technlgy r finance. EME and start-ups are autmatically ES; the fllwing multipliers are available: Prcurement frm a Supplier Develpment beneficiary under a cntract f at least 3 years duratin can be multiplied by 1.2; Prcurement frm black wned EME r QSE which are nt supplier develpment beneficiaries but have a cntract f at least 3 years duratin can be multiplied by 1.2; and Prcurement frm a first time supplier can be multiplied by 1.2. Prcurement falling under 2.1 n the prcurement screcard, cannt be scred under 2.2 and 2.3 and vice versa; Supplier Develpment and Enterprise Develpment beneficiaries are EME r QSE which are at least 51% black wned r at least 51% black wmen wned; 5. Sci-Ecnmic Develpment N Change Targets and s A summary f the weightings can be fund belw and a detailed descriptin f the s and weightings fr each screcard element can be fund at the end f this dcument. Element (Old COGP) (New COGP) Ownership Management Cntrl Emplyment Equity 15 - Skills Develpment Preferential Prcurement 20 - Enterprise and Supplier Develpment - 40 Enterprise Develpment 15 - Sci-Ecnmic Develpment 5 5 Ttal

4 Cntributin Levels Depending n the amunt f scred n each element, a certain cntributin level is achieved: B-BBEE Status Qualificatin (Old COGP) Qualificatin (New COGP) B-BBEE Prcurement Recgnitin Level Level 1 Cntributr % Level 2 Cntributr 85 but < but < % Level 3 Cntributr 75 but <85 90 but <95 110% Level 4 Cntributr 65 but <75 80 but <90 100% Level 5 Cntributr 55 but <65 75 but <80 80% Level 6 Cntributr 45 but <55 70 but <75 60% Level 7 Cntributr 40 but <45 55 but <70 50% Level 8 Cntributr 30 but <40 40 but <55 10% Nn-cmpliant Cntributr < 30 < 40 0% 4

5 Detailed Screcards Ownership Criteria/Indicatr Vting Rights: Exercisable Vting Rights f black peple 3 25% + 1 vte 4 25% + 1 vte Exercisable Vting Rights f black wmen 2 10% 2 10% Ecnmic Interest: Ecnmic interest f black peple 4 25% 4 25% Ecnmic interest f black wmen 2 10% 2 10% Ecnmic interest f black natural peple in Designated Grups; Emplyee Ownership Schemes; Brad-based Ownership Schemes; C-Operatives 1 2,5% 3 3% Invlvement in wnership f black new entrants % Realisatin Pints: Ownership fulfilment 1 Net Value Time-based graduatin factr: 10% f Target (Year 1) 20% f Target (Year 2) 40% f Target (Year 3-4) 60% f Target (Year 5-6) 80% f Target (Year 7-8) 100 % f Target (Year 9-10) Bnus Pints: N Restrictins % 8 25% Invlvement in wnership f black new entrants 2 10% 0 0% Invlvement in wnership f black participants in Emplyee Ownership Schemes; Brad-Based Ownership Schemes; Cperatives Ttal 1 10% 0 0% Bnus Pints 25 5

6 Management Cntrl Criteria/Indicatr Bard Participatin: Exercisable Vting Rights f black Bard members 3 50% * 2 50% Exercisable Vting Rights f black female Bard members 1 25% Black Executive Directrs 2 50% * 2 50% Black female Executive Directrs 1 25% Executive Management: Black Executive Management 3 40% * 2 60% Black female Executive Management 1 30% Black Other Tp Management 2 40% * 0 0% Bnus pint fr Black Independent Nn-Executive Bard Members Disabled Emplyees 1 40% 0 0% Black Disabled emplyees as a percentage f all emplyees 0 0% 2 2% Senir Management: Black emplyees in Senir Management 0 0% 2 60% Black female emplyees in Senir Management 1 30% Middle Management: Black emplyees in Middle Management 0 0% 2 75% Black female emplyees in Middle Management 0 0% 1 38% Junir Management: Black emplyees in Junir Management 0 0% 1 88% Black female emplyees in Junir Management 0 0% 1 44% Ttal * - Using Adjusted Recgnitin fr Gender bnus 19 Shuld be 15 Emplyment Equity Criteria/Indicatr Black Disabled emplyees as a percentage f all emplyees 2 3% * 0 0% Black emplyees in Senir Management 5 60% * 0 0% Black emplyees in Middle Management 4 75% * 0 0% Black emplyees in Junir Management 4 80% * 0 0% Bnus fr meeting r exceeding the EAP s per categry Ttal * - Using Adjusted Recgnitin fr Gender bnus 0 6

7 Skills Develpment Criteria/Indicatr Skills Develpment Spend n Learning Prgrammes Skills Develpment expenditure 6 3% * 8 6% Skills Develpment expenditure fr black emplyees with disabilities Learnerships: Number f black emplyees participating in Learnerships, apprenticeships r Number f unemplyed black peple participating in Learnerships, apprenticeships r Bnus pint fr number f Black Peple absrbed at the end f the learnership Ttal 15 * - Using Adjusted Recgnitin fr Gender 3 0.3% % 4 0.3% 6 5% * 4 2.5% 0 0% 4 2.5% 0 0% 5 100% Bnus Pints Enterprise and Supplier Develpment Criteria/Indicatr 2.1 Preferential Prcurement Brad-based BEE Prcurement Spend frm all Empwering Suppliers based n the brad-based BEE Prcurement Recgnitin levels as a percentage f Ttal Measured Prcurement Spend f the enterprise Brad-based BEE Prcurement Spend frm all QSE Empwering Suppliers based n the applicable brad-based BEE Prcurement Recgnitin levels as a percentage f Ttal Measured Prcurement Spend fr the enterprise Brad-based BEE Prcurement Spend frm all EME based n the applicable brad-based BEE Prcurement Recgnitin levels as a percentage f Ttal Measured Prcurement Spend fr the enterprise Brad-based BEE Prcurement Spend frm any f the fllwing Empwering Suppliers as a percentage f Ttal Measured Prcurement Spend: 12 70% 5 80% 3 15% 3 15% 4 15% suppliers that are 51% black wned; 3 12% 9 40% suppliers that are 30% black wmen wned 2 8% 4 12% Bnus Pints Prcurement Spend frm Designated grup suppliers that are at least 51% black wned 0 0% 2 2% 2.2 & 2.3 Enterprise and Supplier Develpment Annual Value f all Supplier Develpment cntributins as a % f Target 0 0% 10 2% f NPAT Annual Value f all Enterprise Develpment 0 0% 5 1% f NPAT 7

8 Criteria/Indicatr cntributins as a % f Target Bnus Pints Graduatin frm Enterprise Develpment t Supplier Develpment Beneficiary Jbs created by a supprted supplier Ttal bnus Enterprise Develpment Criteria/Indicatr Value f all Enterprise Develpment Cntributins and Sectr Specific Prgrammes made 15 3% f NPAT 0 0% Ttal 15 0 Sci-Ecnmic Develpment Criteria/Indicatr Value f all Sci-Ecnmic Develpment and Apprved Sci-Ecnmic Develpment Cntributins made 5 1% NPAT 5 1% NPAT Ttal 5 5 Shuld yu have any queries, please d nt hesitate t cntact the writer n Yurs faithfully RICHARD RYDING GLOBAL BUSINESS SOLUTIONS 8