At least 5 myths or urban legends regarding BEE have taken root and have grown into fairly large indigenous trees. Which of the 5 myths do you believe are true?

Myth One

I must sell (or give) at least 25% of the shares in my business to a Black person.

This is the most widely held myth. It is simply not true. The myth has come about because the companies who do sell shares to a Black person publically announce the deal to get the most publicity out of the transaction. If you print something often enough it becomes the truth. Its free advertising and shows the company to be politically correct.

You do not have to sell nor give shares away to be BEE compliant. Being BEE compliant means having a score of over 45 on the BEE Scorecard now and 65 by the year 2014.

Myth Two

To be BEE compliant my score on the scorecard must be determined by a Rating Agency.

There is no such thing as a “Rating Agency”. The correct term is “Verification Agency”. If your business has an annual turnover of less than R5 Million you are automatically BEE compliant. You are a “Level 4″ contributor on the BEE Generic Scorecard. A letter from your Auditor or Accounting Officer confirming this is all that is required in terms of the legislation.

You can rate yourself on the BEE Scorecard or you can contact a “Verification Agency” who will verify your rating – at a fee. Please be warned – if you go the route of self rating, your clients have the right to ask for your documentary evidence to support your rating. This may include your financials. Therefore ensure that your self rating is accurate and that you have sufficient documentary evidence to support your rating.

Myth Three

As I export all or most of my products I am not affected by BEE.

This may be true unless you are dependent on the State for some kind of export license or permit. Your BEE credentials may then form part of the required criteria.

Myth Four

The company is owned by a parent company in Europe, the USA or the Far East – consequently BEE does not affect me.

Sorry, also a myth. To do business with the state or do business with a company working for BEE points, you will need a BEE rating. You can substitute the shareholding section of the Scorecard by something called “Equity Equivalent Programme for Multinationals” you would still be expected to produce your BEE status.

Myth Five

I own my business and as a Black, Indian or coloured person my business is automatically BEE compliant.

Nope – the key wording of the Act says its all:- – Broad Based Black Economic Empowerment Act. Clearly you will score well on the Ownership element of the Scorecard. That’s a maximum of 25 points, if you have an annual revenue of between R5 Million and R35 Million and 20 points, if over R35 Million. There are 6 other parts to the scorecard. All of which are as relevant as Ownership. Your large clients will benefit from your Ownership status if you can give them evidence that your company is more than 50% Black Owned, or more than 30% Black Women Owned.

So there you have 5 myths of BEE. Anyone for a reality check?

Leslie Owen
Director
Owen, Adendorff & Associates (Pty) Ltd.