UNDERSTANDING THE MINING CHARTER

October 12, 2018

Released on 27 September 2018 by Mineral Resources Minister Gwede Mantashe, the new Mining Charter has sparked significant interest not only in recent days but also in the months leading up to it.

The Department of Mineral Resources has provided an overview of the Charter, examining its various components. These include Ownership, Mine Community Development, Employment Equity, Beneficiation, Housing and Living Conditions, and others.

Despite its tumultuous history, which saw numerous iterations before this final version was Gazetted (15 June 2018, No. 41714), Minister Mantashe has assured stakeholders that there will be no additional changes made within the next five years.

The Charter was first introduced in 2004 and amended in 2010. It is designed to set out the obligations of mining and prospecting rights holders to racially transform their ownership, management structures, and procurement practices. This is necessary to facilitate sustainable transformation, growth, and development of the mining industry.

And while it is still early days to determine the general market reception (and impact) of the Charter, its finalisation will help bring certainty around policy in the mining sector.

Even though the full Mining Charter is available online for downloading and reading, we have provided a link to a presentation from Mantis Networks for a convenient overview.

Given the complexities and nuances in such a complicated document, government has provided the assurance that implementation guidelines will be released within the next two months. An important consideration is that the Mining Charter does not align with the Codes of Good Practice from the Department of Trade and Industry. While it does take its definitions from the B-BBEE Act, the sector must be aware there are important distinctions in the Charter.

The success of the Charter will likely only be seen in the months and years to come. However, the much-needed structure provided to the regulatory environment, means mines can now focus on putting the systems and process in place to ensure compliance.

Want to know more? Get in touch with Signa Group, and let one of our business experts advise you on the ins and outs of the Charter for your business. Please email info@signa.co.za for further information.

B-BBEE Commission releases practical guide to ensure validity of B-BBEE certificates

September 12, 2018

The B-BBEE Commission has issued a number of letters requiring organisations to withdraw their B-BBEE Verification Certificates due to invalidity or fraudulent conduct. The purpose of the Practice Guide 1 of 2018, issued on 3 September 2018, is to set out the approach the B-BBEE Commission is likely to take on determining the validity of B-BBEE certificates.

Download the Practice Guide 01 of 2018 here.

A B-BBEE Verification Certificate, a sworn affidavit and a B-BBEE certificate issued by the Companies and Intellectual Property Commission (CIPC) is evidence of a company’s compliance with the B-BBEE Act. It is illegal for a company to trade with an invalid or incorrect B-BBEE certificate.

This bulletin outlines the non-negotiable elements that must appear in a sworn affidavit and on a B-BBEE certificate for compliance.

Validity of a sworn affidavit

Exempted Micro-Enterprises (EMEs) and black controlled and owned Qualifying Small Enterprises (QSEs) only have to use a sworn affidavit to indicate their B-BBEE compliance status. Government introduced this mechanism specifically to reduce the cost of doing business and regulatory burden for these businesses.

The Department of Trade and Industry (dti) has designed mandatory affidavit templates which can be accessed on the dti website. The following pointers are key in determining the validity of a sworn affidavit:

a) Name/s as they appear in the identity document and the identity number.

b) Designation of the deponent as either the director, owner or member must be indicated in order to know that person is duly authorised to depose of an affidavit.

c) Name of company as per registration documents issued by the CIPC.

d) Percentage of black ownership, black female ownership and designated group. In the case of specialised enterprises as per Statement 004, the percentage of black beneficiaries must be reflected.

e) Total revenue for the year based on audited financial statements or management account.

f) Financial year-end documents, which were used to determine the total revenue.

g) B-BBEE status level.

h) Empowering supplier status must be indicated. For QSEs, the deponent must select the basis for the empowering supplier status.

i) Date deponent signed and date of Commissioner of Oaths must be the same.

j) Commissioner of Oaths cannot be an employee or ex officio of the company.

Validity of B-BBEE certificates issued by CIPC

The dti mandated CIPC to issue B-BBEE certificates for EMEs and start-up enterprises, in its efforts to reduce cost of business for small businesses. B-BBEE certificates can be applied for via eservices on the CIPC website. A valid CIPC certificate must have the following information:

a) Name of enterprise, registration number and business address.

b) Date of issue and expiry (e.g. 9 June 2018 to 8 June 2019) must be indicated.

c) Percentage of total black ownership, black female ownership and total white ownership.

d) Certificate number.

e) Barcode with tracking number.

f) Barcode with enterprise number.

g) B-BBEE status and procurement recognition level.

h) The dti logo on the top left corner and CIPC logo on the top right corner.

i) CIPC watermark.

Determining validity of a B-BBEE certificate for B-BBEE compliance

A company that qualifies to undergo a B-BBEE verification process, can only do so with a verification professional accredited by SANAS. A B-BBEE Verification Certificate shall identify the following information:

a) Name of company as per registration documents issued by CIPC.

b) Value-Add Tax number.

c) The B-BBEE scorecard against which the certificate is issued, indicating all elements and scores achieved for each element. The actual score achieved must be linked to the total points as per the relevant Codes.

d) B-BBEE status with corresponding procurement recognition level.

e) The relevant Codes used to issue the B-BBEE Verification Certificate.

f) Date of issue and expiry (e.g. 9 June 2018 to 8 June 2019).

g) Financial period which was used to issue the B-BBEE Verification Certificate.

h) Unique identification number of the B-BBEE verification professional.

i) Name and logo/mark of the B-BBEE verification professional or agency.

j) A B-BBEE Verification Certificate must be signed by the technical signatory at the bottom with full name and surname. The details of the technical signatory can be checked on the SANAS website.

k) The SANAS logo on the B-BBEE Verification Certificate.

Penalties

Trading with an invalid or fraudulent B-BBEE Verification Certificate is an offence which could lead to fines of up to 10% of a company’s annual turnover. Individuals involved could be imprisoned for up to 10 years.

This Practice Guide will go a long way in assisting with the interpretation and testing of the validity of a B-BBEE sworn affidavit/CIPC B-BBEE certificate as well as a B-BBEE Verification Certificate issued by an accredited verification agency.

YES Programme launched to addresss youth unemployment crisis

August 30, 2018

On 28 August 2018, the department of Trade and Industry published the Youth Employment Service (YES) Initiative as Notice 502 under Gazette #41866. The programme was launched by President Cyril Ramaphosa on 27 March 2018, as an addition to the Broad-Based Black Economic Empowerment (B-BBEE) Act.

Download the Youth Employment Service Initiative – a programme designed to address the country’s youth unemployment crisis.

To provide guidance on questions like “What now?”, “How does this affect B-BBEE scoring?” and “What does it mean for business?”, Signa Advisors are presenting a series of workshops on the following dates: 27 September in Johannesburg, 4 October in Cape Town, 11 October in Durban. To join us for any of these workshops, please email info@signa.co.za for further information.

An overview of YES

The statistics are shocking: 52% of youths between the ages of 15 – 24 and 33% of youths between the ages of 25 – 34 are unemployed. The initiative aims to reduce the unemployment rate to secure the country’s economic prosperity.

The YES programme places the needs of young people at the centre of inclusive economic growth by providing specific opportunities to youths. The programme aims to create more than one million paid internships over the next three years, for mainly black South Africans between the ages of 18 and 35.

Other employment opportunities will be created by:

  • Corporate work experience: Companies can create one-year paid positions in addition to the current employment numbers.
  • SMME host placements: Companies that don’t have capacity for additional employers can sponsor the salary for a one-year placement in SMEs.
  • SMME development: Youths are empowered to start and grow their own business, with support from YES in the form of training, seed funding and value-chain integration.

The rationale behind YES is to provide young people with corporate work experience to improve the prospects of finding employment, and to empower them through training and funding to start and grow their own businesses.

Murray Chabant, CEO of Signa Group, says, “Research has shown that one year of work experience, together with a CV and employment letter, will increase threefold the chance of a person being permanently employed. This programme creates a formalised platform for companies to invest in and contribute to solving the country’s unemployment crisis.”

Government is recognising companies’ efforts to comply with the YES programme, by providingadditional incentives. Companies employing black youth between the ages of 18 and 29 will qualify for the Employment Tax Incentive (ETI).

This latest gazette amends B-BBEE legislation to provide for an enhancement of up to 2 Levels for companies that meet or exceed YES targets for youth employment and comply with registration and absorption criteria.

  • Achieve YES target + 2.5% absorption of the youth: 1 Level
  • Achieve 1.5 x YES target + 5% absorption of the youth: 1 Level + 3 bonus points o Achieve 2 x YES target + 5% absorption of the youth: 2 Levels

It should be noted that this gazette does not change Priority Element compliance requirements, whereby missing a 40% sub-minimum requirement results in the loss of a B-BBEE Level. But an entity can now regain that level under the YES initiative and achieve a further level by greater YES performance. Informal Skills Development expenditure for YES employees will be recognised and companies will be able to claim up to 50% of their Skills Development Spend as Informal Training against the Skills Development scorecard.

“It is clear from this initiative that government is actively creating solutions to the country’s unemployment challenge. Programmes such as YES are critical to secure the country’s economic prosperity,” Chabant says.

This new development will create a significant opportunity for B-BBEE consultants to assist their clients maximise the opportunity to improve their B-BBEE Level and to assist them in sponsoring new jobs in external organisations.

Download the Youth Employment Service Initiative for measuring Broad-Based Black Economic Empowerment as gazetted on 28 August 2018.

Want to know more? Join one of our workshops: 27 September in Johannesburg, 4 October in Cape Town, 11 October in Durban. To register, please email info@signa.co.za for further information.

B-BBEE Commission calls for government and private sector to increase number of women on boards

August 24, 2018

The report produced by the Broad-Based Black Economic Empowerment Commission (“B-BBEE Commission”) on the national status and trends on broad-based black economic transformation for the 2017 calendar year shows that JSE listed companies have only 38% representation by black people on their boards, with males accounting for 20% while females stand at 18%. The report shows a decline in black ownership by 5.75% and black female ownership by 1.96% compared to the 2016 report.

Zodwa Ntuli, the Commissioner, says “to improve this, we call on government and the private sector to increase procurement from businesses that are at least 30% black women-owned, and to provide financial assistance, including through incentive schemes such as the black industrialist incentive programme of the dti.”

The B-BBEE Commission commissioned the study through DNA Economics, in collaboration with Alternative Prosperity (Pty) Ltd, which analysed data submitted by JSE listed companies and B-BBEE certificate information captured by verification agencies on the B-BBEE Certificates Portal System that the B-BBEE Commission created in 2017. The study is part of the B-BBEE Commission’s mandate under section 13F (1) (g) of the B-BBEE Act and sought to analyse and determine the country’s present levels of economic transformation towards the achievement of the objectives of the B-BBEE Act, in relation to black people owning, managing and controlling enterprises and productive assets of the economy.

The information analysed was for the 2017 calendar year (i.e. 2861 Portal information, 121 JSE listed entities and four state-owned entities). Although required to submit compliance reports to the B-BBEE Commission in terms of section 13G of the B-BBEE Act, none of the organs of state and SETAs submitted their reports in the 2017 calendar year. The analysis was purely based on data submitted on the B-BBEE certificates, and the various elements of the Codes of Good Practice have not been tested for compliance with the B-BBEE Act or on whether the verification was conducted properly by the verification agencies.

The report results show that 38% (male – 20%; female – 18%) of JSE listed companies’ board control is held by black people, which includes black foreign nationals who do not meet the definition of black people as per legislation. The 2016 report indicated that only 30% (male – 18%; female – 12%) of black South Africans held directorship on listed companies, and black foreign nationals were at 15%.

The report indicates that black ownership has declined by 5.75% standing at 27% and black female ownership by 1.96% which is at 9% compared to the 2016 report (black ownership – 32.75% and female 10.32%). The Property, Tourism, Agri-BEE and Financial Services did not achieve 25% on Ownership and on average, entities failed to reach 50% of targets on Skills Development, Management Control, and Enterprise & Supplier Development across all sectors.

The number of companies achieving B-BBEE Level 4 and above has also declined compared to the 2016 report, with the report showing that 60% of the entities fall between B-BBEE Level 5 and Non-Compliant B-BBEE Status, while the 2016 report had 60.09% of entities achieving B-BBEE Level 4 and above. The 2017 report shows that only 40% of entities achieved B-BBEE Level 4 and above, which is 20% decline from the 2016 report.

“We expect the pace of transformation to improve going forward given the recorded 65% increase in the requests for advice from the B-BBEE Commission in the 2017/2018 financial year, and also improvement in the submission of compliance reports after the JSE made B-BBEE reporting a listing requirement, which has helped improve the reporting in 2018 already,” Ntuli concluded.

Click on the link for the full report:
https://bbbeecommission.co.za/wp-content/uploads/2018/08/National-Status-and-Trends-on-Black-Economic-Empowerment-Report-31-March-2018-FINAL.pdf

The B-BBEE Commission was established in terms of section 13B of the B-BBEE Act 53 of 2003 as amended by Act No 46 of 2013 with powers effective from 6 June 2016. The B-BBEE Commission’s mandate, amongst others, is to supervise and encourage adherence to the B-BBEE Act in the interest of the public, conduct reactive and proactive investigations and promote good governance and accountability by creating an effective and efficient environment for the promotion and implementation of the objectives of broad-based black economic empowerment.

Issued on behalf of the B-BBEE Commission by:

Sidwell Medupe – Departmental Spokesperson Department of Trade and Industry

The impact of the National Minimum Wage Bill on Skills Development

August 1, 2018

The Skills Development Act was passed in 1998, to develop the skills of the South African workforce, increase their productivity and improve the quality of their lives. The Act set a framework for skills development strategies, integrated these strategies into the National Qualifications Framework (NQF), provided for learnerships that would lead to recognised occupational qualifications and stipulated how skills development would be financed.

The government then introduced the Skills Development Levies Act of 1999, where levies collected from qualifying employers were used to develop employees’ skills. These levies were paid to SARS, with 80% being distributed to Sector Training and Education Authority (SETA) systems. The SETAs were responsible for monitoring skills development and making funds available within their specific sector for education and training.

The government also introduced learnerships, managed by the SETAs, to help learners prepare for the workplace. These structured programmes deliver learning opportunities and practical workplace experience, which provide the learner with better employment opportunities.

There are primarily two types of learnerships: unfunded and funded. With an unfunded learnership, all training costs are for the employer’s expense and there is no stipend for the learner. With funded learnerships, an employer can apply to their relevant SETA for bursary funds for both employed and unemployed learners.

  • An employed learnership is where an existing staff member can obtain a formal qualification, with funds paid out by the SETA to cover training costs.
  • An unemployed learnership is where the SETA pays a stipend to supplement the salary of the learner during their learnership and they may also cover training costs.

The National Minimum Wage Bill

On 17 November 2017, the National Minimum Wage Bill (NMW Bill) was published in the Government Gazette, and it was adopted on 29 May 2018 by the National Assembly. Before it can be signed into law by South Africa’s president, it must pass through the National Council of Provinces.

Its purpose is to rectify income inequalities in the labour market. While Treasury has revealed that 750 000 job losses may occur, President Ramaphosa has argued that the income of 6.6 million workers will increase. The NMW Bill stipulates minimum pay and does not prevent people from earning more.

All employers have to pay their employees a minimum wage of R20 per ordinary hour worked, however, a different hourly rate applies to farm workers, domestic workers and workers on expanded public works programmes.

Schedule 2 of the Bill sets out allowances for learnership agreements, concluded in terms of the Skills Development Act. These vary from R301.01 to R 1755.84 per week, depending on the NQF level and the number of credits obtained, and for the most part they are below R20 per hour.

The impact of the NMW Bill

The Bill stipulates that no employer can pay wages below the minimum wage, which equates to R3 500 per month for a full-time employee. Currently, the SETAs fund R1 500 towards a learner’s stipend, which raises the question of who is responsible for the shortfall in order to comply with the new minimum wage? Does this responsibility lie with the relevant SETA, to sponsor a larger amount, or will this fall on the company? There is a misalignment between the minimum stipend and the NMW Bill, which is why legislation must be clearer in order to guide the industry.

Understanding the B-BBEE elements

August 1, 2018

There are five B-BBEE elements that make up the generic scorecard, with each element having a certain number of points assigned to it. An entity is measured against each element and their total across all elements will determine their B-BBEE status level.

The highest status level for B-BBEE is Level 1, which is 100 points or more, and the lowest is Level 8, where the entity achieves between 40 – 55 points. There is also a non-compliant level, where the entity gets less than 40 points.

OWNERSHIP

  • This is a priority element
  • Its weighting on the scorecard is 25 points
  • A sub-minimum of 40% of net value must be reached

Ownership refers to the percentage of ownership interests (voting rights, shareholding, etc.) which are held by black people in general and black women specifically.

MANAGEMENT CONTROL

  • Its weighting on the scorecard is 15 points (plus 4 bonus points)

Management Control relates to the proportion of black people who can impact the direction of a business, such as a board member or a person holding a senior management position.

SKILLS DEVELOPMENT

  • This is a priority element
  • Its weighting on the scorecard is 20 points (plus 5 bonus points)
  • A sub-minimum of 40% must be scored overall

Skills Development measures the investment an entity makes in the training and development of their black employees.

ENTERPRISE AND SUPPLIER DEVELOPMENT

  • This is a priority element
  • Its weighting on the scorecard is 40 points (plus 4 bonus points)
  • A 40% sub-minimum must be scored under each sub-category (Preferential Procurement, Supplier Development, and Enterprise Development)

This element is the largest on the scorecard and measures an entity’s involvement in supporting, developing and growing black-owned businesses and black-owned suppliers in their supply chain.

SOCIO-ECONOMIC DEVELOPMENT

  • Its weighting on the scorecard is 5 points

This relates to the extent to which an entity carries out corporate social investment efforts, to uplift black individuals and communities. The agri sector is the only exception, where a 1.5% contribution of net profit after tax will gain an entity 15 points.