# Regulatory Compliance Category > BEE and Employment Equity Forum >  BEE  Score for CC

## Marius1975

Hi Guys,

We are a new CC with 4 members, the cc is run only by members of which 2 are male with 65% and 2 female with 35% interest in the business. I know some / most companies take your BEE score into consideration and so was wondering what our score would be?

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## BusFact

If your annual turnover is less than R5million then you are considered to be an exempted micro enterprise and will be able to automatically get a level 4 exemption which is basically 100% BBEEE recognition (although it is possible to get higher - go figure).

You do still have to get a BBEEE verification agency to issue you that certificate after they have checked your turnover.

If your turnover is higher, it starts getting complicated.

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## Marius1975

THX! That's perfect!!

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## Construction Media

Just remember that companies with BEE ownership qualify for a higher level of contribution under BBBEE, so you're still at a disadvantage! Also remember that while you can claim points for female ownership as an HDI (Historically Disadvantaged Individual) those points don't count towards BEE ownership. 

If you're planning to do business with government or parastatals, you should probably look into setting up a PDI company as a subsidiary, with someone you know, like and trust as your director, and use that company to tender. Remember that when you are tendering on government projects, you recieve a score, and that score is used to calculate a price change (you still get paid what you bid, but your tender is evaluated based on the adjusted rate) that means that even BEE companies who's price is higher, might get a contract that you bid on on price!

I used to workin tendering, marketing and estimating in the construction field, so I have hands on knowledge of how this all works. Hope that helps!

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## sterne.law@gmail.com

> You do still have to get a BBEEE verification agency to issue you that certificate after they have checked your turnover.
> 
> If your turnover is higher, it starts getting complicated.


You do not need a verification agency (at a cost of about R7500), where you use the turnover threshold. An affidavit or audited statements from accountant/accounting officer, or for a start up deposing to turnover predictions, will suffice. Submit to department with the neccessary paperwork and you will have the 100% rating for about R275 give or take.Of course if you do wish to get a higher rating then you need to do the scorecard and verification etc, ect

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BusFact (18-Mar-11)

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## BusFact

> You do not need a verification agency (at a cost of about R7500), where you use the turnover threshold. An affidavit or audited statements from accountant/accounting officer, or for a start up deposing to turnover predictions, will suffice. Submit to department with the neccessary paperwork and you will have the 100% rating for about R275 give or take.Of course if you do wish to get a higher rating then you need to do the scorecard and verification etc, ect


You could well be right, but I thought that had changed a while back. I may be wrong though. In any event, if its an EME, the verification agency should do it for a lot less than R7500, closer to R1000. I have a QSE which is going to cost around R7500.

The other factor is that the certificate makes your life a lot easier. Simply send it though each time its requested. If you send the accountants letter, you're going to often walk into walls of bureaucracy. "But I have been instructed to get a certificate", "Sorry but our policy requires a certificate", etc. You may be right with the letter, but if so, trying to educate the supplier each time can be a pain. I suppose it comes doen to a cost/time savings trade off.

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## BusFact

> Just remember that companies with BEE ownership qualify for a higher level of contribution under BBBEE, so you're still at a disadvantage!  ....
> 
> ....I used to workin tendering, marketing and estimating in the construction field, so I have hands on knowledge of how this all works. Hope that helps!


I have less experience in this field, but if you are dealing with a QSE (turnover between R5mil and about R30mil), you can still get the highest rating with zero black ownership. You simply choose 4 of the 7 categories other than ownership and score full marks there. Have I got this wrong? Obviously the bigger companies need something there in ownership as the are evaluated on all 7 categories.

Also, with a 100% rating for an EME (under R5mil), I can't believe that getting even higher scores is worth the effort, unless your whole business involves tendering to the government. This rating keeps your suppliers happy and normally thats good enough.

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## BusFact

> If you're planning to do business with government or parastatals, you should probably look into setting up a PDI company as a subsidiary, with someone you know, like and trust as your director, and use that company to tender. Remember that when you are tendering on government projects, you recieve a score, and that score is used to calculate a price change (you still get paid what you bid, but your tender is evaluated based on the adjusted rate) that means that even BEE companies who's price is higher, might get a contract that you bid on on price!


Just be careful of "fronting" here. The verification agencies will be checking that this subsidary is not simply a sales office that tenders and passes all the actual business on to the parent company who does all the work and simply collects a commission. The PDI will have to be actively involved in its operation and not just a token placement.

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## sterne.law@gmail.com

you still get the certificate from the department. the letter is the paperwork to the department, in lieu of the verification agency paperwork.

But now that you mention it the cost is about R1000-R1500, which if I am correct is the mere certification, not calculating a true rating (taht is higher score)

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## BusFact

> you still get the certificate from the department. the letter is the paperwork to the department, in lieu of the verification agency paperwork.


Yah, you see, I should have read your post more carefully. I missed the bit about submitting to the department. Sorry. That does sound like a good option, if it works.

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## Dave A

> Yah, you see, I should have read your post more carefully. I missed the bit about submitting to the department. Sorry. That does sound like a good option, if it works.


It works.

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## Sparks

What about 3 entities partnering up to form 1 company which then will be registered as 60,20 & 20% partnerships of which only the 2x 20% partnerships are held by "previously advantaged". That should give a 110% rating. But now my question, these 3 entities are operating totally independantly of each other. They merely formed the company to gain the BEE status. All tenders made by the builder ar his alone, those by the plumber are his alone and likewise the electrical contractor. Each entity will be responsible to meet all his own legal requirements. Would this be acceptable?

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## wynn

> They merely formed the company to gain the BEE status.


Is this not what a 'Joint Venture' is all about?

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## Sparks

Would this grant each of the three entities a 110% rating if they used the same name but still kept their operations independant of each other?

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## wynn

Company A is owned by 60%X no PDI, 20%Y with PDI and 20%Z with PDI so the total is 40% PDI with the comensurate BBBEE score?
If they use company A to do all the invoicing and quoting the BBBEE rating should apply, you would need to keep the book very clean though and XY&Z would have to put proportionate work through. it can't just be a front for A

I have always thought that the easiest way is to form a trust as best percentage necessary for BBBEE as a profit sharing partner (no enforcable input as to how you run your business and you decide what is profit) the beneficiaries are a charity and your PDI staff proportionate to length of service and salary, set up in such a way that if any staff leave your employ for whatever reason, they fall off the beneficiary list and will only recieve benefit for the period worked.

Three trustees are, you, a lawyer or accountant who are not beneficiaries and one beneficiary elected anually by the PDI staff.
 you can change the charity as you and the trustees see fit, you keep the beneficiary trustee in the loop about business decisions and problems and how the business is being run also consider any input he may have if it makes sense.

This way no single individual benefits from your business and only those who work for you are included so you don't have any albatrosses.

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## Pap_sak

My wife has been told that she needs a BEE certificate if she is going to get any further work from one government department. She is a small sole sole prop with no employees and a turnover that will be luckly to hit R250K never mind R5 mill. And she's colored.

You would have thought a copy of her ID would be sufficient, but no, certification is required. You see, it's not just us whities that have to jump through hoops...

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## BusFact

I can sort of see their point. By insisting on a certificate they are covering themselves should a problem occur in the future. If they were to accept her ID, then they would be the one making the decision and that could end up being a carreer limiting move if it turns out to be wrong. Much safer for them to pass on the responsability.

It is a grudge expense though and should be unnecessary from you side. That bit I see too. Not exactly ideal for business cost efficiency.

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## Pap_sak

Well, my wife did phone around and it looks like it will cost her R1400 per year - which isn't too bad and could easily be offset with a slight increase in the hourly rate. But here is the problem: up to now she has competed on work and price and done ok, she doesn't want jobs on her PDI status. If anything, i am thinking of using her PDI status for my company!

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## Dave A

> she doesn't want jobs on her PDI status.


Please pass on my compliments to her, but frankly I suggest she doesn't look a gift horse in the mouth while it's there to be had. The sooner we get to those equity targets, the sooner we stand a chance of getting rid of this racist legislation.

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## gac

Just to claify, which Dept are you referring to Anthony?

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