17 April 2020
Did you know that financial assistance provided to your clients may contribute to your B-BBEE scorecard and planning?
The COVID-19 pandemic, the national lockdown and the global recession is adversely affecting businesses globally in many ways, but uniquely to South Africa, it is also impacting the B-BBEE planning and the scorecards of many businesses.
As a result of the ongoing crises and national lockdown, many businesses are currently faced with numerous requests from their clients for financial assistance such as discounts on services and products or relaxed payment terms. Should your business assist clients by affording them some form of monetary relief during this time, it is important to remember that such relief could possibly qualify as contributions under the Enterprise Development element of your business’s BEE scorecard.
Enterprise Development contributions are defined in the B-BBEE Codes of Good Practice as any monetary or quantifiable non-monetary contribution to qualifying Enterprise Development beneficiaries, with the objective of contributing to the development, sustainability and financial and operational independence of those beneficiaries. Furthermore, just as a reminder, Enterprise Development beneficiaries should have an annual turnover below R50 million per annum, with at least 51% Black ownership shareholding.
Should your business for instance offer a discount to a client (who qualifies as an Enterprise Development beneficiary), the value of such discount (or other form of assistance) can form part of the Enterprise Development initiatives of the business, if structured correctly. This initiative may be enough to cover the full target of your Enterprise Development scorecard or at least make up a sizable portion of this target, in turn easing the future cash flow implication of this B-BBEE scorecard element on your business.
The above principles also apply if your business qualifies as an Enterprise Development beneficiary and your business approaches, for example, suppliers, landlords or franchisors for financial relief during this very challenging time. Your business’s BEE credentials may therefore strengthen your case for obtaining such relief.
It is important to remember that in due course, businesses will reopen and continue as best possible with their business activities and operations, and therefore needs to ensure that they remain compliant in all relevant areas. Should you require any assistance with advice or documentation pertaining to B-BBEE when considering requests for or requesting financial relief during this time, please contact our Commercial Department.
Although we have used our best efforts to ensure that all information contained in this communication is accurate as at the date hereof, we cannot guarantee the accuracy thereof and recommend verification thereof before use.