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following amendments:
BEE • The target for procurement expenditure on 51% black owned suppliers
is to be increased from 40% to 50% of the total measured procurement

expenditure.
• The total scorecard points for procurement expenditure on 51% black
owned suppliers are to be increased from nine to 11 points, ensuring that
his sub-category accounts for nearly half of the total points available under
the Procurement element.
• The current separate sub-categories for EMEs and QSEs under the
Procurement element are to be merged into a single sub-category with a
target of 25% of the total measured procurement expenditure for this
combined category. Additionally, in a further nod towards 51% black owned
suppliers, these amendments propose to allow suppliers that have 51%
black ownership measured using the flow-through principle, to also be
recognised for expenditure under this combined sub-category.
• It is further proposed that companies can multiply their expenditure on
suppliers that are at least 51% black owned, measured using the flow
through principle, by a factor of 2, enhancing the attractiveness of procuring
from such companies.
Aside from the above procurement benefits, any entity which is at least 51%
black owned, measured using the flow-through principle, can also qualify as a
beneficiary for Supplier Development or Enterprise Development contributions.
Currently, only EMEs or QSEs (companies with a turnover of less than R50
million) qualify as beneficiaries. The proposed amendments wish to extend
this by allowing all 51% black owned companies, measured using the flow-
through principle, to qualify as beneficiaries, irrespective of turnover, thereby
also including Generic companies (more than R50 million annual turnover)
as potential beneficiaries and positioning such companies to benefit from
investment or support through supplier or enterprise development agreements
concluded with business partners wishing to claim points under their Enterprise
and Supplier Development elements.
Importantly, the proposed amendments will only apply to entities that are
measured under BEE Codes. If your business falls under a specific sector charter
such as the ICT or Construction Sector BEE Charter, these amendments will not
automatically apply until these sector charters have been aligned with the
proposed amendments.

What is clear from the above is that from a transformation and BEE Scorecard
perspective there is a clear and definite advantage to being a 51% black owned
company. There are specific requirements to qualify as such a company, and
if you want to ensure that you qualify as a 51% black owned company using
the flow-through principle to access the additional benefits described above,
it would be advisable to consult with a BEE or commercial specialist before
you proceed with your transaction to ensure that your transaction is structured
correctly and your business is positioned favourably to make the most of the
strategic opportunities afforded to 51% black owned companies.

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