Code 600 Enterprise Development

Code Series 600 refers to the measurement Enterprise Development element of BBBEE. Statement 600 provides the general principles for measuring Enterprise Development.

The Enterprise Development scorecard gives points for the annual value of the contributions made by the measured entity.

The key measurement principles are as follows:

  • Recognition of Enterprise Development contributions are quantified as a monetary value using a standard valuation method
  • The contributions are recognised cumulatively from the first date of the Codes, or a date the entity chooses (date of inception) through to the date of measurement
  • The date of inception that the entity chooses should not be more than five years longer than the first date of the Codes
  • Any contributions made to a beneficiary for a qualifying Enterprise Development programme that were done after the date of measurement do not qualify to be included in the qualification

Enterprise Development contributions are recognised through the following:

  • Enterprise Development contributions are monetary and non-monetary contributions made by an entity with the aim of creating sustainable and financial independence of the beneficiary. This is usually done by expanding the beneficiary’s financial and operational capacity
  • Contributions that are made to beneficiaries that are 50% black owned or 30% black women owned can multiply the value of the contributions by benefit factor 1.25
  • Enterprises that are 50% black owned and 30% black women owned as well as having a BEE status of between level 1 to level 8 also qualify as being recognised Enterprise Development contributions by a measured entity.
  • Enterprises that are 25% black owned or 20% black women owned as well as having a BEE status of between level 1 to level 6, qualify as recognised Enterprise Development contributions made by a measured entity.
  • Historical contributions made to non-qualifying beneficiaries are also considered qualifying enterprises.

Sometimes a non-qualifying contribution can become qualified if the measured entity initiated the enterprise development programme with the intention of making the beneficiary eventually become a qualifying contribution. In order for this to happen, the following must apply:

  • If the development contributions were made before the Codes began, it must be shown that these contributions were made in order for the beneficiary to become more BEE compliant.
  • If the development contributions were made after the Code began, it must be shown that there was a written agreement between the measured entity and the beneficiary that the contributions are being used to make the beneficiary a qualifying entity.

Enterprise development contributions are as follows:

  • Grant contributions to beneficiary companies
  • Investment in beneficiary companies
  • Loans made to beneficiary companies
  • Security given on behalf of the beneficiary companies
  • Making credit facilities available to the beneficiary company
  • The direct costs incurred by an enterprise towards the development of the beneficiary company
  • The overhead costs that an enterprise has incurred because of enterprise development contributions
  • Enterprise development capital that has been made available to the beneficiary entity
  • Making preferential credit terms available to the beneficiary entity
  • Making preferential terms for supplying goods and services to the beneficial entity
  •  The contributions made by the measured entity towards a third party to perform enterprise development on their behalf
  • The discounts that are given to the beneficial entity for maintenance and acquisition costs associated with the grant received for a franchise, license or other similar rights
  • The contributions that have been made towards the development of skills and the ability of a beneficiary entity to manufacture goods that were previously not made in South Africa
  • Giving access to credit facility to an entity because they have no access to any other form of credit because of being high risk or lack of collateral.
  • Providing training for beneficiary entity employees and this training will contribute towards the growth of the beneficiary entity’s operational abilities
  • When the company has a unit dedicated towards enterprise development identification and making contributions towards beneficiaries.

In addition to the above, contributions can also include

  • Creation of capacity of the beneficiary entity to produce goods that were previously unavailable in South Africa
  • Provision of preferential credit to beneficiaries at an interest lower than the commercial interest rates
  • Relaxing of security requirements when giving a beneficiary entity credit facilities
  • Having a shorter period of time to settle accounts with the beneficiaries, provided that this period is less than 10 days long
  • The payments made to a third party to do enterprise development programmes on behalf of the company
  • When a company provides training and mentoring to the employees of a beneficiary entity, then this qualifies as a contribution
  • The existence and the money spent on an enterprise development unit in the measured entity qualifies as a contribution