| 5.1. | Priority Elements and Subminimum |
The sub-minimum requirement for ownership (equity) is 40% of Net Value (40% of the 8 points) based on the Time Based Graduation Factor as provided in Annexure 100(E) of Amended Codes of Good Practice.
| 5.1.2. | Skills Development |
The sub-minimum requirement for Skills Development is 40% of the total weighting points excluding any bonus points for Skills Development.
| 5.1.3. | Enterprise and Supplier Development |
The sub-minimum requirement for Enterprise and Supplier Development is 40% for each of the three categories excluding any bonus points, within the Enterprise and Supplier Development element, namely Preferential Procurement, SupplierDevelopment and Enterprise Development
5.2. Compliance to priority elements
| 5.2.1. | A Large Enterprise is required to comply with all the Priority Elements; |
| 5.2.2. | A QSE is required to comply with Ownership as a compulsory element, and either Skills Development or Enterprise and Supplier Development. |
5.3. Discounting principle effects
| 5.3.1. | Non-compliance with the 40% sub-minimum requirements of any of the priority elements will result in the following outcomes for both Large Enterprises and QSEs: |
| 5.3.1.1 | The actual points scored by the Measured Entity and the consequent level that the Measured Entity would have achieved were it not for noncompliance with the 40% sub-minimum requirements will be recognised by the Verification Agency (the Recognition Level). |
| 5.3.1.2 | Notwithstanding the recognition in 5.3.1.1 above, the Measured Entity’s B-BBEE status level will be discounted by one level down until the next applicable verification period in which the Measured Entity can demonstrate compliance with the 40% sub-minimum requirements, at which point the Recorded Level will become the applicable ratings level for that Measured Entity in the verification period. |
| 5.4. | Start-up enterprises |
| 5.4.1. | Start-up enterprise must be measured as an EME under this statement for the first year following their formation or incorporation. This provision applies regardless of the expected total revenue of the Start-up Enterprise. |
| 5.4.2. | Start-up Enterprise is deemed to have the qualifying B-BBEE Status in accordance with the principles of paragraph 2.7 of this Statement eligibility as an EME. |
| 5.4.3. | In order to qualify as a Start-up Enterprise, the enterprise must provide an independent confirmation of its status in accordance with paragraph 2.7, a sworn affidavit statement or CIPC issued certificate. |
| 5.4.4. | Despite paragraph 5.5.1 and 5.5.2, a start-up Enterprise must submit a QSE scorecard when tendering for any contract, or seeking any other economic activity covered by Section 6 of the B-BBEE Amendment Act, with a value higher than R10 million but less than R50 million. For contracts of R50 million or more they must submit the Generic scorecard. The preparation of such scorecard must use annualised data. |
