| 4.1 | "The Act" means the Broad-Based Black Economic Empowerment Act No. 53 of 2003 as amended from time to time; |
| 4.2 | "Armscor" means the Armaments Corporation of South Africa Limited established by the Armaments Corporation of South Africa Act No. 51 of 2003; |
| 4.3 | "B-BBEE Enterprises" means enterprises whose B-BBEE score, in terms of a sector scorecard which has been issued as a sector code of good practice or in terms of the dti’s Generic Scorecard, has been verified by an accredited B-BBEE verification agency or in the case of Exempt Micro Enterprises or Qualifying Small Enterprise that are at least 51% Black Owned, produced an affidavit verifying their status; |
| 4.4 | "B-BBEE Facilitator Status" means Organs of State or Public Entities or State-Owned Enterprises that have been designated as B-BBEE Facilitators by the Minister of Trade and Industry by notice in the Government Gazette. In calculating their Ownership score, Measured Entities must treat B-BBEE Facilitators as having rights of Ownership held: |
| 4.4.1 | 100% by Black people; |
| 4.4.2 | 40% by Black women; |
| 4.4.3 | 20% by Black Designated Groups; |
| 4.4.4 | without any acquisition of debts; and |
| 4.4.5 | without any third party rights; |
| 4.5. | "Black Designated Groups" means: |
| 4.5.1 | Unemployed Black people not attending and not required by law to attend an educational institution and not awaiting admission to an educational institution; |
| 4.5.2 | Black people who are youth as defined in the National Youth Commission Act of 1996; |
| 4.5.3 | Black people who are persons with disabilities as defined in the Code of Good Practice on employment of people with disabilities issued under the Employment Equity Act; |
| 4.5.4 | Black people living in rural and under developed areas; |
| 4.6 | "Black Military Veterans" means for the purpose of this Sector Code, any Black South African citizen who: |
| 4.6.1 | rendered military service to any of the Non-Statutory Military Organizations, which were involved in South Africa's Liberation War from 1960 to 1994; |
| 4.6.2 | served in the Union Defence Force before 1961; |
| 4.6.3 | became a member of the new South African National Defence Force after 1994; and |
| 4.6.4 | has completed his or her military training and no longer performs military service, and has not been dishonourably discharged from that military organization or force, provided that this definition does not exclude any person referred to in paragraph 4.5.1 or 4.5.2 who could not complete his or her military training due to an injury sustained during military training or a disease contracted or associated with military training; |
| 4.7. | "Black Owned Entity Company" means a juristic person, having shareholding or similar members’ interest, that is Black controlled, in which Black Participants enjoy a right to an Economic Interest that is at least 51% of the total such rights measured using the Flow Through Principle; |
| 4.8 | "Black Controlled Entity" means a juristic person, having shareholding or similar members interest, that is Black controlled, in which Black Participants enjoy a right to Exercisable Voting Rights that is at least 51% of the total such rights measured using the Flow Through Principle; |
| 4.9 | "B-BBEE Recognition Level" means the percentage B-BBEE Recognition Levels as determined: |
| 4.9.1 | for Entities that are neither Qualifying Small Enterprises nor Exempted Micro-Enterprises, using statement 000 of the Codes; |
| 4.9.2 | for Qualifying Small Enterprises, using statement 000 of the Codes; and |
| 4.9.3 | for Exempted Micro-Enterprises, the applicable deemed B-BBEE Recognition under statement 000 of the Codes. |
| 4.10 | "Black People" is a generic word which means Africans, Coloured and Indians: |
| 4.10.1 | who are citizens of the Republic of South Africa by birth or descent; or |
| 4.10.2 | who became citizens of the Republic of South Africa by naturalisation: |
| 4.10.2.1 | before 27 April 1994; or |
| 4.10.2.2 | on or after 27 April 1994 and who would have been entitled to acquire citizenship by naturalisation prior to that date. |
| 4.11 | "Broad-Based Black Economic Empowerment" means the viable economic empowerment of all Black people, in particular women, workers, youth, people with disabilities, and people living in rural and underdeveloped areas, through diverse but integrated socio-economic strategies that include, but are not limited to: |
| 4.11.1 | increasing the number of Black people that manage, own and control enterprises and productive assets; |
| 4.11.2 | facilitating ownership and management of enterprises and productive assets by communities, workers, co-operatives and other collective enterprises; |
| 4.11.3 | human resources and skills development; |
| 4.11.4 | achieving equitable representation in all occupational categories and levels in the workforce; and |
| 4.11.5 | preferential procurement from enterprises that are owned or managed by Black people; |
| 4.11.6 | investment in enterprises that are owned or managed by Black people. |
| 4.12 | "Broad-Based Ownership Scheme" means an ownership scheme which meets the rules set out in Annexure 100(B) of the Codes; |
| 4.13 | "Charter Council" means the Defence Sector Charter Council established in terms of paragraph 17 of this Sector Code; |
| 4.14 | "Codes" means the Codes of Good Practice as amended from time to time including all the statements issued under Section 9 of the Act; |
| 4.15 | "Defence Industrial Participation" (DIP) means a government-initiated process whereby defence acquisitions and purchases are used as a leverage to oblige a foreign seller of Category 1 Matériel to reciprocate defence-related business in South Africa on a reciprocal basis in order to advance military strategic and defence-related industrial participation imperatives; |
| 4.16 | "51% Black Owned" means an Entity in which: |
| 4.16.1 | Black people hold at least 51% of the exercisable voting rights as determined under Code series 100; |
| 4.16.2 | Black people hold at least 51% of the economic interest as determined under Code series 100; |
| 4.16.3 | It has earned all the points for Net Value under statement 100; |
| 4.17 | "51% Black Women Owned" means an Entity in which: |
| 4.17.1 | Black women hold at least 51% of the exercisable voting rights as determined under Code series 100; |
| 4.17.2 | Black women hold at least 51% of the economic interest as determined under Code series 100; and |
| 4.17.3 | It has earned all the points for Net Value under statement 100. |
| 4.18 | "30% Black Women Owned" means an Entity in which: |
| 4.18.1 | Black women hold more that 30% of the exercisable voting rights as determined under Code series 100; |
| 4.18.2 | Black people hold at least 30% of the economic interest as determined under Code series 100; |
| 4.18.3 | It has earned all the points for Net Value under statement 100. |
| 4.19 | "Defence Matériel" means any Matériel whether raw or processed, including equipment, facilities, weapons, munitions, pyrotechnics, systems and services used principally for military purposes; |
| 4.20 | "DoD" means the Department of Defence and Military Veterans; |
| 4.21 | "the dti" means the Department of Trade and Industry; |
| 4.22 | "EAP" means Economically Active Population as determined and published by Statistics South Africa. The operative EAP for the purposes of any calculation under the Codes will be the most recently published EAP; |
| 4.23 | "Economic Interest" means a claim against the Entity representing a return on ownership of the Entity, similar in nature to a dividend right, measured using the Flow-Through and where applicable, the Modified Flow-Through principles; |
| 4.24 | "Elements" means the measurable quantitative or qualitative elements of B-BBEE compliance in the Codes; |
| 4.25 | "Empowering Supplier" means subject to any Notices that may be issued by the "the dti", within the context of B-BBEE, is a B-BBEE compliant entity, which is a good South African corporate citizen, complying with all material regulatory requirements of the country such as employment equity and taxation and should meet at least 3 (three) if it is a Large Enterprise or 1 (one) if it is a Qualifying Small Enterprise on the following criteria: |
| 4.25.1 | at least 25% of cost of sales excluding labour cost and depreciation must be procured from local producers or local suppliers in SA. For the service industry, labour costs are included but capped at 15%; |
| 4.25.2 | job creation - 50% of jobs created are for Black people provided that the number of Black employees since the immediate period prior verified B-BBEE measurement is maintained; |
| 4.25.3 | at least 25% transformation of raw material/beneficiation which include local manufacturing, production and/or assembly, and/or packaging; |
| 4.25.4 | skills transfer - at least spend 12 days per annum of productivity deployed in assisting Black Owned EMEs and QSEs to increase their operation or financial capacity; |
| 4.25.5 | labour costs - at least 85% of labour costs are paid to South African employees of Entities in the service industry; |
Exempted Micro Enterprises and Start-Ups are automatically recognized as Empowering Suppliers;
| 4.26 | "Entity" means a legal entity or a natural or a juristic person conducting a business, trade or profession in the Republic of South Africa; |
| 4.27 | "Enterprise Development Contributions" means monetary or non-monetary contributions to Exempted Micro Enterprises or Qualifying Small Enterprises which are at least 51% Black Owned or at least 51% Black Women Owned with the objective of contributing to the development, sustainability and financial and operational independence of those beneficiaries; |
| 4.28 | "Equity Equivalent Investment Programme" means a public programme or scheme of any government department, provincial or local government in the Republic of South Africa or any other programme approved by the Minister of Trade and Industry as an Equity Equivalent Investment Programme; |
| 4.29 | "Exempted Micro-Enterprise" means an entity with an annual turnover of R5,000,000 (five million Rand) or less; |
| 4.30 | "Flow-through Principle" means as a general principle when measuring the rights of ownership of any category of Black People in a Measured Entity, only rights held by natural persons are relevant. If the rights of ownership of Black People pass through a juristic person then the rights of ownership of Black People in that juristic person is measurable. These principles apply through every tier of ownership in a multi-tiered chain of ownership until that chain ends with a natural Black person holding rights of ownership; |
| 4.30.1 | The method of applying the Flow Through Principle across one or more intervening juristic persons is as follows: |
| 4.30.1.1 | Multiply the percentage of the Participants’ rights in the juristic persons through which those rights pass, by the percentage rights of ownership of each of those juristic persons successively to the Measured Entity; and |
| 4.30.1.2 | The result of this calculation represents the percentage of rights of ownership held by the Participant. |
| 4.31 | "Foreign Enterprise" means an Entity that is incorporated outside the borders of South Africa whether or not it carries on business in South Africa; |
| 4.32 | "Fronting practice" means a transaction, arrangement, or other act or conduct that directly or indirectly undermines or frustrates the achievement of the objectives of the Act or the implementation of any of the provisions of the Act, including but not limited to practices in connection with a B-BBEE initiative: |
| 4.32.1 | in terms of which black persons who are appointed to an enterprise are discouraged or inhibited from substantially participating in the core activities of that enterprise; |
| 4.32.2 | in terms of which the economic benefits received as a result of the broad-based black economic empowerment status of an enterprise do not flow to Black people in the ratio specified in the relevant legal documentation; |
| 4.32.3 | involving the conclusion of a legal relationship with a Black person for the purpose of that enterprise achieving a certain level of B-BBEE compliance without granting that black person the economic benefits that would reasonably be expected to be associated with the status or position held by that Black person; or involving the conclusion of an agreement with another enterprise in order to achieve or enhance B-BBEE status in circumstances in which: |
| 4.32.3.1 | there are significant limitations, whether implicit or explicit, on the identity of suppliers, service providers, clients or customers; |
| 4.32.3.2 | the maintenance of business operations is reasonably considered to be improbable, having regard to the resources available; |
| 4.32.3.3 | the terms and conditions were not negotiated at arm’s length and on a fair and reasonable basis; |
| 4.33 | "Generic Scorecard" means the balanced B-BBEE scorecard as contained in statement 000 of the Codes; |
| 4.34 | "Global Practice" means a globally and uniformly applied practice of a Multinational, restricting alienation of equity in or the sale of business in its regional operations. The practice must have existed before the promulgation of the Act; |
| 4.35 | "Local Enterprise" means an enterprise with 51% or more equity ownership by South African citizens, registered in the Republic of South Africa and paying tax to South African Revenue Service; |
| 4.36 | "Large Enterprise" means an entity that qualifies for measurement under the Generic Scorecard, with an annual turnover of more than R50,000,000 (fifty million Rand); |
| 4.37 | "Local content" means that portion of the tender price which is not included in the imported content, provided that local manufacture does take place; |
| 4.38. | "Management" means: |
| 4.38.1 | Executive management, which includes the Chief Executive Officer, Managing Director, Chief Financial Officer, Executive Directors and those managers who have a significant leadership role in the enterprise, have control over the day to day operations, have decision-making powers and report directly to the Chief Executive Officer, Managing Director and/or the Board of Directors; |
| 4.38.2 | Senior management means an employee who is a member of the occupational category of "Senior Management" as determined using the Employment Equity regulations, issued by the Department of Labour in terms of the Employment Equity Act 55 of 1998, as amended; |
| 4.38.3 | Middle management means an employee of the Measured Entity who is a member of the occupational category of "Middle Management" as determined using the Employment Equity regulations, issued by the Department of Labour in terms of the Employment Equity Act 55 of 1998, as amended; and |
| 4.38.4 | Junior management means an employee of the "Measured Entity" who is a member of the occupational category of "Junior Management" as determined using the Employment Equity regulations, issued by the Department of Labour in terms of the Employment Equity Act 55 of 1998, as amended. |
| 4.39 | "Measured Entity" means an Entity or Enterprise as well as an organ of state or public entity subject to measurement under the Codes; |
| 4.40 | "Minister" means the Minister of Trade and Industry; |
| 4.41 | "Multinational Enterprise" means a Measured Entity with a business in the Republic of South Africa and elsewhere which maintains its international headquarters outside the Republic; |
| 4.42 | "National Development Plan" The National Development Plan (NDP) is an economic policy framework that aims to eliminate poverty and reduce inequality by 2030 through strategies that draw on the energies of its people, growing an inclusive economy, building capabilities, enhancing the capacity of the state, and promoting leadership and partnerships throughout society; |
| 4.43 | "Net Profit after Tax" means the operating profit of a Measured Entity after tax. It incorporates both profit / loss figures and abnormal items, but excludes extraordinary items as determined by (International Financial Reporting Standards (IFRS); |
| 4.44 | "NDIC" means The National Defence Industry Council; |
| 4.45 | "Non-Statutory Military Organisations" means the Azanian People’s Liberation Army (APLA), Azanian National Liberation Army (Azanla) and Umkhonto we Sizwe (Umkhonto); |
| 4.46 | "Ownership" means ownership of an Economic Interest in an enterprise; |
| 4.47 | "Organs of State" means: |
| 4.47.1. | A national or provincial department as defined in the Public Finance Management Act No. 1 of 1999; |
| 4.47.2. | a municipality contemplated in the Constitution; |
| 4.47.3. | a provincial legislature; and |
| 4.47.4 | a constitutional institution listed in Schedule 1 of the Public Finance Management Act 1999 (Act No. 1 of 1999); |
| 4.48 | "Participant" means a natural person holding rights of ownership in a Measured Entity; |
| 4.49 | "Procurement" means all expenditure for goods, products, equipment and services, including capital expenditure and excluding where the expenditure is on municipal rates and taxes or part of payroll as well as in the context of procurement in the SADI, the complete process of acquiring or obtaining personnel, matériel, services, or property from outside the Defence Force (by means authorized in pertinent directives) in support of operational requirements and includes negotiating, contracting and purchasing; |
| 4.50 | "Qualifying Small Enterprise" means an Entity that qualifies for measurement under the Qualifying Small Enterprise Scorecard with a turnover of R5,000,000 (five million Rand) or more but less than R50,000,000( fifty million Rand); |
| 4.51 | "SADI" means the South African Defence Industry which is a collective term for South African Defence Related Industries and means those Entities in the public and private sector, including commercial companies and business units of such Entities, which are directly or indirectly active in the design, research, development, manufacture and marketing of Defence Matériel; |
| 4.52. | "Scarce Skills" means skills required in the SADI which shall contribute towards establishment or maintenance of Sovereign Capability; |
| 4.53. | "SMME" means small, medium and micro enterprises namely Exempted Micro Enterprises and Qualifying Small Enterprises; |
| 4.54 | "Sovereign Capability" means the ability to ensure, full national control, without reliance on any direct foreign assistance, of certain capabilities identified as vital to national security, including but not limited to, command and control, secure communications, aspects of precision-guided munitions, elements of electronic warfare, relevant algorithms and relevant software; |
| 4.55 | "Stakeholders" means Measured Entities, Organs of state, Public Entities, State-Owned Enterprises and suppliers who are involved in the SADI; |
| 4.56 | "Start-Up Enterprise" means a recently formed or incorporated Entity that has been in operation for less than 1 year. A start–up enterprise does not include any newly constituted enterprise with merely a continuation of a pre=existing enterprise; |
| 4.57 | "Public Entity" means an enterprise that is listed as a public entity in Schedule 2 or 3 of the Public Finance Management Act, 1999 (Act No. 1 of 1999); |
| 4.58 | "Supplier" means any supplier or service provider to a Measured Entity if any portion of the supply or service provision falls within the definition of Total Measured Procurement Spend; |
| 4.59 | "Supplier Development Contributions" means monetary or non-monetary contributions carried out for the benefit of value adding Suppliers to the Measured Entity that are Exempted Micro-Enterprises or Qualifying Small Enterprises which are at least 51% Black owned or at least 51% Black Women Owned, with the objective of contributing to the development, sustainability and financial and operational independence of such suppliers; |
| 4.60 | "Strategic Enterprise" means a public or private South African owned company which provides one or more of the capabilities identified as vital to national security and deemed sovereign; |
| 4.61 | "Targeted-Procurement" means a policy or programme of an Entity that reserves a percentage of procurement exclusively for certain categories of enterprises; |
| 4.62 | "Voting Right" means a voting right attached to an Entity Instrument owned by or held for a participant measured using the Flow Through Principle or the Control Principle, provided that: |
| 4.62.1 | to the extent that the provisions of the Codes of Good Practice Issued by "the dti" on 11 October 2013 and as amended from time to time provide further definition as to the nature of voting rights in an enterprise other than a company having share capital, those provisions should be read in conjunction with this definition in relation to such enterprises; and |
| 4.62.2. | voting rights exercised on behalf of a Black participant, by another natural person who acts in a fiduciary capacity or in terms of specific mandate or proxy, shall be deemed to be exercised by that participant; |
| 4.63 | "Weighting" means the weightings applied to the various Elements in the Sector Code Scorecards. |
