Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003)

Industry Charters

Financial Services  Charter

Code Series FS600: The Measurement of the Enterprise Development and/or Empowerment Financing Element of Broad-Based Black Economic Empowerment

Statement 601: The Measurement of the Enterprise Development Element for Measured Entities that are exempted from contributing towards Empowerment Financing

3. Key Measurement Principles
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3.1General principles

 

3.1.1Measured Entities receive recognition for any Qualifying Enterprise Development Contributions that are quantifiable as a monetary value using a Standard Valuation Method;

 

3.1.2Qualifying Enterprise Development Contributions of any Measured Entity are recognisable cumulatively from the commencement date of this statement, or an earlier date chosen by the Measured Entity (the inception date), until the date of measurement;

 

3.1.3No portion of the value of any Qualifying Enterprise Development Contribution that is payable to the beneficiary after the date of measurement can form part of any calculation under this statement.

 

3.2Recognition of Enterprise Development Contributions:

 

3.2.1Enterprise Development Contributions consist of monetary or non-monetary, recoverable or non-recoverable contributions actually initiated and implemented in favour of beneficiary entities by a Measured Entity with the specific objective of assisting or accelerating the development, sustainability and ultimate financial and operational independence of that beneficiary. This is commonly accomplished through the expansion of those beneficiaries' financial and/or operational capacity;

 

3.2.2The full value of Category A Enterprise Development Contributions, adjusted using the Benefit Factor, multiplied by 1 ,25 is recognisable;

 

3.2.3The full value of Category B Enterprise Development Contributions is recognisable;

 

3.2.4Recognition of Enterprise Development Contribution is limited to Qualifying Enterprise Development Contributions made to beneficiary entities if the beneficiary has met the definitional requirements of a beneficiary entity.

 

3.2.5The following is a non-exhaustive list of Enterprise Development Contributions:

 

3.2.5.1Grant contributions to beneficiary entities;

 

3.2.5.2Investments in beneficiary entities;

 

3.2.5.3Loans made to beneficiary entities;

 

3.2.5.4Guarantees given or security provided on behalf of beneficiaries;

 

3.2.5.5Credit facilities made available to beneficiary entities;

 

3.2.5.6Direct costs incurred by a Measured Entity in assisting and hastening development of beneficiary entities;

 

3.2.5.7Overhead costs of a Measured Entity directly attributable to Enterprise Development Contributions;

 

3.2.5.8Enterprise Development or developmental capital advanced to beneficiary entities;

 

3.2.5.9Preferential credit terms granted by a Measured Entity to beneficiary entities;

 

3.2.5.10Preferential terms granted by a Measured Entity in respect of its supply of goods or services to beneficiary entities;

 

3.2.5.11Contributions made to settling service costs relating to the operational or financial capacity or efficiency levels of beneficiary entities;

 

3.2.5.12Payments made by the Measured Entity to third parties to perform Enterprise Development on the Measured Entity's behalf;

 

3.2.5.13Discounts given to beneficiary entities in relation to the acquisition and maintenance costs associated with the grant to those beneficiary entities of franchise, licence, agency, distribution or other similar business rights;

 

3.2.5.14The creation or development of capacity and expertise for beneficiary entities needed to manufacture or produce goods or services previously not manufactured, produced or provided in the Republic of South Africa;

 

3.2.5.15Facilitating access to credit for beneficiary entities without access to similar credit facilities through traditional means owing to a lack of credit history, high-risk or lack of collateral;

 

3.2.5.16Provision of training or mentoring to beneficiary entities which will assist the beneficiary entities to increase their operational or financial capacity; and

 

3.2.5.17The maintenance by the Measured Entity of an Enterprise Development unit that focuses exclusively on support of beneficiary entities or candidate beneficiary entities.

 

3.2.6The creation or development of the capacity of beneficiary entities, which will enable them to manufacture and produce goods or provide services previously not available in the Republic of South Africa, may constitute an Enterprise Development Contribution.

 

3.2.7New projects promoting beneficiation may constitute an Enterprise Development Contribution.

 

3.2.8Provision of preferential credit facilities to a beneficiary entity by a Measured Entity may constitute an Enterprise Development Contribution. Examples of such contributions include without limitation:

 

3.2.8.1Provision of finance to beneficiary entities at lower than commercial rates of interest;

 

3.2.8.2Relaxed security requirements or absence of security requirements for beneficiary entities unable to provide security for loans; and

 

3.2.8.3Settlement of accounts with beneficiary entities over a shorter period of time in relation to the Measured Entity's normal payment period, provided the shorter period is no longer than 15 days.

 

3.2.9Providing training or mentoring to beneficiary communities by a Measured Entity. (Such contributions are measurable by quantifying the cost of time (excluding travel or commuting time) spent by staff or management of the Measured Entity in carrying out such initiatives. A clear justification, commensurate with the seniority and expertise of the trainer or mentor, must support any claim for time costs incurred).

 

3.2.9.1Maintaining an Enterprise Development unit by the Measured Entity. (Only that portion of salaries and wages attributable to time spent by the staff in, and the other expenses related to, promoting or implementing Enterprise Development, constitutes contributions).

 

3.2.9.2Payments made by the Measured Entity to third parties to perform Enterprise Development on the Measured Entity's behalf.