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The following “special rules” apply to these different categories of small
companies:
BEE • A small company will automatically qualify for a level 5 BEE

status and not the usual level 4 as would happen under the
Generic BEE Codes. For a small company to qualify for a Level
4 BEE status, they must have at least 30% black ownership.
• Above 50% black ownership will however still qualify for Level
2 status or 100% black ownership for Level 1 status, but the
Revised Codes clearly state that the modified flow through
principle cannot be used if a company wants to obtain an
exempt level 2 or 1 BEE status.
• A BEP small company must be owned and managed by a
majority of black professionals that are qualified within the
applicable profession if it wants to obtain an exempt level 2 or 1.
• No provision is made for affidavits to prove BEE status. This
means that all small companies will have to be verified by a
SANAS agent and this will hold a cost implication as it will likely
entail a small audit by a SANAS verification agency.
• Most small companies will be subject to the principle of
discounting and enhancement. The discounting principle is
focused on the skills development element and states that a
company needs to score at least 40% of its target for skills
development to avoid discounting (losing a level).The
enhancement principle makes provision for companies to
enhance its levels by as many as two BEE levels by achieving their
full targets for skills development and supplier development.

Although the Revised Codes do make provision for the exemption of
small companies, there are a number of rules that you must understand
and meet to obtain the exemption. Although the Revised Codes are
not yet in force, small construction companies would be well advised
to orientate themselves to the new rules that will soon be introduced
and obtain the necessary advice in advance to prepare themselves.

Implications of the new Construction BEE
Charter on construction material suppliers

March 2017

“My company supplies construction materials and in the past
I have always been verified under the general BEE Codes with
my BEE verification. Will this still be the case in terms of the
new Construction BEE Charter? If not, what effect will this have
on my business?”

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