Broad Based Black Economic Empowerment (B-BBEE) in South Africa. October 2015

Transcription

1 Broad Based Black Economic Empowerment (B-BBEE) in South Africa October 2015

2 Verification Timeline - What does this mean to your business? The government s Broad Based Black Economic Empowerment (B-BBEE) policy is a transformation imperative but is also viewed as an economic growth strategy. Embracing B-BBEE has not only proved to be the right thing to do, but is a cornerstone in the economic growth of our country. Structural changes We have summarised the key changes below to provide a high-level analysis: Revised Codes in which case have been given up until the end of October 2015 to align to the Revised Codes, All Rights Reserved - EY 2015 Pg 2

3 So what s the big deal? Who is an Empowering supplier? It is referred to as a good citizen South African entity that complies with all regulatory requirements of the country and should meet 3 of the following criteria if it is a large enterprise or 1 if it is a QSE A. B. C. D. E. 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 to 15%. Job creation 50% of jobs created are for Black people provided that the number of Black employees since the immediate prior verified B-BBEE Measurement is maintained. At least 25% transformation of raw material/beneficiation which include local manufacturing, production and/or assembly, and/or packaging. Skills transfer - at least spend 12 days per annum of productivity deployed in assisting Black EME and QSE beneficiaries to increase their operation or financial capacity. At least 85% of labour costs should be paid to South African employees by service industry entities. All Rights Reserved - EY 2015 Pg 4

4 Our Services Current State Assessment This involves performing an independent assessment of the client s current status of their B-BBEE compliance and transformation efforts. The assessment will revolve around the business meeting the relevant scorecard targets and compliance with the B-BBEE Act. Future State Co-Development Using the results of the current state assessment and in conjunction with client senior management, develop guidelines and goals for the appropriate level of compliance with the relevant industry charters in line with the overall strategy of the business. The future state co-development is a joint effort between the EY team and client senior/ top management. This ensures that the business benefits from the in depth knowledge of the business possessed by senior/top management and the wealth of knowledge and experience possessed by EY around B-BBEE transactions. Policy Co-Development With the changing landscape of South African business, the inclusion of transformation and B-BBEE in the development of policies within business should not be underestimated. The EY team will assist client management and staff to develop/re-develop policies around enterprise and supplier development, employment equity, skills development and socio-economic development. The policy co-development service may extend to other areas of the business should the client request. Implementation Strategy (deliverable) Regardless of how brilliant and appropriate a strategy may be, without implementation the strategy is futile. For successful implementation of any strategy it is important to ensure that the correct resources are allocated to this critical stage of the project. EY will assist the client to identify the relevant projects, timescales and milestones for successful role out of its B-BBEE Strategy. We are able to assist with appropriate resources to ensure a successful roll out is achieved. Reporting and Monitoring Framework For successful strategy development, implementation and roll out of an appropriately designed reporting and monitoring framework is essential. EY will assist the client with the development of such a framework. Our services can be extended to include the supply of independent auditing of this framework thereby ensuring that objectivity exists within the process. Reporting formats, lines and timescales are discussed with client management to ensure that communication channels and deliverables are agreed on. Facilitator role for stakeholders In complex negotiations, it is important to include in the discussions an objective party that ensures the discussions remain focussed and for the best interests of the business. Our experienced facilitators act as the critical pivotal role in B-BBEE transaction negotiations and strategy development/implementation. Facilitators are able to operate at different levels within organisations thereby allowing clients the required flexibility in these negotiations and discussions. Merger & Acquisitions Our services include advising shareholders on the disposal of non-core businesses, acquisitions of strategic investments, management buyouts, capital raising exercises, cross-border transactions, identifying B-BBEE partners for corporates, identifying investment opportunities for B-BBEE groups & capital raising and structuring of B-BBEE transactions. Supplier Development Models For transformation efforts to be effective, it is imperative that B-BBEE extends to the supply chain. Through a collaborative approach, EY assists clients with developing models for its suppliers in their efforts to embrace B-BBEE within the supply of products and services. Verification Services The significance for most of our clients is that we are now in a position to issue a verified B-BBEE certificate together with the audited Annual Financial Statements which would be independently verified by our Assurance Division. We offer them a value added service, as we already possess an in-depth knowledge of their structure and operations. All Rights Reserved - EY 2015 Pg 6

5 A team you can trust Your EY project team Why this is the right team for you... Our team has deep insights into the B-BBEE space. The team has worked with a number of clients in South Africa on many occasions. Sugan Palanee will have the overall project responsibility. He brings extensive B-BBEE knowledge, insight and a wealth of experience to the team. Future clients can be assured of a realistic view of their B-BBEE status, backed by a certificate signed off by a leading assurance provider. This instils confidence in both the customer and seller of services. We are also committed to furthering the intention and spirit of the legislation, by ensuring that all certificates issued are in accordance with the letter of the law and by providing an entity with an accurate view of their present B-BBEE status. He is a senior partner in the firm and serves on the Africa executive. You can Lead Partner Sugan Palanee B-BBEE Advisory team All Rights Reserved - EY 2015 Pg 8

6 Our Team Project lead - B-BBEE Strategic Services Sugan Palanee Client Engagement Partner Markets Leader - Africa Tel: Fax: Sugan.palanee@za.ey.com Background Sugan Palanee is a Chartered Accountant (South Africa) and the Markets Leader, Africa leading teams across Africa at EY. He is a member of the EY Africa Executive team and the Europe, Middle East, India & Africa (EMEIA) Leadership team. Professional Qualifications: BCompt (Hons), CA (SA) Institute of Internal Auditors member Skills He has extensive experience in Advisory, BBBEE Strategy development and Internal Audit. He has experience in the private equity, oil & gas, real estate, retail & consumer products, technology, media & telecoms, financial services, rail, airline, healthcare, infrastructure development, energy,mining and government and public sectors. Ancillary Achievements: Chosen as a GLT (Global Leader for Tomorrow) at the World Economic Forum. Involved in strategies to take NEPAD forward in Africa Elected to sit on the Board of Kwa Zulu-Natal Education Quality Improvement Plan Seconded to EY, United States of America,Connecticut Was chosen to attend the Kelloggs Executive Leadership Program in Chicago, United States of America in 2009 Experience Sugan joined EY in 1991 and was admitted to Partnership in 2003 Sugan set up and currently leads the B-BBEE Strategic Services Division nationally - His clients include a number of listed organisations and various multinationals. Sugan was promoted to the Head of Markets for the Africa Sub-Area and serves on the African Executive of EY. Sugan acts as an advisor to the Department of Trade and Industry on B-BBEE issues - he was requested to present to the B-BBEE Advisory Council s second sitting. Served on SAICA s Ethics Committee, Disciplinary Committee, KZN Council. Appointed by the President to the Income Tax Court of South Africa. Served on the Audit Committees of umsekeli and the Commission for Gender Equality. Served on the National and Provincial Board of the Association for the Advancement of Black Accountants ABASA). Advised Transnet on the B-BBEE compliance initiatives, assisted with mock audits and data integrity reviews in preparation for independent assessments by a B-BBEE verification agency. Provided strategic support in accordance with compliance to the B-BBEE legislation to Sunedison, Infosys, American Tower Corporation and a host of other multinationals seeking to establish business in South Africa. Provided strategic support to the BATSA B-BBEE management team during the development of the internal B-BBEE compliance strategies. Served as account leader on the Unilever, Tata Group and Neotel accounts. Advised Unilever on the B-BBEE compliance initiatives, assisted with mock audits and data integrity reviews in preparation for independent assessments by a B-BBEE verification agency. Assisted the Edcon Group with the issue of a B-BBEE certificate and provided feedback on improvement areas thereto. All Rights Reserved - EY 2015 Pg 10

7 B-BBEE team Rubeshne Gobardan Associate Director Tel: Background Rubeshne Gobardan is a Chartered Accountant (South Africa) and works within the BBBEE Strategic Services team in KZN. She re-joined the Durban office of Ernst & Young in January Skills Rubeshne has extensive experience in Advisory and BBBEE Strategy development within numerous industries. Skills include: Current state assessment; Strategy co-development; Implementation strategies; Policy review and development; Supplier development compliance; Skills development strategic compliance; and Workshops and facilitated sessions. Experience Advised Transnet on B-BBEE compliance initiatives, assisted with mock audits and data integrity reviews in preparation for independent assessments by a B-BBEE verification agency. Provided strategic support in accordance with compliance to the B-BBEE legislation to Sunedison whilst establishing business in South Africa. Assisting Infosys with strategic support specific to compliance with the B-BBEE legislation. Advised American Tower Corporation with the B-BBEE compliance strategy specific to the establishment of an operation in South Africa. Provided strategic support to the BATSA B-BBEE management team during the development of the internal B-BBEE compliance strategies. Advised Unilever on B-BBEE compliance initiatives, assisted with mock audits and data integrity reviews in preparation for independent assessments by a B-BBEE verification agency Assisted the Edcon Group with the issue of a B-BBEE certificates and provided feedback on improvement areas thereto. Provided strategic guidance to Fujifilm to assist in the understanding of options available to multinationals when addressing the ownership pillar of the B-BBEE scorecard. All Rights Reserved - EY 2015 Pg 12

8 B-BBEE team Background Krish Lutchmanan Senior Manager Tel: Krish Lutchmanan joined EY in January 2004 He gained experienced in the Internal audit, Special project teams and thereafter moved into the B-BBEE Strategic Services team. Skills Krish has extensive experience in Advisory and BBBEE Strategy development within numerous industries. Skills include: Current state assessment; Strategy co-development; Implementation strategies; Policy review and development; Supplier development compliance; Skills development strategic compliance; and Workshops and facilitated sessions. Experience Advised Unilever on B-BBEE compliance initiatives, assisted with mock audits and data integrity reviews in preparation for independent assessments by a B-BBEE verification agency Advised Transnet on B-BBEE compliance initiatives, assisted with mock audits and data integrity reviews in preparation for independent assessments by a B-BBEE verification agency. Provided strategic support in accordance with compliance to the B-BBEE legislation to Sunedison whilst establishing business in South Africa. Assisted Cisco with support specific to their B-BBEE compliance initiatives. Assisted the Edcon Group with the issue of a B-BBEE certificate and provided feedback on improvement areas thereto. Provided strategic guidance to Fujifilm to assist in the understanding of options available to multinationals when addressing the ownership pillar of the B-BBEE scorecard. Advised American Tower Corporation with the B-BBEE compliance strategy specific to the establishment of an operation in South Africa. Provided strategic support to the BATSA B-BBEE management team during the development of the internal B-BBEE compliance strategies. All Rights Reserved - EY 2015 Pg 14

9 About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com EYGM Limited. All Rights Reserved Creative Services ref Artwork by Upton. ED no. none This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. ey.com