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Real Estate Business Owners South Africa REBOSA AGM 29 June 2015

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CONTENT Understanding transformation BBBEE Act & Sector Codes Application of current transformation and BBBEE Revised Codes of Good practice Changes to the Codes and implication to PSC Amendment Bill and Verification process Residential Industry Scorecard

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Transformation is a mechanism by government using Broad based Economic empowerment to enable the participation of the previously marginalised in the main stream economy! UNDERSTANDING TRANSFORMATION

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WHY IS TRANSFORMATION NECESSARY? SA was forced to take steps to deal with its past in order to attempt to redress the inequalities in all spheres of life cause by the previous system of apartheid One of these steps was the development of a strategy which would achieve economic transformation- to address inequalities Transformation is a pragmatic growth strategy that aims to realise the countrys full economic potential by ensuring all citizen can participate in the mainstream of the economy in a sustainable manner. All citizen means Its people and their enterprises

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SA DEMOGRAPHIC STATISTICS

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SA POPULATION: GENDER SPLITS (2012)

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EXPECTED RESULTS OF TRANSFORMATION BBBEE strategy emphasis: Growth Development Well implemented BBBEE sustainability Profitability Growth Global competitiveness Innovativeness

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LEGAL AND COMMERCIAL STATUS B-BBEE and Sector Codes do not impose legal binding obligation of any company to comply; BUT B-BBEE is an important fact to be taken into account by any company conducting business in SA. B-BBEE is an important consideration to successfully tender for Government and State Owned Entities contracts or in some instances to obtaining government licence and in Private Public Partnership (PPP).

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WHO IS THE CUSTODIAN OF TRANSFORMATION The DTI (Department Trade and Investment) is the custodian of transformation/Broad Based Black Economic Empowerment (B- BBEE) The DTIs mandate is to increase Trade and Investment in the country in order to allow the economy to grow The DTI has four Mission statements of how they will achieve their mandate and one of them is : Grow the economy through Inclusive Participation There are a number of tools to drive Inclusive Participation and one of them Broad Based Black Economic Empowerment (B-BBEE) Women Empowerment Programmes People with Disability Programme

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Ownership Preferential Procurement Enterprise Development Employment Equity Skill Development Management Control SED BBBEE AS A TOOL OF TRANSFORMATION

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BBBEE use 7 elements to drive transformation Ownership Management Control Employment Equity Skill Development Preferential Procurement Enterprise Development Socio-Economic Development Plus Sector Code additional element

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UNDERSTANDING TRANSFORMATION EQUITABLE ECONOMIC OPPORTUNITIES Ownership equity Management control THE OPPORTUNITY BARRIER Preferential procurement Enterprise development THE BUSINESS BARRIER Skills development THE SKILLS BARRIER Employment equity Socio Economic Development THE POVERTY BARRIER Mainstream economy upper class Majority are white Wealthy with economic choices Business owners Upper middle class & investors High income Positive net asset value Invest in shares Majority are white Entrepreneur middle class Self employed Owner managed businesses Small Medium & Micro Enterprises Majority are white The professional middle class Formal employment (Black Diamonds) School leavers/graduates Artisans/professionals Second economy The majority are black With no economic earning ability No technical or tertiary skills Dependant on grants (Unemployable) Subsistence on land produce

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BBBEE Act & SECTOR CODES

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Introduction The Broad-Based Black economic Empowerment Act 53 of 2003 (BBBEE Act) provides the legislative framework for broad based black economic empowerment in SA. The Generic Codes of Good Practice and Sector Codes are issued under the B-BBEE.

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BBBEE Sector Code What are Sector Codes Development of sector transformation strategy that uses the generic principles of BBBEE and accommodating specific nuances of your sector in order to make transformation more effective and meaningful. Why are sector Codes important The 7 elements of generic codes are critical and important but there are also other elements beyond that the country needs to transform Funding transformation Financial Sector Charter Access to connectivity ICT Charter Development in under-resourced area- Property Sector Charter

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BBBEE Sector Code 2009 Construction Sector Code Tourism Sector Code Forestry Sector Code Transport Sector Code 2011 Chartered Accountants Sector Codes 2012 ICT Sector Codes Property Sector Code AgriBEE Sector Codes 2013 Financial Sector Codes Sector Charter Section 12 MAC Sector Codes

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BBBEE Sector Code BBBEE Sector Codes Bought into being by the BBBEE Act, No.53 of 2003 They are anchored under the generic codes Establishment of Sector Codes needs to have as common factor Use same principles Use Same methodology Use Same calculations Use Same definitions What Sector Codes are at liberty to change are: Targets of the different elements Weighting of the different elements Adding a different/unique element/s

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APPLICATION OF CURRENT TRANSFORMATION AND BBBEE

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BBBEE as a toll of transformation Company threshold Large Entities Qualifying Small Enterprise (QSE) medium size entity Exempted Micro Enterprises (EME) Small entity OLD REVISED COGP LARGE ENTITIES R35M < QSE R5M-R35M EME