B-BBEE Verification Process

You’ve put in the hard work—now it’s time to take the next steps.

Start-up companies or those companies with an annual turnover below R10 million (Exempt Micro Enterprises (EME’s), may complete a Broad-Based Black Economic Empowerment (B-BBEE) Affidavit to establish their B-BBEE level of compliance. Companies that are at least 51% Black South African owned and controlled automatically qualify as Level 2 contributors, while those with 100% Black South African ownership will achieve Level 1 contributor status. If the Black South African ownership falls below 51%, the company is assigned a Level 4 contributor status.

For companies with an annual revenue between R10 million and R50 million, a B-BBEE affidavit is also applicable if they have more than 51% Black South African ownership (Level 2) or have 100% Black South African ownership (Level 1). These entities are classified as Qualifying Small Enterprises (QSEs). It is crucial to complete affidavits accurately and thoroughly to ensure validity (See: determining the validity of a sworn affidavit).

Entities that do not qualify for an affidavit, such as QSEs with less than 51% Black South African ownership or those with revenue above R50 million (Generic Enterprises), must undergo a comprehensive B-BBEE verification to confirm their B-BBEE level of compliance. These entities will be evaluated against the five elements of the B-BBEE scorecard and are required to implement various B-BBEE initiatives to obtain the necessary points for their desired compliance level. The five elements are:

Ownership (Priority Element)
Management Control
Skills Development (Priority Element)
Enterprise and Supplier Development (Priority Element)

Preferential Procurement
Enterprise Development
Supplier Development

Socio-Economic Development

To secure a valid B-BBEE Certificate, companies must engage with a South African National Accreditation System (SANAS) accredited Rating Agency to perform their B-BBEE verification. Currently, 87 accredited Rating Agencies (Accredited Rating Agencies) in South Africa are authorised to perform B-BBEE verifications and issue SANAS accredited B-BBEE Certificates. Choosing the right agency is vital and demands careful consideration, as agency timelines, methodologies, and costs can differ significantly. All agencies are subject to annual SANAS audits, so you must confirm that your selected agency maintains its SANAS accreditation and adheres to the SANAS R47-03 framework prior to engaging with them.

Be prepared, the B-BBEE audit process can take up to three months from the submission of the Request for Verification to the certificate issuance. However, timelines may vary based on the Rating Agency chosen. Therefore, familiarise yourself with the audit timelines to ensure sufficient time for completion.

Once you select an agency, the B-BBEE champion of the Measured Entity must complete a Request for Verification to receive a quote for the upcoming B-BBEE audit. A Special Power of Attorney will be necessary if a third party, such as a B-BBEE consultant, is involved in the facilitation of the audit process. Upon receipt of the Request for Verification, the B-BBEE Rating Agency will provide a quotation for the audit and the issuing of the B-BBEE certificate. Once the quote is signed, the Measured Entity is formally engaged with the Rating Agency, and a Letter of Engagement will follow. The Rating Agency will clarify the anticipated timelines for the audit and when you can expect the certificate.

The Rating Agency will provide a Data Capture Sheet, or Lead Sheet, which the Measured Entity must complete with relevant information for each element that will be audited. Ownership and Management Control will be assessed as at the date of the onsite visit, while Skills Development, Enterprise and Supplier Development, and Socio-Economic Development will be evaluated based on the most recent financial period to have concluded.

After completing the Lead Sheet, the Rating Agency will select samples for each element. Sampling is often needed because it is impossible to review all the B-BBEE claims particularly for large entities. If the sample fails, the Rating Agency may impose a negative error rating, deducting points on that element to reflect inaccuracies in the claim submissions. Be aware that additional samples may be required to satisfy the Rating Agency’s sampling methodology, which can vary by agency.

The Measured Entity will prepare a pack of evidence to support the samples selected by the Rating Agency. This will include certain core documents as well as the documents to support the sampled items per element. Once the pack of evidence has been prepared it is submitted to the Rating Agency for review. It is normally advantageous to submit a completed file prior to onsite date in order to ensure an efficient audit. The assigned analyst will review the information and may request additional information should they need to clarify any information for the claimed initiatives.

An onsite visit will be conducted by the Rating Agency once they have obtained the initial evidentiary file. The onsite will occur at the head offices, and potentially national offices (multi-site audit), of the Measured Entity. The onsite agenda will be structured by the Rating Agency according to their policies and procedures. They may request to review original files at site, as well as conduct interviews with shareholders, beneficiaries, employees, and learners. Further evidence may be provided during the onsite should it not have been submitted previously. Many Rating Agencies also allow for a short window period post onsite to submit the outstanding documents or information. However, should information not be submitted, the analyst will remove the points for that initiative or element and proceed to conclude the file.

The Analyst will conclude his/her review of the audit file and submit it to a Technical Signatory (“TS”) for review. The TS will review the sampled initiatives on each element and ensure that all evidence is available on file to support the claims. The TS may request additional information which must be provided to clear any queries raised by the TS. Once all queries and required information have been cleared and submitted, a preliminary B-BBEE report and certificate will be issued to the Measured Entity for review. The Measured Entity is given a timeframe (Rating Agency specific) to object to the preliminary report issued, if they disagree with the Rating Agency. If there is no objection to the preliminary report, or if the rating agency has received no comments from the measured entity within the required time frame , the TS will issue and sign the final B-BBEE Certificate with the points and level of compliance confirmed.
The issued B-BBEE Certificate will be valid for 1 year, and will need to be re-verified annually shortly prior to expiration.

Need help with B-BBEE? Our tailored solutions will help you navigate compliance, optimise your scorecard and drive meaningful transformation. Partner with us for strategic insights and seamless verification preparation.

Chanelle Zeeman

Assistant Manager: B-BBEE, Johannesburg