A BEE affidavit, also known as a Broad-Based Black Economic Empowerment affidavit, is a legal testament of a business’s compliance with BEE regulations in South Africa. A B-BBEE affidavit can be notarised by a commissioner of oaths. The BEE affidavit is essential for businesses that want to participate in government tenders, contracts, or transactions that require BEE compliance.
If you don’t want to go through all the hard work of getting a BEE Certificate yourself, speak to a professional BEE Consultant.
Purpose of a BEE Affidavit
The BEE affidavit is a simpler alternative for businesses with a total annual turnover of R10 million or less (depending on Industry Sector ), and it simplifies the process of obtaining a BEE certificate. These businesses may be exempt from undergoing a full BEE verification process and can use the BEE affidavit as proof of their BEE compliance status. Obtaining a BEE certificate enables small businesses to do the following:
- Businesses can participate in government tenders and contracts that require BEE compliance.
- They can demonstrate their commitment to transformation and empowerment in South Africa.
- Businesses can improve their competitiveness and access to business opportunities.
Key Elements of a BEE Affidavit
A BEE affidavit is a sworn statement confirming black ownership and basic BEE compliance. To ensure accuracy and compliance, the following key elements must be included in a BEE affidavit:
Black Ownership Levels
A BEE affidavit should clearly state the percentage of black ownership in the business. This includes specifying the unencumbered economic interest, voting rights, and the net value of shares held by black individuals. It is essential to provide accurate and detailed information regarding the ownership structure to demonstrate compliance with BEE regulations.
Turnover Information
Including the annual turnover of the business is crucial in determining the type of BEE certificate required. For businesses classified as Exempted Micro Enterprises and Qualifying Small Enterprises, whose turnover falls below R10 million (Depending on Industry Sector), this information is particularly important. The turnover figure helps in categorizing the business correctly and ensuring the appropriate BEE compliance level is applied.
Industry and Sector
A BEE affidavit should specify the industry and sector in which the business operates. Different sectors may have specific requirements or variations in the BEE affidavit format. Ensuring that the correct affidavit is used based on the industry helps in aligning the compliance documentation with sector-specific regulations and standards.
Financial Statements
A BEE affidavit should state which financial statements have been relied on, this cannot be older than 12 months. This can be done by annexing financial reports such as audited financial statements, management accounts, or any other financial information provided in the affidavit. Financial information is important to validate the business’s compliance with BEE regulations.
Black Ownership and Automatic B-BBEE Level
The contents of a BEE affidavit should reveal the black ownership percentage in the company as well as the B-BBEE Status level the business obtained. This information assists in ascertaining the BEE compliance as well as the B-BBEE level that the firm is eligible for depending on its ownership and other forms of empowerment.
Date of Financial Year-End
The BEE affidavit does require the date of the financial year-end to be added as well. Reporting the BEE compliance information for the financial period ensures clarity and accuracy in reporting the financial period for which the BEE compliance information is being disclosed. This date is useful in bringing the affidavit in line with the most appropriate financial reporting season.
Signatures and Commission
The BEE affidavit needs to be signed in its entirety by the respective director, member, or owner of the business. The affidavit is expected to be commissioned on the very same day by a commissioner of oaths. A signature and commission validate the information on the affidavit, making it an official document.
Verification and Validation
The BEE affidavit must be completed by an official commissioner of oaths before it can be verified and validated for compliance. Exempted Micro Enterprises should obtain this verification, as this will practically be seen as their B-BBEE certificate and will be irrevocably accepted as correct and not contradicting with the BEE actuary. Verification Contributes to Affidavit Credibility: An affidavit with verification enhances the credibility in the matter of business and governmental operations.
Key Considerations
There are certain things that need to be considered when it comes to BEE affidavits;
Accuracy and Honesty
Information provided in the BEE affidavit should be accurate and truthful. If you submit false or misleading information, you can attract legal consequences and damage the business’s overall image.
Validity Period
A BEE affidavit is valid for 12 months from the date of issue. Businesses are required to ensure that their affidavit is updated and should renew it before it expires. This helps to maintain their BEE compliance status.
Continuous Improvement
A BEE affidavit is one of the easiest methods of ensuring that a small business complies with the BEE Act. Thus, it is crucial to establish that the objective is to build up from what has been achieved and transition to the next higher BEE levels. Managers should continually focus on business and organizational transformations as well as economic goals while nurturing their employees and surrounding societies.
Conclusion
A BEE affidavit is a key component for small businesses in South Africa when it comes to BEE. A BEE affidavit is generally free, however, the SANAS accredited BEE certificate prices range from R8,000 to R100,000. Businesses seeking to apply for a BEE affidavit should consult with qualified BEE specialists like those at Pioneer Compliance Consultants. They will save you from the complex process of acquiring a BEE affidavit, ensuring your business’s compliance with the BEE regulations.