BEE Blog 6

Designation of Enterprises

The Revised Codes


In terms of the Revised Codes, enterprises are classified into three categories depending on their annual turnover. 

The three categories are:


1. Turnover of below R10 million: Exempted Micro Enterprise (EME); 

2. Turnover of R10 million – R50 million: Qualifying Small Enterprise (QSE); and 

3. Turnover in excess of R50 million: Generic Enterprises.


Key Differences


The key differences between the various Designations of Enterprises are:


1. BEE Legislation imposes varying levels of compliance obligations on the different designations of enterprises.  EMEs are subject to the lowest level of compliance obligations with all EMEs being automatically awarded at least a Level 4 BEE Rating.

2. QSEs are subject to their own QSE Scorecard that contains the same elements as the Generic Scorecard.  Notwithstanding the legislatures attempt to make compliance by QSEs easier than for Generic enterprises the removal of certain bonus points in the QSE Scorecard in fact makes the achievement of a reasonable BEE Rating under the QSE Scorecard quite challenging.

3. QSEs have to comply with two Priority Elements.  Ownership is compulsory and the QSE can choose which of the other two Priority Elements to comply with.  Thus, in order to avoid being discounted an empowerment level, a QSE must achieve the sub-minimum Ownership and either Skills Development or Enterprise and Supplier Development score.

4. Notwithstanding the above, a 100% Black-owned EME or QSE is not required to comply with the rest of the scorecard and is automatically recognised as a Level 1 contributor.  Similarly, a Majority Black-Owned EME or QSE is automatically recognised as a Level 2 contributor and is also exempt from compliance with the other elements of the scorecard.

5. Start-up enterprises are always EMEs in their first year of operation.  However, should an EME wish to tender for individual transactions larger than R10 million, it must be verified as a QSE.

6. Generic enterprises are subject to measurement in terms of all five elements of the Generic Scorecard.