Small Business Resources: What is an Exempted Micro-Enterprise?

29 Mar Small Business Resources: What is an Exempted Micro-Enterprise?

The South African economy needs emerging businesses, or start-ups, to grow in order to facilitate economic transformation and create employment. To this end, the revised Broad-based Black Economic Empowerment (B-BBEE) codes were issued by the Department of Trade and Industry (DTI)) on the 1st of May 2015 to level the playing field for small and emerging businesses competing against bigger entities. Qualifying companies can now take advantage of Exempt Micro-Enterprises (EMEs) status. What is an EME, and what qualifies?

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Annual turnover

One of the qualifying factors is a company’s annual turnover. If your business turns over less than R10 million a year, it’s categorised as an EME, and is automatically recognised as an empowering supplier. Says the DTI, BEE certificates no longer need to be issued to qualifying EMEs –all you have to do to secure EME status, is prepare a sworn affidavit confirming your company’s annual turnover and percentage of black ownership. Download a BEE affidavit here.

The BBBEE scorecard

Larger entities need to comply with all five elements of the Generic BEE scorecard so as not to lose points on their overall BEE score – these are management control, enterprise and supplier development, ownership, skills development, and socio-economic development. A QSE or Qualifying Small Enterprises (with a turnover of more than R10 million but less than R50 million) needs to comply with at least two of these elements – ownership, enterprise and supplier development, or skills development. There is more good news for EMEs…

  • Companies that are 100% black owned automatically qualify as a level 1 BEE contributor
  • Companies with over 50% black ownership qualify as a level 2 BEE contributor.

 

More business and a competitive advantage

An Exempted Micro-Enterprise has the opportunity to procure more business from medium and larger organisations with an annual turnover of more than R50 Million. These larger entities can improve their BEE scorecard and gain incentives by supporting and purchasing from EMEs, QSEs, and 51% black owned companies. This gives your company a competitive advantage over other smaller companies that have not pursued being recognised as an Exempt Micro-Enterprise.

Need help with BBBEE?

There’s no need to stress about BEE verification! SAB&T has been involved in the BEE environment since the inception of the Draft Codes of Good Practice, and has a wealth of experience when it comes to assisting with BBBEE verifications, consulting, training, gap-analysis, scenario planning, and outsourced solutions. For more information, contact one of our branches today!

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