The Property Practitioners Act and BEE
Author CL Tonkin

The Property Practitioners Act and BEE

The Property Practitioners Act of 2019 (“PPA”) was signed into law by the President on 19 September 2019, with a recently defined commencement date of 01 February 2022. The PPA has as one of its main objectives the transformation of the property sector.

Section 50 of the Act states that a fidelity fund certificate may not be issued to a person or entity that is not in possession of a valid BEE certificate.

Two previous articles dealing with the B-BBEE Sector Code for the Property Sector were published. This may be found via this link:?https://beeratings.com/category/property-sector/

To obtain a BEE certificate is important to determine in which category your business falls.

The Amended Property Sector BEE Code of 2017 (“Property BEE Code”) determines the following categories for real estate agencies:

EME (below R2,5 million turnover). An EME is exempt from BEE which means that these entities only have to do an affidavit to obtain a level 4 BEE status. These entities do not have to go through a formal BEE audit or verification process.

QSE (R2,5 million – R35 million turnover). A QSE needs to go through a BEE audit and will need to have its status verified against scorecard verifying elements such as ownership, management, employment equity, skills development and others. QSE entities have lower targets and less stringent requirements compared to Generic entities. QSE entities which are 51% black owned will be exempt from going through a full BEE audit and can receive a level 2 BEE level via an affidavit.

Generic (R35 million and above turnover). A generic company has to undertake a full BEE audit with comparatively high targets for each of the elements.

ROLE OF COUNCIL

The Property Sector Charter Council (“the Charter Council”) represents all stakeholders in the sector. The mandate of the Charter Council includes:

To constitute an executive structure with adequate capacity;

To oversee and monitor the implementation of the sector code;

To receive, consider and approve annual enterprise B-BBEE reports;

To issue guidance notes on the interpretation and application of the sector code; and

To prepare annual reports on progress in implementing the sector code.

The council may offer support to the industry where conflicting opinions between regulators exist.

MONITORING AND REPORTING

Measured entities within the property sector will be encouraged to contribute towards funding the Charter Council and this will be recognised as Enterprise Development or Supplier Development contribution.

Each enterprise will submit a B-BBEE report annually to the Charter Council. The report, must contain the B-BBEE certificate and enterprise’s scorecard, verified by an accredited BEE verification agency, and other information may be requested from time to time by the Charter Council.

The first annual report will be for the enterprise’s first full financial year after the effective date of the code and must be submitted to the sector charter council within two months after the request from the Charter Council office.

Once the sector code is gazetted, it will be binding and enforceable with immediate effect and the verification certificates issued before the gazetting of the sector code will remain valid for 12 months.

The Charter Council will comprehensively review progress on the implementation of the sector code after five (5) years from the effective date of this sector code or at the review of the Codes of Good Practice – which ever one comes first.

All verification agencies must submit Property Sector B-BBEE certificate and scorecard report within 30 days of issue at the following email address:[email protected]

As with other B-BBEE Sector Codes, the Property Sector Code requires compliance with priority elements for QSE and Generic (large) Enterprises.

The Priority Elements are as follows:

Ownership:

The sub-minimum requirement for Ownership is 40% of the Net Value points based on the property owning company time based graduation factor.

Skills Development:

The sub-minimum requirement for Skills Development is 40% of the total weighting points for Skills Development excluding bonus points.

Enterprise and Supplier Development:

The sub-minimum requirement for Enterprise and Supplier Development is 40% for each of the three weighting points excluding bonus points, within the Enterprise and Supplier Development element, namely Preferential Procurement; Supplier Development and Enterprise Development.

Non-compliance with the 40% sub-minimum requirements of any of the applicable priority elements, will result in the following outcomes for both Large Enterprises and Qualifying Small Enterprises:

The discounted level that the Measured Entity achieved because of non-compliance with the 40% sub-minimum requirements will be recognised by the Verification Professional (“the Recognition Level”); based on the prior statement, the Measured Entity’s B-BBEE status level will be discounted by one level down.

The requirement to submit data to the Department of Labour under the Employment Equity Act 55 of 1998 as amended from time to time is only applicable to ‘designated employers’ who employ 50 or more employees or are above the threshold as gazetted in the Amendments to the Employment Equity Act.

Transformation is not achieved with “quick fix” solutions. Businesses must ensure that their strategies include transformation such that it is implemented with meaningful and genuine outcomes so as to create a sustainable business venture for all shareholders, employees and clients.

Further articles dealing with the priority elements will be published.

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