RSM South Africa

Determining the validity of a sworn affidavit for B-BBEE compliance

On 3 September 2018, the Broad-Based Black Economic Empowerment Commission issued a Practice Guide, which clarified the Broad-Based Black Economic Empowerment (B-BBEE) requirements for Exempted Micro Enterprises (EMEs) and Qualifying Small Enterprises (QSEs).  EMEs are entities with a turnover of less than R10 million, and QSEs are black controlled and owned entities with turnover between R10 million and R50 million under the Amended Generic Codes. These entities only have to complete a sworn affidavit to evidence their B-BBEE compliance status. This mechanism was specifically introduced to reduce or lessen the burden and the cost of compliance on small and medium entities. It is important to note that specific B-BBEE Sector Codes may have different turnover thresholds for EMEs and QSEs. There are also exceptional cases, for example in the Transport Industry, where EMEs have a choice of obtaining accounting letters or being verified by a SANAS accredited verification agency. This is because the Transport Sector Code has not aligned to the Amended Generic Codes.

The sworn affidavit mechanism has led to the mushrooming of fraudulent B-BBEE certificates, as affidavits are easier to produce as a form of proof of an entity’s B-BBEE compliance status. Measured Entities that are subject to verification, require proof from their suppliers and beneficiaries of their B-BBEE status. This proof often takes the form of an affidavit.  Measured Entities need to authenticate the information on the affidavits they receive. The lack of knowledge of how to do this could affect the Measured Entity’s scorecard, particularly on the procurement, enterprise development and supplier development elements of the scorecard, if they use a supplier or contribute to a beneficiary whose affidavit is incorrect or invalid. The Measured Entity would be at risk of losing the supplier or enterprise development points due to invalid affidavits.

In order to check and ensure that the affidavits are above board, companies can request their suppliers or beneficiaries to provide relevant information to support their declarations made on the affidavits. Examples of documentation that could be requested include, amongst others, share registers, share certificates and documents from the Companies and Intellectual Properties Commission (CIPC). The B-BBEE Commission Practice Guide also specifies the following key information in determining the validity of a sworn affidavit:

  • Name/s of deponent as they appear in the identity document and the identity number
  • Designation of the deponent as either the director, owner or member must be indicated in order to know that person is duly authorised to depose of an affidavit
  • Name of enterprise as per enterprise registration documents issued by the CIPC, where applicable, and enterprise business address.
  • Percentage black ownership, black female ownership and whether they fall within a designated group.
  • Indicate total revenue for the year under review and whether it is based on audited financial statements or management accounts.
  • Financial year-end as per the enterprise’s registration documents, which was used to determine the total revenue.
  • B-BBEE status level. An enterprise can only have one status level.
  • Date deponent signed and date of Commissioner of Oath must be the same.
  • Commissioner of Oath cannot be an employee or ex officio of the enterprise because, a person cannot by law, commission a sworn affidavit in which they have an interest.

EMEs and black controlled and owned QSEs can use the affidavit templates that are available on the Department of Trade and Industry website at no cost.

Edson Munetsi

B-BBEE Consultant, Johannesburg


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