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Increase your B-BBEE score through a joint venture

Article written by Lezé Jonker (BEE and Labour Legal Advisor at SEESA Port Elizabeth)

A Joint Venture (JV) is a business agreement between two or more entities whereby they agree to join their resources for the purpose to achieve a specific business goal. A JV is its own entity, separate and apart from the participants to the agreement. It will require its own Broad-Based Black Economic Empowerment (B-BBEE) certificate when responding to
tenders and entering into contracts that require a B-BBEE certificate.

This means you will have to obtain a new B-BBEE certificate for the Joint Venture, which combines each participant’s B-BBEE status level.

The following documents will be required to do a rating of the JV:

  • B-BBEE certificates of all the parties entering into the JV;
  • JV agreement.

The turnovers of all the parties in the JV will be joined in order to determine which scorecard will be applicable to the JV. This will determine whether the JV will be rated as a QSE (Qualifying Small Enterprise) or a Generic Entity. Therefore, should two entities enter into an unincorporated JV, their respective scores will be weighted according to their proportionate
share in the JV and added together for a combined score of 100.

The following scores will be allocated for unincorporated JV’s, where the measured entities are:

  • Level 1:
    100% Black Owned Exempted Micro Enterprise (EME) or Qualifying Small Enterprise (QSE) = 100 points;
  • Level 2:
    51% Black Owned EME or QSE = 95 points;
  • Level 4:
    Less than 51% Black Owned EME = 85 points;
  • Generic Enterprises and QSE’s which are less than 51% Black Owned = Current score on B-BBEE certificate.

This scoring indirectly allows Generic Enterprises and QSE’s, which have less than 51% Black Ownership, to use the score on their current B-BBEE certificates for purposes of tendering under an unincorporated JV. The JV B-BBEE certificate must tender specific; it must contain the name and number of the tender that you are responding to. A JV B-BBEE certificate is valid for 12 months and only applicable to a specific project.

JV’s are, therefore, a great way to increase B-BBEE scores by joining forces with BlackOwned companies and increasing your ownership. When you have the right JV partner with a good B-BBEE score it will ensure that you achieve a much higher score, on the Preferential Procurement element rather than going into the tender alone.

Contact your nearest SEESA office to find out how we can assist you in obtaining a Joint Venture B-BBEE certificate for your entity and help you increase your B-BBEE scores.

About the Author:

Lezé Jonker started her career at SEESA in 2017 and is currently a BEE and Labour Legal Advisor at the SEESA Port Elizabeth branch. She graduated with an LLB degree from UNISA.

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