A Level 1 B-BBEE status is the highest recognition level, and it is reached in two very different ways depending on the size of the business. For a small business it can follow automatically from ownership; for a larger one it takes years of deliberate work.
This page sets out both routes and what each actually requires.
Business Requirements at a Glance
What reaching the highest level generally involves.
- For an Exempted Micro Enterprise: a deemed level based on black ownership, evidenced by a sworn affidavit
- For a Qualifying Small Enterprise: an affidavit where black ownership meets the threshold, or a verified scorecard
- For a larger entity: a verified scorecard achieving the points the Codes require for the highest level
- Meeting the sub-minimum requirements on the priority elements
- Compliance with any sector code applying to your industry
- Verification by a SANAS-accredited agency, where verification is required
- Supporting records for every claim made
- Genuine ownership and control — not a paper arrangement
Registration and Legal Requirements
B-BBEE is governed by the Broad-Based Black Economic Empowerment Act 53 of 2003 and the Codes of Good Practice issued under it, together with sector codes where a sector code applies. The B-BBEE Commission oversees compliance and the Department of Trade, Industry and Competition administers the framework.
Confirm the current thresholds, scorecard weightings and requirements with the Department of Trade, Industry and Competition, the B-BBEE Commission or a SANAS-accredited verification agency. The Codes and sector codes are amended, and third-party summaries go out of date quickly.
For the smallest businesses, ownership does it. An Exempted Micro Enterprise with black ownership at or above the prescribed level is generally deemed to be at the highest recognition level, evidenced by a sworn affidavit. That is the simplest route and it costs nothing.
For larger entities it is a scorecard. The highest level requires a points total set in the Codes, achieved across ownership, management control, skills development, enterprise and supplier development, and socio-economic development.
Priority elements carry sub-minimums. Where the Codes designate elements as priority, failing to meet the sub-minimum on one results in a discounting of the overall level. That means a business can score well overall and still drop a level. Confirm which elements are priority and what the sub-minimums are.
The elements that move the score are expensive. Skills development spend, enterprise and supplier development contributions, and procurement decisions all cost real money and take a financial year to reflect. Reaching a high level is a budget decision, not an administrative one.
Fronting is a criminal offence. Misrepresenting ownership, control or participation to obtain or improve a B-BBEE status is prohibited under the B-BBEE Act, and it carries serious consequences for everyone involved — the entity, its directors and the person whose participation is misrepresented. Arrangements where a black shareholder holds a nominal interest without real economic benefit or control are exactly what the Act targets.
Documents and Ownership Information Required
What is generally required.
- CIPC registration documents and a current company profile
- A shareholders’ or members’ register with identity details
- Beneficial ownership information as filed with the CIPC
- Certified ID copies for directors, members and shareholders
- Annual financial statements or, for a small entity, a signed turnover confirmation
- A SARS tax compliance status PIN
- Payroll records and employment equity data, where the scorecard requires them
- Records of skills development, procurement and enterprise development spend, where applicable
Tax, Licence and Compliance Requirements
Plan a financial year ahead. Skills development spend, supplier development and procurement all measure over a period, and decisions taken in the last quarter barely register. Businesses that improve their level plan the year’s spend against the scorecard at the start of it.
Procurement is often the largest lever for a larger entity, because buying from suppliers with good levels scores directly. That means asking suppliers for their certificates and, where two suppliers are otherwise equal, choosing the one that scores.
Enterprise and supplier development is a genuine programme, not a donation. It involves supporting qualifying beneficiary businesses, and the Codes set out what counts. Doing it properly produces both points and real suppliers.
Skills development spend must be evidenced and aligned to the requirements in the Codes, including on learnerships and workplace training. Records are what makes it count.
Ownership must be genuine. Real economic interest, real voting rights and real participation. An arrangement without them is fronting, and the consequences reach the directors personally.
Keep records for every claim and expect them to be tested. Unevidenced claims are not counted, and that is the most common reason a level is lower than expected.
Process, Deadlines and Ongoing Obligations
Establish your category first, since for a small business the route may be an affidavit rather than a programme.
For a larger entity, engage a SANAS-accredited verification agency early and use a pre-assessment to see where the score sits before committing to a strategy. That is a far better basis than assuming.
Budget the spend against the scorecard at the start of the financial year, and track it through the year rather than reconstructing it at verification.
Never take a shortcut. Ownership arrangements without genuine economic benefit and control are fronting, they are investigated by the B-BBEE Commission, and the consequences include criminal liability and disqualification from doing business with the state.
- Establish your category — a small business may qualify by ownership alone
- Use the sworn affidavit route where it applies
- Confirm which elements are priority and what the sub-minimums are
- Plan the scorecard spend at the start of the financial year
- Use procurement as a lever — ask suppliers for their certificates
- Treat enterprise and supplier development as a real programme
- Evidence every skills development claim
- Use a pre-assessment before committing to a strategy
- Ensure ownership carries genuine economic interest and control
- Never enter a fronting arrangement — it is criminal
Frequently Asked Questions
How does a small business reach the highest level?
Generally through black ownership at or above the prescribed level, evidenced by a sworn affidavit as an Exempted Micro Enterprise. No verification or programme is required.
Why did we score well but drop a level?
Probably a priority element sub-minimum. Where the Codes designate priority elements, failing a sub-minimum discounts the overall level regardless of the total points.
What moves the score most for a larger entity?
Procurement from suppliers with good levels, and genuine enterprise and supplier development. Both cost real money and take a financial year to reflect.
Can we structure ownership to reach a level?
Only genuinely. Arrangements without real economic interest and control are fronting, which is criminal and is investigated by the B-BBEE Commission.
Recognition levels, points thresholds, priority elements, sub-minimums and sector codes are set in the B-BBEE Act and the Codes of Good Practice and are amended. Confirm current requirements with the Department of Trade, Industry and Competition or a SANAS-accredited agency.