Qualifying Small Enterprise

Black Economic Empowerment Plan

As contemplated in section 11 (2) (c) of the

Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003)

ChemWash Manufacturing CC

A Close corporation duly registered in terms of

the Close Corporation Act with registration number:

CK 2005/108005/23

with main place of business:

7 Schenk Road

Pinetown

KwaZulu Natal

Introduction

The purpose of this document is to reflect the present situation of ChemWashManufacturing CCtrend over a specific period for the business to become BEE compliant.

On the date of compiling and accepting this Black Economic Empowerment Strategy (the BEE Plan), the business did not fall within the scope of any Sect oral Code. The business therefore falls within the scope of the Qualifying Small Business Scorecard as contemplated in the Code of Good Practice and the Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003). At the time of compiling and acceptance of this BEE Plan, targets had been set in the Draft Codes to the Act to be applied by those entities outside the scope of Sectoral Codes.

The business takes note of the contents of the Black Economic Empowerment Strategic Framework to develop Sectoral Codes for all major industries by the year 2008 and that the following industries have been identified as priority sectors to increase the number of black people who have ownership and control, namely:

  • agriculture and agro-processing
  • mining
  • minerals and metals beneficiation
  • clothing and textiles
  • automation and communication technology sector
  • chemicals
  • culture industries, including media, film, music and crafts, and
  • high-value added services.
  • automobiles and components

Whereas no sectoral charter has been accepted as a code of good practice with regard to the business, and in the absence of empowerment targets, the business hereby wishes to develop a BEE Plan of its own to indicate its willingness to be considered a BEE contributor.

The business is aware that this BEE Plan is subject to any Sectoral Charter that may be accepted as a code of good practice and that may be published in future or targets set in terms of the Generic scorecard or Qualifying Small Business Scorecard.

Interpretation

“BUSINESS” shall include:

the particular business to be assessed irrespective of the relevant business form (e.g. partnership, Close Corporation, etc.)

“the Act” means the Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003)

“BEE” – Broad Based Black Economic Empowerment

“BEE Commission” means the commission established in May 1998 under the auspices of the Black Business Council, entrusted with the objective of researching and reporting on BEE in South Africa

“Black-empowered enterprise” means an enterprise that is at least 25,1% black-owned and where there is substantial management control

“Black-owned enterprise” means an enterprise that is 50,1% black-owned and where there is substantial management control

“Black people” is a generic term for Africans, Coloreds and Asians (Indians) who are citizens of the Republic of South Africa

“ Broad based BEE” means the economic empowerment of all black people, including women, workers, youth, people with disabilities and people living in rural areas, through diverse but integrated socio-economic strategies

“code” means the Codes of Good Practice published by the Department of Trade and Industry specifying government’s approach in the measurement of BEE compliance

“control of enterprises and assets” means equity ownership where the relevant person assumes liability for risk and profit and has corresponding voting rights and economical interest

“contributor to BEE” means the level of contribution according to the relevant Broad Based Black Economic Empowerment scorecard, namely:

  • Level 1 Contributor 100 on relevant BBBEE Scorecard
  • Level 2 Contributor 85 but < 100 on relevant BBBEE Scorecard
  • Level 3 Contributor 75 but < 85 on relevant BBBEE Scorecard
  • Level 4 Contributor 65 but < 75 on relevant BBBEE Scorecard
  • Level 5 Contributor 55 but < 65 on relevant BBBEE Scorecard
  • Level 6 Contributor 45 but < 55 on relevant BBBEE Scorecard
  • Level 7 Contributor 40 but < 45 on relevant BBBEE Scorecard
  • Level 8 Contributor 30 but < 40 on relevant BBBEE Scorecard
  • Non-compliant Contributor < 30 on the relevant BBBEE Scorecard

“conversion factor” enables a business to reflect progress made against the specific black economic empowerment targets set by the enterprise

“employment equity” refers to the achievement of an equitable representation of black people in all occupations and at all levels of an enterprise over a period of time, including at an operational, professional and executive level

“enterprise development” refers to cumulative contributions made by a measured entity as a percentage of the earnings before tax and depreciation to designated entities with acceptable Black Economic Empowerment contributor status.

“fronting” means any practices or initiatives which are in contravention of or against the spirit of any law, provision, rule, procedure, process, system, policy, practice, directive, order or any other term or condition pertaining to black economic empowerment under the codes.

“human resource development” refers to the transfer of skills, generally, and advanced professional skills, in particular core and critical skills

“indirect empowerment” refers tomechanisms short of black ownership and control that serve the objectives of black economic empowerment

“ownership” means equity ownership where the relevant person assumes liability for risk and profit and has corresponding voting rights and economical interest

“preferential procurement” means the procurement of goods or services by the State and the private sector from an enterprise with a sufficient Broad Based Black Economic Empowerment status, i.e. a rating of 30% and above

“Superior Contributor” is a level one to four contributor

“Transformation charter” refers to the policy instruments, as developed by various industry sectors, which serve as a framework for promoting the empowerment of blacks in the South African economy as referred to in section 12 of the Act

Reference to any specific year shall be deemed to be 31 December of that year.

Legislative framework

-Broad-Based Black Economic Empowerment Act, 2003 (Act No.53 of 2003)

-Employment Equity Act, 1998 (Act No. 55 of 1998)

-Skills Development Act, 1998 (Act No. 97 of 1998)

-Skills Development Levies Act, 1999 (Act No. 9 of 1999)

-Preferential Procurement Act. 2000 (Act No. 5 of 2000)

-Code of Good Practice in terms of section 9 and 10 of the Act

Guidance

This plan was drafted with the following as guide:

-The BEE Commission Report as published by the BEE Commission in 2001

-The King Report on Corporate Governance

-Already developed Transformation and Sectoral Charters, although not directly applicable to the business

-Broad-Based Black Economic Empowerment Strategic Framework

-Draft Codes of Good Practice as published by the Department of Trade and Industry

Objectives of this BEE Plan

The main objectives of this BEE Plan are:

  • To increase the number of black people, including black women and other vulnerable groups such as those with disabilities, workers and the youth, who directly own and control private enterprises;
  • To eliminate and discourage the practice of token ownership on the part of blacks and whites alike, otherwise commonly referred to as fronting;
  • To set acceptable targets for levels of membership interest by black people in the cc.
  • To explore the notion of collective ownership through co-operatives and other similar structures; and
  • To encourage BEE compliance of the business’ suppliers.

Aim of empowerment in respect of equity management and control

Empowerment goodwill

It has been submitted that the inclusion of previously disadvantaged individuals in the equity ownership of a business should be regarded as a valuable contribution to a new partnership.

Employee share ownership programmes

It has been submitted that it is imperative for black employees to play a substantial and meaningful role in equity ownership in the enterprises that employ them.

DIRECT EMPOWERMENT AND CONTROL EMPOWERMENT

Equity ownership

The business at present has the following members:

Membership Interest / Beneficial holding
(including beneficial owner if held through nominee) / Race and gender / Class of shares / Members Interest / Per value / Total / Member ship interest
RA Shave
JC Mouton
R Maharaj / White Male
White Male
Black Male / N/A
N/A
N/A / 35
55
10 / R100.00
R100.00
R100.00 / R3500.00
R5500.00
R1000.00 / 35%
55%
10%

Target and rate:

  1. The business is a Qualifying Small Enterprise and currently has 10% Membership interest in Black Hands. The business aims to increase this membership interest to 25.1% in the next five years.

Management & Control

The business has the following members.

Name / Race / Gender / Job Title / Date of appointment / Country of residence / % Ownership
RA Shave
JC Mouton
R Maharaj / White
White
Black / Male
Male
Male / Member
Managing Member
Member / 01/04/2006
01/04/2006
01/04/2006 / RSA
RSA
RSA / 35%
55%
10%

Targets and rate:

  1. The business is a Qualifying Small Enterprise and has one black member who holds 10% membership interest with equal exercisable voting rights and entitlement to economic interest.

HUMAN RESOURCE DEVELOPMENT

Employment equity

Aim of employment equity

  • To align employment equity targets with skills development programmes and objectives.
  • To embark on a diversity management programme for all employees at all levels.
  • To focus specifically on the participation of black people, including black women, in the first-line decision-making process.
  • To ensure that black people, including black women, participate at all levels of management of the business, especially at operational level.

Present situation

The business employs 21 (twenty one) people at present.

Occupation Level / % Black males / % Black females
Middle Management / 100% / No employees
Managers & Controllers / 33.33% / No employees
Supervisors / No employees / No employees
Professionals / No employees / No employees
Technicians & associate professionals / 100% / No employees
Clerical / Admin staff / No employees / 42.86%
Service workers & Sales Staff / No employees / 33.33%
Plant & machine operators and assemblers / 100% / No employees
Labourers / 100% / No employees
Cleaners / elementary occupations / No employees / No employees

Black Employees represent 81% of total Workforce. Black Female employees represent 23.5% of total Workforce.

Targets and rate:

The business aims to increase and maintain the percentage of blacks employed at the various occupational levels to ensure that black employees are 70% of the total employees of the business and black women are 35% of the total employees of the business.

*The business is not a designated employer as contemplated in the Employment Equity Act.The employment targets and training envisaged in this plan will therefore form the basis for the business’s future employment and training policy, and will be aligned with Skills Development Plan.

Skills development

Objectives

  • To develop black people sufficiently to increase the number of blacks, including black women, the youth and black people with disabilities, at management, technical and specialist levels.
  • To develop those black people already on the above levels sufficiently to manage and operate sustainable businesses of their own.

Present position

The business has an unknown annual payroll figure due to the fact that the business only commenced 1February 2006 . The business has done internal training which is not verifiable.

Targets and rate:

The business is committed to increasing and maintaining the amount of money spent on training black employees as a percentage of payroll (over and above the Skills Development Levy) to 2% per year. The business intends to participate in the CHIETA process comprehensively.

INDIRECT EMPOWERMENT

Enterprise development

The business acknowledges that, due to a lack of:

  • Start-up capital
  • Operational capital
  • Access to support infrastructure, and
  • Shortage of management skills,

black SME are often unable to fund and/or sustain their operations in the long term.

Objectives of enterprise development

To support and encourage the development of enterprises with sufficient black ownership and/or contributor status by means of infrastructural and operational support.

Present position

The business does not have any Enterprise Development in place.

Targets and rate:

  1. The business as a Qualifying Small Enterprise has opted not to include enterprise development as a discipline to be rated on the qualifying small enterprise scorecard.

Preferential procurement

Objective

  • To increase the amount of money spent on procurement from BEE-compliant enterprises and those that score at least 30% on the relevant BEE scorecard as well as the on procurement from so called micro-enterprises.
  • Procurement from the above enterprises will ensure that the ripple effect of affirmative procurement is realized throughout the economy.

Present status and targets

In order for the business to be BEE compliant, the suppliers of the business are urged to become BEE compliant themselves and to have themselve’s independently rated.

The business is aware of its legal obligation to satisfy itself that those suppliers claiming to be BEE compliant are indeed compliant.

The business will therefore accept only independent ratings as proof of BEE status and could insist on a fronting scorecard and a second rating by another rating agency should any fronting be suspected(see definitions).

Targets and rate:

The business is committed to achieving the target that at least 50% in value of its procurement is from suppliers with an acceptable BEE contributor status.

For purposes of procurement, the following suppliers will be excluded from the procurement targets as indicated above:

-lawful tax or levies imposed by an organ of state or person duly authorized

-salaries, wages and contributions to provident and pension funds

-directors emoluments

-loans to associated enterprises

-investments or loans qualifying for recognition under enterprise development or residual

Residual

Objectives

  • The business is committed to industry-specific initiatives, which will result in the formulation of co-ordinated and sustainable programmes to ensure that corporate social investments are implemented according to clearly stated and sustainable long-term objectives.
  • To allocate corporate social investments to benefit black people, black women, black communities and disabled black people.

Present

The business presently offers the following:

(Taking into account code 700 page 2 state what is presently being offered)

  • Donations to the HIV Samaritan Care Centre in Chatsworth.
  • Paying 100% contributions to the Infinity Provident Fund I respect of black employees
  • Good Corporate Governance.

Targets and rate:

The target of the business is to spend at least 2% of net profit after tax per year on qualifying residual contributions namely the following corporate social investments and Industry specific contributions:

  • To continue with the above
  • To support a BlackSchool pupil or pupils with furthering Education

Conclusion

This BEE Plan has been compiled with the objective of guiding the business towards BEE compliance and to encourage other businesses to do the same. Any other information relating to this plan or any business operations of the business will be provided in terms of the business' Information Manual drafted in terms of the Promotion of Access to Information Act. Requests for further information can be addressed to:Jacques Mouton tel: (031) 702 2576 fax: (031) 701 8496

The business sets as overall target to endeavour to become a superior contributor within 5 to 6years.

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