Exempted Micro Enterprises

In South African law, Exempted Micro Enterprises (EMEs) are businesses that are exempt from measurement in terms of the DTI's codes of Good Practice for Black Economic Empowerment (BEE). They automatically qualify as 100% contributors towards BEE, this offers small South African businesses the opportunity to grow as a result of BEE irrespective of the make-up of the shareholding.

In terms of Paragraph 4 of the DTI's "Codes of Good Practice for BEE".

Turnover required for exemption

In terms of the Broad-Based Black Economic Empowerment Codes businesses with a turnover of less than R5 Million qualify as EMEs. However, during 2009 two sector charters were released that reduced the turnover required for exemption as follows:

  • Tourism & Hospitality Charter reduced the turnover required for exemption to R2.5 million for all businesses that are considered to be part of the tourism and/or hospitality Industry[1]
  • Construction Charter reduced the turnover required for exemption to R1.5 million for Built Environment Professionals (BEPs), these "provide services related to but not limited to consulting engineering, architecture and quality surveying".[2] Contractors are considered exempt if they have a turnover of less than R5 million.

BEE Recognition of Exempted Micro Enterprises

For Preferential Procurement purposes EMEs offer clients at least 100% BEE recognition for any purchases that the client has made from that EME. EMEs are required to prove to the client that they do qualify, this commonly takes place through the presentation of an exempt certificate.

  • Businesses with a black shareholding of less than 50% automatically qualify as 100% contributors towards BEE
  • Businesses with a black shareholding of more than 50% automatically qualify as 110% contributors towards BEE

In terms of the codes of good practice for BEE exempt certificates can be issued by verification agents or auditors/accounting offices provided enough supporting evidence is available to prove exemption. Exempted Micro Enterprises obtain an affidavit from an accredited verification agency in order to ensure that they do qualify which should signed by the commissioner of oaths. The affidavit is used in place of the BEE certificate and it is valid for a period of 12 months from the date it is signed by the commissioner.

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References
  1. "Tourism Sector Codes" (PDF).
  2. "Construction Sector Codes" (PDF).
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