The CIDB grade “4” designation gives construction companies the opportunity to bid for government construction tenders between the values of R2, 000,001 to R4, 000,000. In order to qualify, companies need to have completed at least one single large construction project between the values of R900, 001 and R1, 500, 000 within the past five years. Construction projects completed more than five years are not accepted as at the date of application.

Therefore, if you are going to be applying for a grade 4, all your project paper work should be within a period of last 5 years. In addition to the above, companies need to also be compliant with the general legislative requirements such as tax as well as the companies and intellectual property commission. I shall be discussing all these requirements in more detail in the paragraphs that follow.

Works capability refers to the single largest historical construction project ever carried out by the company within the past 5 years. Let me illustrate this by using an example. Let’s say you had 3 projects in the past 5 years. The first project was R300, 000, the second R400, 000 and the third R1, 000, 000.

You cannot claim a works capability of R1.7 million. The CIDB will only consider the R1, 000, 000 as the single highest project and therefore, qualify you only for a grade 4 despite having performed a total works capability that qualifies you for a grade 5. As mentioned above, the works capability for a grade 3 is calibrated between construction contracts between the values of R900, 001 to R1, 500, 000.

Financial capability refers to the best of total revenue between two comparable financial years generated by the company. It also refers to the net assets value which is derived by taking the total assets of the company less its total liabilities. For a grade 4, the company has the option to claim an upgrade from either the demonstration of its financial capability or its works capability.

What this means is that you can get upgraded solely on your largest single contract or on a combination of your revenue and net assets value. Revenue is the total sales made by the company whereas net assets value is the net difference between a company’s total assets and its liabilities. Please note that when submitting Annual Financial Statements for A CIDB grade 3 or 4, please make sure that the accountant who prepared them is a member in good standing with one of the controlling bodies such as SAICA.

It seems pretty obvious that a tax clearance certificate should be the easiest part about complying with when submitting a CIDB grade 4 application however, from the look of things, it appears that there is more to be considered when submitting a tax clearance. In the previous years, tax clearance certificates were valid for a period of 12 months as at date of printing, however, as from late 2019, it appears that the tax clearance certificate is only valid as at the date of confirmation.

What does this mean?

It means that when you submit your tax clearance, you must remain compliant throughout the period of submission. Since you can’t predict the date when the CIDB will be conducting checks on your taxes with the South African Revenue Service, it is advisable to remain compliant throughout the entire 21 days.

This is especially true for clients who have companies that do submit monthly payroll. Should you miss a monthly payroll tax return during the time of application, your tax affairs that were compliant a couple of days ago, might no longer be so. This is immediate grounds for disqualification of your application.

Therefore, it is wise that your company remains fully tax compliant throughout the period of application as well as the periods when your CIDB has been granted. Remember, your CIDB shall be taken down in case of non tax compliance.

The CIDB requires applicants to be compliant with the CIPC. Being compliant requires the filling of annual returns on the commissioner’s website. To determine if your company is compliant, you should print out the latest company’s registration documents from the Commissioners website to determine your enterprise status.

Enterprises indicated by “In Business” mean that those companies are compliant whereas those indicated by “In deregistration process” simply mean that they need to file and pay their annual returns immediately.

SHAREHOLDERS CERTIFICATES

If your company is a close corporation, then there is no need to look for a shareholders certificate, however, if the company’s designation ends with a (PTY) Ltd or (Inc), then a shareholders certificate shall be needed.

The shareholders certificate must be done by a competent professional.

The stamp date of the oaths of commissioner must be within 3 months as at the date of submission.

OTHER DOCUMENTATION

All other documents as mentioned on the application form (Grades 2 to 9) must be certified by a commissioner of oaths. The stamp date must also fall within the 3 months period.

APPLICATION FORM

The application form must be filled in properly and submitted to the CIDB in person. For grade 4, there is no online application. It means you must physically go and hand in the documents at the CIDB offices.

All in all, a CIDB grade 4 will qualify you for government construction tenders between the values of R2 to 4 Million and will require you to have carried out at least one single large contract between the values of R900,000 to R1,500,000 or to have generated revenue between the values of R2,000,000 to R4,000,000 with a net asset value between R200,001 to R400,000.