In order to qualify for the grade 7, companies need to have completed at least one single large construction project between the values of R9 to R30 Million within the past five years. Construction projects completed more than 5 years are not accepted as at the date of application. Therefore, if you are going to apply for a grade 7, all your project paper work should at least fall within a period of 5 years. I shall be discussing the CIDB grade 7 application requirements in more details in the paragraphs that follow.

WORKS CAPABILITY

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 R2 Million, the second R8 Million and the third R25 million.

You cannot claim a total works capability of R35 million. The CIDB will only consider the single largest project of R25 million and therefore, qualify you only for a grade 7 despite having performed a total works capability that qualifies your company for a grade 8. As mentioned above, the works capability for a grade 7 is calibrated between construction contracts between the values of R9 to R30 million

Financial capability refers both to the best of total revenue between 2 comparable financial years generated by the company as well as the net assets value which is derived by taking the total assets of the company less its aggregate liabilities. For a grade7, the company has to comply concurrently with its financial and works capability. What this means is that in addition to meeting the above mentioned works capability thresholds, the company must also meet the financial capability scores as mentioned below. Meeting the financial capability scores on a Grade 7 application requires:-

The company to have generated revenue from construction contracts between the values of R20 to R65 Million. In addition to this, it also needs to have maintained a net assets value of R4 to R13 Million. As you can see, for grade 7, the application requirements are far much more stringent. Revenue is the total Rand figure of construction projects carried out in a year whereas the net assets value is the total difference between a company’s assets and its liabilities.

Please be careful to submit Annual Financial Statements that meet the works and financial capability minimum score thresholds. There is absolutely no point in applying for a particular grade that does not meet the thresholds for the Grade of financials you are applying for. If you need assistance with your financial statements, you can contact us to assist you with drafting them.

In addition to the above, companies also need to be compliant with the general legislative company requirements such as the tax clearance certificate as well as the companies and intellectual property commission.

It seems pretty obvious that a tax clearance certificate should be the easiest part about complying with when submitting 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, nowadays, it appears that the tax clearance certificate is only valid as at the date of confirmation.

What does this mean?

This 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 tax affairs, it is advisable to remain compliant throughout the entire period of the application, which is 21 working days. This is especially true for clients who have companies that submit monthly payroll taxes. Should you miss a monthly payroll tax return during the time of application, tax affairs that were compliant a couple of days ago, might no longer be. Therefore, it is wise that you keep your tax affairs compliant during and after the registration process. Non compliance with the South African Revenue Service shall invalidate your CIDB certificate.

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

SHAREHOLDERS CERTIFICATES
If your company is a close corporation, the shareholders certificate does not apply, however, if the company’s designation ends with a (PTY) Ltd or (Inc), then a shareholders certificate will be needed.

The shareholders certificate must be done by a competent professional otherwise; it can also turn out to be reasons for non compliance.

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

All in all, a CIDB grade 7 Upgrade is possible and will qualify you for government construction tenders between the values of R13 to R40 Million construction projects. You will also be required to have carried out one previous single large contract between the values of R9 Million to R30 Million.

In addition to this, the company needs to have generated revenue between the values of R20 to R65 Million and at least to have maintained a net asset value in the range of R4 Million to R13 Million. If you need professional assistance, Please fill in the online application form for assistance with your grade 6 upgrade.