In order to qualify for the ultimate grade, a company needs to have demonstrated and completed at least one single large construction project of  R90 Million and above within the past five years. Construction projects completed more than 5 years do not count. Therefore, if you are going to apply for a grade 9, all your project paper work should at least fall within a period of the past 5 years. I shall be discussing the CIDB grade 9 application requirements in more details in the paragraphs that are going to 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 R20 Million, the second R30 Million and the third R60 million.

You cannot claim a total works capability of R110 million and therefore claim a CIDB grade 9. The CIDB will only consider the single largest project of R60 million which already disqualifies you from applying for a grade 9 project despite having performed a total works capability that would have otherwise qualified you. As mentioned above, the works capability for a grade 9 is only considered met, If one of your single largest construction contract was above R90 million.

Financial capability refers to the best annual revenue between 2 comparable annual financial years as well as the net assets value which is derived by taking into consideration, the total assets of a company less its aggregate liabilities. For a CIDB grade 9, 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 9 application requires:-

The company to have generated revenue of more than R200 Million from construction contracts in a period of one year. In addition to this, it also needs to have maintained a net assets value of more than R40 Million. As you can see, for grade 9 applications, the requirements are quiet astronomical.

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. The financial statements must be audited and a VAT statement of account or VAT201 forms must be submitted as well to prove revenue. There is absolutely no point in applying for a grade 8 if your financial statements have not met the thresholds mentioned above and that they have not been signed off by a qualified auditor.

Bank statements, project contract award letters as well as completion certificates are all key requirements when applying for an upgrade. If you need assistance with your financial statements, you can contact us to assist you with the drafting of 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 registration period which is typically 21 working days. This is especially true for clients who have companies that submit monthly payroll taxes. Should you miss out on a monthly payroll tax return during the time of application, tax affairs that were compliant a couple of days ago, might no longer apply. Therefore, it is wise that you keep your tax affairs in check during and after the registration process. Non compliance with the South African Revenue Service shall invalidate your CIDB certificate upgrade.

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.

All in all, a CIDB grade 9 Upgrade is possible and will qualify you for government construction above R90 Million to infinity.

You will also be required to have carried out one previous single large contract in excess of R90 Million. In addition to this, the company needs to have generated revenue greater than R200 Million and at least have maintained a net asset value greater than R40 Million.

If you need professional assistance, Please fill in the online application form for assistance with your grade 9 upgrade.