Ownership is now a priority element which will need to be complied with by both QSE’s and Generic enterprises. The ownership scorecard percentage has not changed significantly from that of the previous Codes, the target is still 25% however, the points have increased from 20 to 25 points.
The Modified Flow Through* principle is now only applicable once in the entire ownership structure and the black new entrant target has increased from R20 Million to R50 Million. To avoid being discounted by one level on the scorecard, companies must attain at least 40% of the annual target for Net Value.
The Codes make provision for a minimum amount of black ownership to be enacted; companies must have at least 10% black ownership. The Codes also ensure that over a period of not more than 10 years, this 10% economic interest accrues in its entirety to the black participants envisaged by the transaction.
|Ownership Indicator||Weighting points||Compliance target|
|2.1 Voting rights
2.1.1 Exercisable voting rights in the Enterprise in the hands of black people
2.1.2 Exercisable voting rights in the Enterprise in the hands of black women
25% + 1 vote
|2.2 Economic Interest
2.2.1 Economic Interest of black people in the Enterprise
2.2.2 Economic Interest of black women in the Enterprise
2.2.3 Economic Interest of the following black natural people in the Enterprise:
• Black designated groups;
• Black participants in Employee Ownerships Schemes;
• Black beneficiaries of Broad-Based Ownership Schemes; or
• Black participants in Co-operatives
2.2.4 New Entrants
|Net value||8||10 year targets on Formula A|
“Flow-through and modified flow-through principles” are included to ensure that the objectives of BEE will not be circumvented through complex funding structures. The flow-through principles trace ownership measurement through the chain of ownership to the black natural person(s). The modified flow-through principle allows for the participation of non-BEE funders at one tier of ownership. A measured enterprise can elect to apply the modified flow-through principle at any tier in a chain of ownership, but limited to one tier only. – The Department of Trade and Industry Guide to Interpreting the Codes
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Source: Government Gazette No 36928; Mpowered ; The Department of Trade and Industry Guide to Interpreting the Codes