Economic Interest

Economic Interest confirms the percentage entitlement of black shareholders return on ownership such as the rights to receive dividends, capital gains, profit and other economic rights of shareholders in the in a single or multi-tier measured entity.

The Flow Through Principle (or Modified Flow Through Principle as the case may be) is utilised in calculating the effective percentage economic interest held by black shareholders, across the following sub-groupings:

Economic Interest of all black people in the enterprise

This refers to the total economic interest in the hands of black people in the entity.

Formula
A = B ÷ C x D
Where:
A	Is the score for the measured indicator.
B	Is the achievement of the measured entity.
C	Is the target for that category.
D	Is the weighting for the measured indicator.

Example

If black shareholders hold shares with rights entitling such shareholders to receive 10% of the of the economic interest in the company, the points earned are calculated as follows:

10 ÷ 25 = 40% of the target.

The company will achieve the following points out of 4:

0.4 x 4 = 1.6 points

Economic Interest of black women in the enterprise

This refers to the economic interest in the hands of black women in the entity.

Formula
A = B ÷ C x D
Where:
A	Is the score for the measured indicator.
B	Is the achievement of the measured entity.
C	Is the target for that category.
D	Is the weighting for the measured indicator.

Example

If black women shareholders hold shares with rights entitling such shareholders to receive 5% of the economic interest in the company , the points are calculated as follows:

5 ÷ 10 = 50% of the target.

The company achieved the following points out of 2:

0.5 x 2 = 1 point

Economic Interest of black broad-based and designated groupings in the enterprise

This refers to the economic interest in the hands of black people in broad based schemes within the entity.

Examples of such broad based schemes include:

Designated groups (uneducated, youth, disabled, rural, military veterans);
Employee Ownership Schemes;
Broad-Based Ownership Schemes;
Co-operatives.

Formula
A = B ÷ C x D
Where:
A	Is the score for the measured indicator.
B	Is the achievement of the measured entity.
C	Is the target for that category.
D	Is the weighting for the measured indicator.

Example

If a broad-based scheme comprising black natural people holds shares with rights entitling such shareholder to receive 2% of the economic interest in the company , the points are calculated as follows:

2 ÷ 3 = 66% of the target.

The company will achieve the following points out of 3:

0.66 x 3 = 2 points

Economic Interest of New Entrants in the Enterprise

In order to increase the pool of black equity partners, the Codes make 2 points available for black New Entrants. A black New Entrant is an equity partner who, prior to concluding the transaction in question, is not involved in equity deals cumulatively equal to or exceeding R 50 million.

(The previous threshold per the 2007 Codes was R20 million).

Formula
A = B ÷ C x D
Where:
A	Is the score for the measured indicator.
B	Is the achievement of the measured entity.
C	Is the target for that category.
D	Is the weighting for the measured indicator.

Example

If black New Entrant shareholders hold shares with rights entitling such shareholder to receive 1.5% of the economic interest in the company , the points are calculated as follows:

1.5 ÷ 2 = 75% of the target.

The company achieved the following points out of 2:

0.75 x 2 = 1.5 points

Measurement Category & Criteria		Weighting Points	Compliance Target
Economic Interest	Economic Interest in the Entity to which Black People are Entitled.	4	25%
	Economic Interest in the Entity to which Black women are entitled.	2	10%
	Economic Interest of any of the following Black Natural People in the Measured Entity: Black Designated groups; Black participants in Employee Share Ownership Programmes; Black people in Broad Based Ownership Schemes; Black Participants in Co-operatives	3	3%
	New Entrants	2	2%