The Ownership Element

 

Ownership
Measurement Category & Criteria		Weighting Points	Compliance Target
Voting Rights	Exercisable Voting Rights in the Entity in the hands of Black people.	4	25% + 1 Vote
	Exercisable Voting Rights in the Entity in the hands of Black women.	2	10%
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%
Realisation Points	Net Value	8	Refer to Annexure C
TOTAL		25

 

The Codes have defined the Net Value sub-element of the Ownership element as a Priority Element in terms of transformation imperative.

 

The Entity is required to achieve the 40% subminimum in relation to Net Value points

ie 3.2 out of 8 points.

 

Should a Generic Entity not achieve the required 40% subminimum in relation to Net Value points its B-BBEE Status will be discounted by 1 level.

 

There are various entities and structures that will earn points under the Ownership element, such as:

 

• Companies.
• Close Corporations.
• Sole Proprietors.
• Partnerships.
• Trusts.
• Co-operatives.
• Broad Based Ownership Schemes.
• Employee Ownership Schemes.
• Any other form of juristic person recognised under South African law

 

Certain entities will by their nature be excluded from the Ownership element, and use the Adjusted Scorecard which excludes Ownership. They are:

 

• Non-profit organisations/ S21 Companies
• Public entities or enterprises owned by organs of the State.
• Public Benefit Schemes.
• Higher Education Institutions.
• Companies limited by Guarantee.

 

The Flow Through Principle:

 

The Flow Through Principle measures the effective of ownership of black natural persons in a multi-tiered structure.

 

Example

If company A is 53% black owned and owns 25% of company B using the Flow Through Principle the effective black ownership of company B is 53% x 25% = 13.25%.

 

The Modified Flow Through Principle:

 

The Modified Flow Through Principle is a variation of the Flow Through Principle and applies to any B-BBEE owned or controlled company.

 

A B-BBEE owned company means a juristic person having shareholding or similar members interest that is BEE controlled in which black participants enjoy the right to economic interest that is more than 51% of the total rights measure using the flow through principle.

 

A B-BEE controlled company means a juristic person having shareholding or similar member's interest in which black participants enjoy a right to exercisable voting rights that is more than 51% of the total rights measured using the flow through principle.

 

In the Modified Flow Through Principle, an entity may be considered 100% black owned if its ownership exceeds 51% using the Flow Through Principle. This 100% recognition can however only be applied once in the entire ownership structure.

 

The Modified Flow Through Principle is only applicable to Voting Rights and Economic interest in relation to Black people (ie 2.1.1 and 2.2.1 of the Ownership Scorecard) It will not apply to any of the other sub-categories, wherein only the Flow Through Principle may be applied.

 

Example

If company A is 51% black owned and owns 40% of company B, which in turn owns 80% of company C, then, according to the modified flow through principle:   Company A claims 100% black ownership (by virtue of its black owned status, even though Company A is only 51% black owned, the modified flow through principle allows 100% black ownership to be recognised). Company B claims 40% black ownership (100% x 40%). Company C claims 32% black ownership (80% x 40%).