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Selecting The Correct Empowerment Partner Positively Impacts Your Ownership Score

BEE Blog 11

Structure of Ownership has a significant bearing on Ownership Points

1. In terms of the Revised Codes, companies are incentivised to include specific categories of black people by enhancing the points awarded to companies who include these groups in their Ownership.  The breakdown is as follows:

OwnershipGeneric Scorecard
CategoryGroupTargetPoints
Voting RightsBlack people25%4
Black women10%2
Economic InterestBlack people25%4
Black women10%2
Designated Group3%3
New Entrants2%2
Realisation PointsNet Value TransferStep function8
Total Ownership Points 25.00

 

2. So:

2.1. 1% of equity in the hands of a wealthy Black man would deliver points for Economic Interest and Voting Rights as depicted below: 

1/25 × 4 + 1/25 × 4 =  0.32 of a point

3. Whereas:

3.1. 1% of the equity in the hands of a Black woman who is a New Entrant and member of a Black Designated Group would deliver:

1/25 × 4 + 1/10 × 2 + 1/25 × 4 + 1/10 × 2 + 1/3 × 3 + 1/2 × 2 = 2.72 Points

3.1.1. The same 1% of the equity in the hands of a Black woman who is a New Entrant and a member of a Black Designated Group can deliver 8.5 times as many Ownership points as the same 1% of the equity in the hands of a black man.

3.1.2. The construction of any Ownership structure must, therefore, take careful consideration of not only the quantum of Ownership transferred but also the nature of the black shareholders themselves.  A well-constructed Ownership transaction will deliver a large number of Ownership points efficiently.  

3.1.3. This equates to more points for less dilution for the current shareholders.

B

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