The Independent Communications Authority of South Africa (“ICASA”) has recently published draft legislation on how it intends to prescribe equity ownership of Historically Disadvantaged Groups (“HDG”), and more specifically Black people, as it appears in the ICT Sector Codes. In order to receive a new license or retain or take
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: Ownership Generic Scorecard Category
1. The Revised Codes stipulate that: 1.1. Net Value must be valued as the lesser of two formulae. 1.2. Formula A is a step function with a target of transferring 25% of unencumbered Equity Value (Deemed Value) to black shareholders by the end of the eight-year The sub-minimum of 40%
1. Net Value Transfer Requirement 1.1. This requirement of Ownership was enacted to address phantom ownership where black names would appear on shareholder registers without value ever accruing to those black shareholders. This was frequently the case in funded structures where interest rates were greater than the sum of
Element 1 – Ownership Total Weighting Points: 25 Total Bonus Points: 0 Total Possible Points: 25 Core Pillar: Yes Sub-Minimum Element: Net Value Transfer The Detailed Ownership Scorecard: Ownership Generic Scorecard Category Group Target Points Voting Rights Black people 25% 4 Black women 10% 2 Economic Interest Black people 25%
1. Key Inputs into Determination of Targets for Generic Enterprises 1.1. Generic Enterprises have a turnover greater than R50 million in the financial year prior to assessment. Note that the Codes do not recognise the difference between a service business and a high volume, low margin manufacturer. 1.2. The following
The Revised Codes In terms of the Revised Codes, enterprises are classified into three categories depending on their annual turnover. The three categories are: 1. Turnover of below R10 million: Exempted Micro Enterprise (EME); 2. Turnover of R10 million – R50 million: Qualifying Small Enterprise (QSE); and 3.
Three elements of the Codes are considered Core Pillars. They are: 1. Ownership; 2. Skills Development; and 3. Enterprise and Supplier Development which is further made up of Preferential Procurement; Enterprise Development; and Supplier Development. These Priority Elements each have a target score. If a company does not achieve 40%
How do Empowerment Levels work? 1. Various activities score points for a company. The number of points earned corresponds to the empowerment level achieved. 2. The benefit of a company having a better empowerment Level is that its clients multiply any spend with it by a higher factor, the
