Ownership and the Codes
Ownership in the B-BBEE legislation means equity (shares) in the hands of Black people. To qualify for recognition, the Black shareholders should enjoy the same rights as other shareholders.
These rights of ownership include Voting Rights; Economic Interest (the right to dividends) and the right to participate in the appreciation of the company. There is also a target that increases over time, for the amount of Black Owned equity that is be free of debt.
What are the different ways to achieve Ownership?
There are a number of different ways for companies to meet the Ownership requirements of the B-BBEE legislation. These vary considerably in terms of both cost and complexity.
1% of equity in the hands of a Black person delivers 0.32 of a point. 1% in the hands of a Black person who is classified as a Black woman delivers 0.72 points. If that Black woman is also a New Entrant and a member of a Designated Group, she will deliver 2.72 points. Selecting a Black person who falls into all four categories will deliver 8.5 times more points than a partner who is simply a Black person.
Choosing the right empowerment partner to hold 10% of the equity in your company can make a difference of 240% (and save you from being discounted an empowerment level). 10% of equity in the hands of Black people delivers 6.4 Ownership points. 10% held by a Black woman who is a New Entrant and a member of a Designated Group delivers 15.4 points. Selecting Black people who fall into all four categories will deliver 2.4 times more points than partners who are simply Black people.
MFTP can almost double the points recognised for Black Ownership so long as the empowerment partner holds an Economic Interest of at least 51%. MFTP only applies to Generic Enterprises (turning over more than R50m per year). This benefit does not apply to the other sub elements of Ownership. Using MFTP, a 5.1% equity stake would deliver the same 6.4 Ownership points as 10% Black Ownership does in Infographic 2. The remaining elements will not be affected, so 5.1% will deliver 13.44 points.
Click on the drop down to discover how to do ownership right.Contact QTC
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