OWNERSHIP PRESENTATION

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OWNERSHIP PRESENTATION
BEE UNIT 14TH SEPTEMBER 2007
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THE CODES OF GOOD PRACTICE FOR BROAD BASED
BLACK ECONOMIC EMPOWERMENT OWNERSHIP CODE
100 STATEMENT 100, 102 AND 103
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CODE 100 OWNERSHIP

• Statement 100 The general principles for
  Measuring Ownership
• Statement 102 Recognition of the Sale of Assets
• Statement 103 The Recognition of Equity
  Equivalents for Multinationals

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Ownership (Code 100 Statement 100)

• Entrench a key objective of the Act, i.e. to
  increase the number of black people that manage,
  own and control enterprises and productive
  assets.
• Provide recognition and measurement criteria for
  black ownership

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CODE 100 BASIC PRINCIPLES OF OWNERSHIP
Basic Principles

• Ownership is measured as an entitlement to both
• Voting rights Measures the rights of black
  people that hold shares in companies and
• Economic interest Measures the economic value
  that is held by black people holding shares in a
  company
• Measures economic substance vs. legal form
• Net Equity Value A tool that measures real
  economic value in the hands of black shareholders
• The Scorecard measures the ability of black
  shareholders to exercise an enforce their
  ownership rights to prevent exploitation
• Scorecard encourages participation by black
  women, broad-based schemes and new entrants
• Companies entering into transactions with
  broad-based schemes and new entrants are rewarded
  with bonus points

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CODE 100 APPLICATION OF THE CODES

• Codes apply to
• All public entities listed in schedule 2 of the
  Public Finance Management Act (e.g. Airports
  Company, Denel, Eskom, IDC)
• All public entities listed in schedule 3 part A
  and part C of the Public Finance Management Act
  (e.g. Financial Services Board, Competition
  Board, SA Revenue Services, Eastern Cape
  Agricultural Bank, Gauteng Gambling Board, Natal
  Sharks Board)
• Any public entity listed in schedule 3 part B and
  part D which are trading entities which undertake
  any business with any organ of state or public
  entity or with any enterprises and (e.g. Bloem
  Water, Khula Enterprises, Rand Water Board, Algoa
  Bus Company, NW Development Corporation)
• Any enterprise that undertakes any business with
  any organ of state or public entity
• Any enterprises undertaking any business with any
  other measured entity, whether direct or
  indirect, which is subject to measurement

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CODE 100 THE GENERIC OWNERSHIP SCORECARD
Element Weighting Compliance Targets
Ownership 20 points 25 1
Management control 10 points (40 to 50)
Employment Equity 15 points (43 to 80)
Skills Development 15 points 3 of payroll
Preferential Procurement 20 points 70
Enterprise Development 15 points 3 (NPAT)
Socio-Economic Development 5 points 1 (NPAT)
TOTAL 100 points
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EXAMPLES OF DEALS De Beers, Ponahalo and
Peotona
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GLENRAND BEE DEAL

• Glenrand MIB has bolstered its empowerment deal
  to 27
• Kuene Brothers 12
• Hixonia Nyasulu 4.8
• Black Employees 4.3
• Womens Groups
• Ayavuna and Mashishi Matemeku Investments 5.9
• _________________
• Black Shareholding 27

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Sun International

• The Sun International Employee Share Trust
  (SIEST), established in 2003, holds - directly
  and indirectly - 5.7 of the companys shares and
  up to 3.5 of a number of group subsidiaries. The
  SIEST provides an excellent opportunity for
  employees to benefit when the company performs
  well.

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• GUIDELINES FOR
• EQUITY EQUIVALENT
• PROGRAMMES FOR
• MULTINATIONALS

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GUIDELINES EQUITY EQUIVALENT PROGRAMMES FOR
MULTINATIONALS

• THE MULTINATIONAL ENTITY
• Must be able to prove that they have not entered
  into any Ownership partnership arrangements in
  other countries globally
• The EE contributions towards the ownership
  element of B-BBEE made by Multinationals will be
  measurable against
• 25 of the value of their operations in South
  Africa
• 4 of Total Revenue from its SA operations
  annually over the period of continued measurement

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GUIDELINES EQUITY EQUIVALENT PROGRAMMES FOR
MULTINATIONALS

• An EE programme would entail a
• Public Programme / Scheme
• and / or
• Private Programme / Scheme
• Designed to fulfill the requirements of B-BBEE
  Ownership.
• Such Programmes need to be approved by the
  Minister of Trade and Industry in order to
  qualify for Ownership points on the Scorecard

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GUIDELINES EQUITY EQUIVALENT PROGRAMMES FOR
MULTINATIONALS

• OBJECTIVES
• EE Programmes are expected to contribute towards
  the achievement of the following objectives
• Enterprise creation and development.
• Foreign direct investment.
• Accelerated empowerment of black rural women and
  youth.
• Sustainable growth and development.
• Human development with focus on education and
  skills development.
• Infrastructure investment with emphasis on
  developing the countrys research and development
  infrastructure.

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GUIDELINES EQUITY EQUIVALENT PROGRAMMES FOR
MULTINATIONALS

• PRINCIPLES
• The economic impact of the EE Programme must
• be aligned to the objectives of the B-BBEE Act.
• The EE Programme must not displace other
• B-BBEE initiatives to be undertaken as per the
  
• scorecard.
• The EE Programme must be broad based in its
• impact on the black population.

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QUESTIONS AND DISCUSSION
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THANK YOU