Ownership - Definitions

Summary View and Detailed View

• • Detailed View enables the user to create the ownership structure in an organogram format.
  •  Summary View provides 3 methods for capturing ownership information:
    • Using an existing ownership scorecard of the measured entity – input the details of your previous verification certificate.
    • Using the summary ownership data of the company – input the details of your company’s black shareholding.
    • Using the summary ownership data of the empowerment partner – input the empowerment partners details and percentage shareholding.

• Date of Empowerment Transaction – This is the earliest date of all the empowerment transactions (transactions where black shareholding was required).
• Encumbered Equity – This is the debt (acquisition debt) that is still outstanding from the black owned equity to the organisation as at the end date of the current scorecard.
• Unencumbered Equity – This is the value of the black owned equity as at the end date of the current scorecard MINUS the Encumbered Equity.
• Acquisition Debt – means the debt of Black participants incurred in financing their purchase of their equity instruments in the measured entity and Juristic persons or trust found in the chain of ownership between the eventual Black Participants and the measured entity for the same purpose as those in above.
• Black New Entrants – Black participants who hold rights of ownership (economic interest and exercisable voting rights) in an organisation and who, before holding these rights, have not held rights of ownership in any other entity which has a value of more than R 50 million, measured using standard valuation method.
• Percentage equity held by empowerment partner – This method should be selected if the organisation is owned by an empowered organisation (an organisation with black shareholding).
• Net Value – means the percentage resulting from the formula in Annexe 100(C) of statement 100.
• Black Designated Groups – This group includes the following groups of individuals:
  • Unemployed black people not attending and not required by law to attend an educational institution and not awaiting admission to an educational institution.
  • Black people who are youth as defined in the National Youth Commission Act of 1996.
  • Black people who are persons with disabilities as defined in the Code of Good Practice on employment of people with disabilities issued under the employment act.
  • Black people living in rural and under-developed areas.
  • Black Military veterans who qualify to be called a military veteran in terms of the military veterans Act 18 of 2011.

Economic Interest -means a claim against an entity representing a return on ownership of the entity similar in nature to a dividend right, measured using the Flow Through and, where applicable, the modified Flow through principles

Voting Right- means a voting right attaching to an equity instrument owned by or held for a participant measured using the Flow through principle or the control principle.

Flow Through Principle -means a general principle , when measuring the rights of Ownership of any category of Black people in a measured entity, only rights held by natural persons are relevant, if the rights of ownership of black people pass through a juristic person, then the rights of Ownership of black people in that juristic person are measurable , this principle applies across every tier of ownership in a multi-tiered chain of ownership until that chain ends with a black person holding rights of ownership

Modified Flow Through Principle –

• A Measured Entity applying this Modified Flow-Through Principle cannot benefit from the Exclusion Principle.
• The Modified Flow-Through Principle applies to B-BBEE owned or controlled company in the Ownership of the Measured Entity.
• In calculating Exercisable Voting Rights under paragraph 2.1.1, and Economic Interest under paragraph 2.2.1 of the Ownership scorecard the following applies:
• Where in the chain of Ownership, Black people have a flow-through level of participation of at least 51%, and then only once in the entire ownership structure of the Measured Entity, such Black participation may be treated as if it were 100% Black.
•  The Modified Flow-Through Principle may only be applied in the calculation of the indicators in paragraphs 2.1.1 and 2.2.1 of the Ownership scorecards. In all other instances, the Flow-Through Principle applies.This indicates that there is an extra benefit to a black owned (at least 51% black owned and controlled company) in having shares in your company. That benefit will manifest itself in the calculations of certain indicators on the ownership scorecard.