Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003) Industry Charters Chartered Accountancy Charter Section C From Theory to Practice: The Scorecard 13. The QSE Scorecard for the CA Sector 13.2 Application of the CA Sector QSE Scorecard 13.2.1 The QSE Ownership Scorecard

 

The ownership Element measures the effective ownership of enterprises (QSE CA(SA) sector) by Black People. It is measured on the basis of the following indicator Weightings:

 

 

 

 

An Entity receives points for participation by Black People in its rights of ownership, using the QSE ownership scorecard. Black People may hold their rights of ownership in a Measured Entity as direct Participants through a business such as-

•        a company with shares,

•        a close corporation

•        a co-operative,

•        any form of juristic person recognised under South African law,

•        a partnership or other association of natural persons,

•        an Employee Ownership Scheme,

•        a Broad-Based Ownership Scheme, or

•        a trust.

 

For purposes of the QSE CA sector, indicator Weightings have the following definitions:

 

Voting Rights

Voting Rights means a Voting Right attaching to an Equity Instrument owned by or held for a Participant.

 

Measurement of Voting Rights

 

 

Where      A      =      score achieved by the enterprise for the measured ownership indicator

                   B      =      percentage that Exercisable Voting Rights in the hands of the category of Participants who are Black People in that enterprise holds to all Voting Rights held by all Participants of that enterprise

                   C      =      percentage compliance Target for Exercisable Voting Rights for the applicable measured ownership indicator

                   D      =      Weighting points allocated to the applicable measured ownership indicator

 

If an entity gains a score in the formula above that exceeds the Weighting points, that entity will only receive the Weighting points.

 

Ownership Fulfilment

Ownership Fulfilment occurs—

•        on release of all black Participants in a Measured Entity from all Third Party Rights (this is not likely to be applicable to the CA profession); or

•        if black Participants have never been subject to any Third Party Rights.

A minimum score of 7 points for Net Value is a requirement for the award of the Ownership Fulfilment point.

 

Net Value:

The following formula is used to calculate the deemed Net Value referred to in formulas A and C below:

 

 

Where      A      =      deemed Net Value

                   B      =      for purposes of formula A or B below, is the value of the Equity Instruments relevant to the calculation, determined on the date of measurement

                   B      =      for purposes of formula C below, is the value of the Equity Instruments relevant to the calculation, determined on the date of sale or loss

                   C      =      for purposes of formula A or B below, is the carrying value of any acquisition debts of the relevant black Participants on the date of measurement

                   C      =      for purposes of formula C below, is the carrying value of any acquisition debts of the relevant black participants on the date of sale or loss

                   D      =      for purposes of formulas A or B and C below, is the value of the Measured Entity on the date of measurement

                   D      =      for purposes of the exclusion principle, is the value of the measurable portion of the Measured Entity on the date of measurement

 

The Net Value points are the lower result of formula A and formula B. For the CA profession Formula A is generally not applicable as there is seldom a purchase of goodwill in professional service firms. Therefore only formula B will be used to calculate this section of the scorecard for the profession.

 

Formula A        

 

Where      A      =      the score obtained for Net Value

                   B      =      the deemed Net Value for all black Participants in the Measured Entity determined using the formula for the calculation of deemed Net Value above

                   C      =      the time-based graduation factor of the Economic Interest compliance Target outlined below

                                    10% for the first year after the current equity interest date

                                    20% for the second year after the current equity interest date

                                    40% from the first day of the third year after the current equity interest date to the last day of the fourth year after the current equity interest date

                                    60% from the first day of the fifth year after the current equity interest date to the last day of the sixth year after the current equity interest date

                                    80% from the first day of the seventh year after the current equity interest date to the last day of the eighth year after the current equity interest date

                                    100% from the first day of the ninth year after the current equity interest date to the last day of the tenth year after the current equity interest date

 

Formula B    

 

Where      A      =      the score obtained for Net Value

                   B      =      the percentage Economic Interest in the Measured Entity of black Participants

                   C      =      the Target for the ownership indicator measuring Economic Interest of Black People in the enterprise

 

If an enterprise gains a score which exceeds the Weighting points for Net Value, that entity will only receive the Weighting points.

 

Calculation of the recognition of ownership after the sale or loss of shares by black Participants

 

Formula C      

 

Where      A      =      the percentage of rights of ownership that survive the sale of an Equity Instrument by a black Participant

                   B      =      the percentage of rights of ownership for each of the indicators in the ownership scorecard that were attributable to the black Participant immediately before his or her sale or loss

                   C      =      the Net Value percentage provided for in the calculation of deemed Net Value above undertaken for the Equity Instruments sold or lost by the black Participant on the date of the sale or loss. The value of the enterprises is measurable as at the date of measurement

                   D      =      the most recently determined B-BBEE Recognition Level of the Measured Entity which is less than one year old, based on its Generic Scorecard result for all Elements other than ownership determined using statement 000

 

The bonus points

In terms of the CA sector and based on the specific sectoral characteristics, the bonus points under ownership will be awarded as follows:

 

 

While the bonus points awarded in terms of the CA Sector Code differ from that gazetted in the Codes, it does adhere to the intention of the Codes.