Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003)

Industry Charters

Financial Services  Charter

Code Series FS100: Measurement of the Ownership Element of Broad-Based Black Economic Empowerment

Statement 100: The General Principles for Measuring Ownership

3. Key measurement principles

3.2 The Flow-through Principle
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3.2.1As a general principle, when measuring the rights of ownership of any category of Black People in a Measured Enterprise, 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.

 

3.2.1.1An exception to this General Principle exists with regard to recognition under the Ownership Scorecard for domestic measured entities, via Equity Equivalents. This exception to the General Principle is dealt with in further detail in Code series FS100, Statement 103.

 

3.2.2The method of applying the Flow-Through Principle across one or more intervening juristic persons is as follows:

 

3.2.2.1Multiply the percentage of the participants' rights of ownership in the juristic persons through which those rights pass by the percentage rights of ownership of each of those juristic persons successively to the Measured Enterprise; and

 

3.2.2.2The result of this calculation represents the percentage of rights of ownership held by the participant.