Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003)Industry ChartersFinancial Services CharterCode Series FS100: Measurement of the Ownership Element of Broad-Based Black Economic EmpowermentStatement 100: The General Principles for Measuring OwnershipAnnexe 100(C) |
1. Measurement of Voting Rights
1.1 The calculation of the ownership indicators provided for in paragraphs 2.1 and 2.2 is as follows:
A = B/C x D
Where
A is the score achieved for the Enterprise for the measured ownership indicator
B is the 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.
Where Equity Equivalents are utilised, the Equity Equivalents shall be deemed to hold Voting Rights that rank equally with ordinary shareholder voting rights and 50% of the deemed voting rights shall be deemed to be in favour of Black Women.
C is the percentage compliance Target for Exercisable Voting Rights for the applicable measured ownership indicator in paragraphs 2.1 and 2.2
D is the Weighting points allocated to the applicable measured ownership indicator in paragraphs 2.1 and 2.2
| 1.2 | If an Enterprise gains a score in the formula above that is more than the Weighting points in paragraphs 2.1 and 2.2, that Enterprise will only receive the Weighting points. |
| 2. | Measurement of Economic Interest |
| 2.1 | The calculation of the ownership indicators provided for in paragraphs 2.3, 2.4 and 2.5 is as follows: |
A = B/C x D
Where
A is the recognisable percentage of a black participant's claim to Economic Interest in the Enterprise
B is the percentage of Economic Interest, which participants who fall within the category of Black People in that Enterprise hold to all Economic Interest which all participants of that Enterprise hold
Where Equity Equivalents are utilised, the Equity Equivalents shall be deemed to hold Economic Interest that rank equally with ordinary shareholder Economic Interest and 50% of the deemed Economic Interest shall be deemed to be in favour of Black Women and 50% shall be deemed to be in favour of designated groups.
C is the percentage compliance target for Economic Interest for the applicable measured ownership indicator in paragraphs 2.3, 2.4 and 2.5
D is the Weighting points allocated to the applicable measured ownership indicator in paragraphs 2.3, 2.4 and 2.5
| 2.2 | If an Enterprise gains a score in the formula above that is more than the Weighting points in paragraphs 2.3, 2.4 and 2.5, that Enterprise will only receive the Weighting points. |
3. Calculation of Deemed Net Value
In calculating the 'Deemed Net Value' referred to in paragraph 4 below, the following formula applies:
A= (B-C)/D
Where
A is the Deemed Net Value
B for the purposes of paragraph 4 below is the value of the Equity Instruments relevant to the calculation, determined on the date of measurement
C for the purposes of paragraph 4 below is the carrying value of any acquisition debts of the relevant Black Participants on the date of measurement
D for the purposes of paragraph 4 below is the value of the Measurable Portion (Value of South African Operations) of the Measured Entity on the date of measurement
4. Net Value
| 4.1 | The "Net Value" points in paragraph 2.6 is the lower result of Formula A and Formula B as follows: |
Formula A
A = B X (1 /(25% X C)) X 3
Where
A is the score under paragraph 2.6
B is the Deemed Net Value for all Black Participants in the Measured Entity determined using Formula 3 above
C is 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
A= B/C x 3
Where
A is the score under paragraph 2.6
B is the percentage Economic Interest in the Measured Entity of Black Participants
C is the target for the ownership indicator in paragraph 2.3
| 4.2 | If an Enterprise gains a score in paragraph 4.1 that is more than the Weighting points in paragraph 2.6, that Enterprise will only receive the Weighting points. |
5. Calculation of the Recognition of Ownership after the Sale of Shares by Black Participants:
| The calculations referred to in paragraphs 3.5.1.2 of Code series FS1 00, Statement 100, use the following formula: |
5.1 For paragraphs 2.1 and 2.3 of the Ownership Scorecard
A = B x C x D
Where
A is the percentage of rights of ownership that survive the sale of an Equity Instrument by a black participant in paragraph 3.5.1.2 to 3.5.4.3.
B is the percentage of rights of ownership for each of the indicators in the ownership scorecard that were attributable to the black participant immediately before their sale.
C The net value realised/created in black hands after the liquidation of debt as a % of the value of the Sale Shares of each of the indicators immediately prior to exit.
The net value created in black hands is equal to the current value of the shares less any own contribution made by the B-BBEE party at the inception date of the transaction.
D is the most recently determined BEE Recognition Level of the Measured Entity (which must be less than 1 year old) based on its Generic Scorecard result for all Elements other than ownership determined using Code series FS000, Statement 000.
For paragraphs 2.2, 2.4 and 2.5, A shall be equal to the percentage held by Black Women/designated groups immediately before their sale of shares multiplied by the result of the calculation under paragraph 5.1.
| 5.2 | For paragraph 2.6 of the Ownership Scorecard |
In relation to calculating the percentage of ownership rights that survive after the sale of shares specifically for paragraph 2.6 of the Ownership Scorecard the following calculation shall apply:
A = B X C X D
Where A is the percentage of rights of ownership that survive the sale of an Equity Instrument by a black participant in paragraphs 3.5.1.2 to 3.5.4.3.
B is the percentage of the Equity Instruments diluted, determined on the date of measurement immediately before their sale.
C is the value of the equity interests sold (less) the value of any own contribution made at the inception date of the deal in relation to the shares sold (less) the carrying value of any acquisition debts of the relevant Black Participants on the date of sale or loss divided by the value of the measured entity at the date of sale or loss.
D is the recognition level of the measured entity excluding ownership immediately prior to the loss or sale.
Illustrative example
| • | Assume B-BBEE Consortium holds 10% of a measured entity at 01/01/2009 (the commencement date). 50% of this holding is attributable to Black Women and 50% is attributable to Black Designated Groups |
| • | As at the commencement date the value of this holding is R150 (enterprise value R1500) and the value of the associated debt is R100. |
| • | B-BBEE Consortium provided R1 0 own cash contribution and R90 was debt funded in lieu of the purchase price of R100 for 10% |
| • | Through corporate action this holding is diluted fully at 31/12/2012 |
| • | At 31/12/2012, the value of this holding has grown to R180 and the debt is R80. The value of the business is therefore R1 800. |
| • | The measured entity is a level 3 contributor excluding ownership as at 31/12/2012. |
Calculation for paragraphs 2.1 and 2.3 of the Ownership Scorecard:
A = B x C x D
B = 10%
C = ((180-80-10)/180) = 50%:
R180 is the value of the shares sold, R80 is the debt outstanding and R10 is the value of the consortium's own contribution at the inception of the transaction.
D = 110%
The continued recognition under paragraphs 2.1 and 2.3 of the scorecard will therefore be:
10% *50% *110% = 5.5%.
The continued recognition under paragraphs 2.2, 2.4 and 2.5 of the scorecard will therefore be:
50% x 5.5% = 2.75%
Calculation for paragraph 2.6 of the Ownership Scorecard:
A = B x C x D
B = 10%
C = (180 -80 - 10) /1800 = 5%
D = 110%
The continued recognition under paragraph 2.6 is therefore:
10% * 5% * 110% = 0.55%.
6. The Bonus Points
6.1 The calculation of the bonus points as it relates to paragraphs 2.8 and 2.9 of the ownership scorecard uses the following formula:
A = B/C x D/25 x E
Where
A is the bonus points awarded in paragraphs 2.8 and 2.9
B is the percentage that Economic Interest to which participants who fall within that category of Black People in that Enterprise holds to the total of all Economic Interest of that Enterprise
C is the percentage compliance Target for Economic Interest for the measured ownership indicator in paragraph 2.8 and 2.9
D is percentage of the Economic Interest in the Measured Entity of Black People up to a maximum of 25%
E is the Weighting points allocated to the applicable measured ownership indicator in paragraph 2.8 and 2.9