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 102: Recognition of the Sale of Assets

3. Key Measurement Principles
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3.1General principles:

 

3.1.1A Seller that has concluded a transaction involving a Sale of Asset, Equity Instrument or Business with an Associated Enterprise may claim the benefits provided for in this statement in its own Ownership Scorecard.

 

3.1.2Where a Seller has claimed benefit in terms of the Ownership scorecard for the Sale of Asset, Equity Instrument or Business it may not claim benefits under the Enterprise Development Element.

 

3.2Qualification Criteria:

 

3.2.1For Ownership points to be recognised the transaction:

 

3.2.1.1Must result in the creation of sustainable businesses or business opportunities in the hands of Black People; and

 

3.2.1.2Result in the transfer of specialised skills or productive capacity to Black People.

 

3.2.2A Sale of Asset, Equity Instrument and Business must involve a separate Associated  Enterprise, which has:

 

3.2.2.1No unreasonable limitations (generally accepted arms length limitations may be imposed and may include but not be limited to limitations such as normal arms length restraints of trade limitations); as to its clients or customers; and

 

3.2.2.2Clients, customers or suppliers other than the Seller.

 

3.2.3Any operational outsourcing arrangements between the Seller and the Associated Enterprise must be negotiated at arm's-length on a fair and reasonable basis.

 

3.2.4The following transactions do not constitute Qualifying Transactions:

 

3.2.4.1Transfers of business rights by way of license, lease or other similar legal arrangements not conferring unrestricted ownership; and

 

3.2.4.2Sales of franchises by franchisors to franchisees, but includes sales of franchises from franchisees to other franchisees or to new franchisees.