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 103: The Recognition of Equity Equivalents

6. Special Rules on Entities Applying for Recognition of Equity Equivalents
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6.1Any contributions towards the Ownership Element of B-BBEE made by entities applying for recognition of Equity Equivalents are measurable against the value of their operations in the Republic of South Africa.

 

6.2In calculating their ownership score, entities applying for recognition of Equity Equivalents must apply the Exclusion Principle to any portion of the business value of their South African operations gained from non-South African sources. A Standard valuation method must be used to determine the value of the South African operations.

 

6.3In calculating their ownership score, entities applying for recognition of Equity Equivalents may recognise sales of Equity Instruments in non-South African Enterprises to Black People, on the following basis:

 

6.3.1The non-South African Enterprise must form part of the chain of ownership between the entities applying for recognition of Equity Equivalents and its eventual holding company; and

 

6.3.2The transaction must comply with South African exchange control requirements; and

 

6.3.3The percentage of the value of the Equity Instruments sold to the value of the business of the entity applying for recognition of Equity Equivalents represents the recognisable black claim to Economic Interest; and

 

6.3.4The percentage of Exercisable Voting Rights ceded to the buyers of the Equity Instruments in the business of the entity applying for recognition of Equity Equivalents represents the recognisable black right to Exercisable Voting Rights; and

 

6.3.5The rights of ownership in the Equity Instruments are comparable to rights that would have accrued had the Equity Instrument been in the business of the entity applying for recognition of Equity Equivalents.