BEE Partner, South Africa Economy Watch

Again this is a principle that applies exclusively to measuring ownership contributions. The principle has many different names, such as “one time all time”, “high water mark” and “continuing consequences”. When companies first started engaging in BEE, before there were standard measurement principles, they made the assumption that once they had sold a BEE stake, they would be able to recognise this contribution to BEE regardless of whether the BEE party remained in the investment or not. Read the rest of this entry »

A common misperception of ownership is that it relates to economic return exclusively. When ownership is broken down it includes two primary rights. The one is economic return and the other is control, or influence, over decision making, which is exercised through voting rights. Read the rest of this entry »

Economic interest is a participant’s right to share in the economic fruits of the business. The legal form of the distribution is not important, but normally comes in the form of dividends and capital gains. The Codes define it as a claim against the entity representing return on ownership of the entity similar in nature to a dividend right. Read the rest of this entry »

BEE Party’s Net value calculation

The net value calculation is broken down into two formulae and draws from the deemed net value result above. The first, Formula A, calculates the debt-free ownership as calculated above, as a percentage of the targeted debt-free ownership for the year, measured as a pro-rata score against the allocated points. Read the rest of this entry »

BEE Enterprise Net value

The net value is determined by calculating the current market value of the asset in relation to the current market value of the acquisition debt. Where the value of the asset increases in relation to the debt, the net value points will increase. Read the rest of this entry »

Direct ownership represents an identifiable natural person who holds an identifiable ownership stake with a right to participate in economic benefits and the right to exercise influence over the business in line with the voting rights owned. In terms of transformation, direct ownership is the first prize. Read the rest of this entry »

The general broad-based ownership scheme will only receive recognition as Black owned where it satisfies the conditions stated in Section 1 Annexure 100B of Statement 100, which are as follows: Read the rest of this entry »

A broad-based group that meets the definition of a general broad-based ownership scheme, but wants recognition as a special broad-based ownership scheme may do so where it meets the additional criteria as per Section 5 of Annexure 100B of Statement 100. The primary difference between a special and general broad-based ownership scheme is that there is no limitation on recognition of percentage owned by the special scheme. Read the rest of this entry »

THE DON’TS

• Don’t camp near a water source. Camp at least three kilometres away.
• Don’t use soap or shampoo if you are washing in a river or stream. Fill a bucket with water instead, and find a place away from the water source to wash yourself.
• Don’t leave any toilet paper uncovered. Use the ‘cat’ method and bury all the evidence. Read the rest of this entry »
  

Bush etiquette can be divided U into do’s and don’ts. Everyone has a responsibility to treat the environment and local residents with respect and courtesy. Read the rest of this entry »

This section is technical, which is one of the reasons why I mentioned earlier that they must be set up by someone specialising in employee benefit scheme structures. For an employee ownership scheme to obtain recognition as Black owned, it must comply with the requirements of Section 2 of Annexure 100B of Statement 100, which are as follows: Read the rest of this entry »

When the dti launched the BEE Codes in December 2006, it made specific mention of the concern that employee ownership schemes were increasingly being used as an employee retention strategy. Read the rest of this entry »

Trusts are commonly used by small business owners as an asset protection mechanism. The protection is normally used in the form of a family trust. The Codes do not intend restricting a BEE party’s use of family trusts to protect assets. Read the rest of this entry »

Ownership has resulted in many of the negative comments regarding BEE. How many times have comments been passed making vague reference to “not giving my business away to anyone!” followed by a few obscenities. These comments are largely based on a fear of the unknown. The unknown is not referring to the incumbent change so much as the ignorance of the commentator about the nature of the ownership element. Read the rest of this entry »

There are three answers to this question. A Black-owned business would obviously take the points. A white-owned business needs to consider how much benefit it can derive through incorporating Black ownership. Businesses contracting directly with government are going to receive benefit from having Black ownership. Apart from direct dealing with government, where a Black party can bring new value to a business, it then makes economic sense to sell to a Black participant and score on the ownership points. Read the rest of this entry »

There is much detail in this section. It is, arguably, one of the most important issues in the context of BEE. BEE, and particularly ownership, has developed a bad name because the wrong partners have been sought. It is all very well to have a paternalistic approach and give ownership to staff members or some unfortunate person, but is this a sound business principle? It may be, but normally it is not. The point is, if an empowerment deal is not based on sound business principles, then a sustainable relationship is unlikely. Read the rest of this entry »

What are the qualities that a business needs to look for in a BEE partner? The answer lies in both parties’ ability to identify the qualities inherent in themselves. There is little value in a partnership where skills and abilities are replicated. To form a mutually beneficial BEE deal, both parties must know themselves and their proposed partner before a decision can be taken. Standard management principles must be applied to BEE deals. Flamboyant creativity should be balanced with practical conservatism. Read the rest of this entry »

The Boston Consulting Group (BCG) categorized businesses into four groups:

• Start-ups (BCG uses the term “Question mark”.)
• Stars
• Cash cows
• Dogs.

Start-ups are new ventures with no track record. Start-ups usually require capital investment and do not produce any cash benefits for the owners. A start-up can evolve to a star or a dog. They are high-risk entities making them difficult to value and will find it hard to obtain empowerment partners. Read the rest of this entry »

Once the type of partner required has been established, the source of that partner is more easily identified. Determine who you want and consider the areas such a person would frequent. A question that small business owners may wish to consider in sourcing empowerment partners is, “Who is my target market and who can bring me closer to that market?” Read the rest of this entry »

In any event, while perceived power symmetries may explain the willingness of both the ANC and the NP to enter into negotiations, the balance of power eventually shifted quite clearly to the ANC. The National Party sought, for example, a guaranteed white veto in the legislature (similar to that assured in Zimbabwe’s 1979 negotiations), and a leading role in writing the final constitution. Read the rest of this entry »