Or does it not perhaps highlight the harsh realities of small business as being an extremely competitive environment where only a few really achieve success and the majority only survive? Read the rest of this entry »
Does international evidence suggest who the best empowerment partner might be? The answer is that the present employees of the company are in many cases the best bet. After all, from CEO down to the gatekeeper, they run the company every working day. Read the rest of this entry »
Most business people have a gut feel for what the client wants, which is built up over years of running the business and interacting with clients. However, it is more difficult to distil this sense into three simple, short descriptions of what your client values in your business. But, once done successfully, these descriptions can be immensely powerful in communicating the essence of the business to all stakeholders. Read the rest of this entry »
The current BEE Act, the First Code of Good Practice and the BEE strategy document, all released in 2003, are the cornerstones of government’s plan to give impetus to broad-based empowerment by 2014. This legislation has direct bearing on the current BEE requirements for your business, and as a consequence needs to be studied in some detail. Read the rest of this entry »
One of the biggest problems with BEE initiatives is that they become one person’s responsibility, and one person cannot change an organisation. Read the rest of this entry »
Becoming an empowered company is not good enough. Soon all your competitors will have achieved similar status. Your company will need to do better than that. Whoever has undertaken the transformation process in the best way will be the winners, not those who have merely transformed. The key lies in transforming your business to become black empowered while simultaneously creating a sustainable competitive advantage. Read the rest of this entry »
An economic BEE transformation is a business necessity as a consequence of the following imperatives:
A moral imperative: The National Party came to power in 198 implemented the policy of apartheid. Economic repression led 4 to the expropriation of black property not already expropriated under the Land Act. There was widespread exclusion from the economy on the basis of race. In addition, white capitalists exploited black labour. Read the rest of this entry »
Empowerment has been defined by the government as ‘an integrated and coherent socio-economic process that directly contributes to the economic transformation of South Africa and brings about significant increases in the number of black people that manage, own and control the country’s economy, as well as significant decreases in income inequalities:’ Read the rest of this entry »
In legal terms, the beneficiaries of BEE are ‘black people’, which, according to the Broad-Based BEE Act (the BBBEE Act, or BEE Act), is ‘a generic term which means Africans, Coloureds and Indians’. Read the rest of this entry »
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 »
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 »
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 »
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 »
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 »
