This element measures the following:

1.      Economic interest

        The level of shareholding, equity held by black people; unencumbered i.e. not indebted,               ceded, pledged etc.

2.      Voting rights

        The level of voting rights attached to the shares held by black people that are                                 independently exercised by those black shareholders

3.      Net value

        The net value of the shares / equity instruments held by the black participants.

 It is the net value of the black shareholder’s shares relative to the value of the entire                    company, after any debt related to the black shareholder’s subscription has been subtracted      off the value

 Ownership is measured against a target of 25% economic interest and voting rights to be            held by black people. The Ownership scorecard is weighted by 20 out of the total 100 points      on the B-BBEE scorecard.

The amended Codes of Good Practice, which come into effect from 1 st May 2015, implements a minimum level of compliance of 10% net value to be held by black people. If this minimum requirement is not met, companies will have their final B-BBEE Level dropped by 1 Level.

The Department of Mineral Resources which issues licensing to the Mines is governed by the Mining Charter, an industry-wide Code with its own specific requirements. In terms of the new Mining Charter, mining companies are required to achieve 30% black economic interest within 12 months of gazette (by June 2018) or face losing their mining licenses. This is currently being enforced very strictly by the mining houses, who are in turn demanding the same level of compliance of their suppliers to meet their own scorecard. The result is threats and intimidation in the market, with companies now facing the loss of income coupled with the current industry recession that has resulted from the prolonged mining strikes which the country faced earlier in 2014. B-BBEE is quickly getting teeth!

This level of enforcement has infiltrated many other sectors of the market, with the Gaming Board now enforcing a Level 2 compliance from companies that require a Gaming License, or at least a plan (which is periodically reviewed against implementation by the company) to obtain this level of compliance. Development Grants awarded to companies by the Department of Trade and Industry now also hinge on a specified level of compliance.

With the costs of implementing the B-BBEE Scorecard and obtaining an adequate level of compliance, companies simply cannot afford not to meet the minimum requirements of the scorecard.

Also, with a Level 2 being imposed on many industries requiring a license, a Level 2 simply cannot be obtained where specific levels of black ownership are not in place – not with how the scorecard is structured, mathematically speaking.