BEE Ownership requirements in South Africa
BEE aims to increase the participation of black people in the economy and to promote economic transformation. One of the key components of BEE is ownership, which refers to the extent to which black people own shares or interests in a business.
1. Black ownership
Black ownership under the Codes ranges from 25% to 100% black ownership. The black shareholders must be South African citizens and must be able to participate in dividends and have voting rights at a Shareholders meeting.
2. Economic interest
Black shareholders must have economic interest in the company. This means that they must share in the profits of the company and have the right to dividends. The economic interest of the black shareholders must be proportionate to their ownership in the company.
3. Voting rights
Black shareholders must have full voting rights in the company proportionate to their shareholding. This means that they must be able to participate in all shareholder meetings and have the right to vote on all matters requiring shareholder approval.
4. Shareholding structure
The shareholding structure of the company must be transparent and must not create artificial structures that undermine the principles of BEE. For example, the company cannot have a complex ownership structure that dilutes the economic interest or voting rights of the black shareholders.
5. Empowerment financing
To facilitate black ownership, companies may use empowerment financing. Empowerment financing refers to the provision of funding to black shareholders to enable them to purchase shares in the company. This can be in the form of loans or grants. However, the financing must be provided on a commercial basis and must not create an undue financial burden on the black shareholders.
6. BEE verification
Finally, to be recognized as BEE compliant, the company's BEE ownership must be verified by an accredited verification agency. The verification process involves an assessment of the company's ownership structure, economic interest, and compliance with the BEE Codes of Good Practice.
BEE ownership is a critical component of economic transformation in South Africa. For more information or advice please contact us.