Objects of the Broad-Based Black Economic Empowerment (“BBBEE”) Act, 53 of 2003, as amended by Act 46 of 2013(hereafter the “Act”), include promoting economic transformation and achieving a substantial change in the racial composition of ownership. It is with that in mind that under the Act, “equity ownership” does not simply mean a transfer of shares. In order to enter into a legally enforceable transaction, that would allow the company to claim the points, the following elements must be present, there must be:
- exercisable voting rights;
- economic interest; and
- net value.
Structures, provisions and transactions that the BBBEE Commission has expressed concerns with:
- Call options
- Some restraint of trade provisions
- Preference Shares
- BBBEE warranties and breach provisions
- Broad-based ownership structures
- Employee ownership structures
- Private Equity Funds
The principle of true empowerment should be at the heart of any transaction. Contact us for assistance.