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Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003)

Codes of Good Practice on Broad-Based Black Economic Empowerment

Property Sector Charter

8. Ownership

 

 

(8.1) To date the commercial activities surrounding property continue to reflect inequalities in ownership, with little transformation having taken place. The situation is further exacerbated by skewed ownership patterns of property in general.

 

(8.2) This charter aims to address the low levels of black ownership in property enterprises (including property services enterprises), as well as deal with obstacles to ownership by black people of property assets.

 

(8.3) Each property sector enterprise commits to achieve the following targets within five years:
(8.3.1) at least 25% ownership and economic interest held by black people and 25% plus one vote exercisable by black people in such enterprises;
(8.3.2) at least 10% ownership and economic interest held by black women and 10% votes exercisable by black women in such enterprises; and
(8.3.3) at least 2.5% participation in ownership and economic interest held by broad-based ownership schemes and/or designated groups.

 

(8.4) for property owning companies only, the following measurement of net equity (realization points) will be applied as indicated in the table below, whilst for the other areas in the property sector the measurement of net equity (realisation points) as indicated in the DTI Codes will apply.

 

Year

Percentage

Year 1

3%

Year 2

7%

Year 3

10%

Year 4

15%

Year 5

19%

Year 6

24%

Year 7

30%

Year 8

36%

Year 9

43%

Year 10

50%

 

(8.5) Given that the majority of the listed share register have a mandated investments that are far beyond 40%, a special consent is given for only property listed companies and property unit trusts to cap the mandated investment at 70%. Despite this provision, the cap shall be 40% as in the Generic Codes for those listed companies and property unit trusts, unless there is consistent evidence of 60% or more of the mandated ownership three years prior to being verified of their B-BBEE status. Peculiar cases will be reviewed and assessed on a case to case basis via an application to the Sector Charter Council office and the DTI (BEE Unit). The application would have to provide detailed and full justification that warrants a special concession.

 

(8.6) Black people and designated groups including black women, black youth, black people with disabilities and black people living in rural areas who are already involved in the sector should be given preference in case of any competitive bids for equity ownership opportunities in enterprises within the property sector.

 

(8.7) The funding structures should facilitate the transfer of full economic interest to the black partners and longer term shareholder-type relationships.

 

(8.8) Any provisions in Code 100 relating to the recognition of ownership contributions arising from the sale of shares, businesses or assets by enterprises, shall apply to enterprises in the property sector, provided that the sale itself is not counted under enterprise development.

 

(8.9) The parties to the charter commit to devise mechanisms to remove the obstacles that restrict the ability of black people to own property and to participate in the property market. These would include but not be limited to the following:

 

(8.10) Address administrative and other constraints to ownership, in partnership with the relevant government departments at national, provincial and local level;

 

(8.11) Design partnerships with the financial sector and government to enhance access to finance for property ownership and property development initiatives;

 

(8.12) Meet asset disposal targets as outlined in the Economic Development section of the Sector Code.

 

(8.13) The Charter Council will follow and apply the DTI Codes regarding indirect ownership. If there is any matter relating to score cards and/or measuring of enterprises in this charter, the generic DTI Codes shall take precedence mover the charter code 100.

 

(8.14) The Charter Council will follow and apply the DTI Codes regarding indirect ownership. If there is any matter relating to score cards and/or measuring of enterprises in this charter, the generic DTI Codes shall take precedence over the charter code 100.

 

CODE 100: OWNERSHIP SCORECARD

 

CATEGORY

OWNERSHIP

INDICATOR

WEIGHTING

POINTS

COMPLIANCE TARGET

(5 years)

 

 

Property

Owning

Companies

All other companies

Property Owning Companies

All other companies

Voting Rights

Exercisable Voting Rights in the Enterprise in the hands of black people

5

3

25%+1 vote

25% + 1 vote

Exercisable Voting Rights in the Enterprise in the hands of black people in the Enterprise

2

2

10%

10%

Economic Interest

Economic Interest of black people in the Enterprise

5

4

25%

25%

Economic Interest of black women in the Enterprise

2

2

10%

10%

Economic interest of the following black natural persons in the enterprise:

1. black designated groups;
2. black participants in Employee Ownership Schemes;
3. black beneficiaries of Broad based Ownership Schemes; or
4. black participants in Co-operatives

1

1

2.5%

2.5%

Realization points

Ownership of fulfilment

1

1

1

Refer to paragraph 10.1 of Codes of Good Practice

Net equity Value

4

7

Year 1 – 3%

Year 2 – 7%

Year 3 – 10%

Year 4 – 15%

Year 5 – 19%

Year 6 – 24%

Year 7 – 30%

Year 8 – 36%

Year 9 – 43%

Year 10 – 50%

Annexure C

paragraph 4 of the Codes of Good Practice

Bonus points

Involvement in the ownership of the Enterprise of new Black entrants;

2

2

10%

10%

Involvement in the ownership of the Enterprise of Black participants;

 

1

 

1

 

10%

 

10%
1. in Employment Ownership schemes
2. of broad-based Ownership schemes
3. Co-operatives