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

Amended Codes of Good Practice (2017)

Amended Code Series CSC100: Measurement of the Ownership Element of Broad-Based Black Economic Empowerment in the Construction Sector

Statement CSC100: The General Principles for Measuring Ownership

Annexe CSC100 (D)

3. Rules for Discretionary Juristic Persons

 

3.1 The terms of a constitution, memorandum of incorporation (MOI) or the trust deed of a juristic person, whichever the case may be, may notwithstanding the Rules for Broad-Based Ownership Schemes, Employee Share Ownership Programmes and the Rules for Trusts (Annexe CSC100 B; C & D), provide for a discretion to the fiduciaries to distribute, in their sole and unfettered discretion, such portions of the juristic person’s income and capital as they deem fit from time to time to such beneficiaries or members of a defined class of beneficiaries as they may decide in their sole and unfettered discretion from time to time;

 

3.2 The discretion to the fiduciaries referred to in 3.1 above must be exercised in accordance with the terms of the constitution, MOI or trust deed. Subject to compliance with the remainder of the rules and additional rules as embodied in Annexe CSC100 B, C and D, such discretion will not disqualify the juristic person from qualifying for recognition under the Ownership Scorecard;

 

3.3. Where such a discretion or a partial discretion exists, the race and gender composition of rights of ownership that flow through the juristic person must be determined with reference to the wording of the constitution, MOI or trust deed having regard to the race and gender of Participants thereof and their proportion of entitlement to income or that of certain classes of Participants (where applicable);

 

3.3.1 Where the wording of the constitution, MOI or trust deed is clear on the racial or gender composition of Participants - the constitution, MOI or trust deed, which ever the case may be, will serve as sufficient evidence to those facts it is clear on;

 

3.3.2 Where the determination of race and gender of Participants are not practically determinable from a pure reading of the trust deed, reliance may be placed on a competent person’s report estimating the rights of ownership that flows through the juristic person. Such report may have regard to various factors which could include where appropriate:
3.3.2.1 Ad hoc distributions to Participants of income and capital during the Measurement Period;
3.3.2.2 Official estimating records such as publicly available municipal records, university or school enrolment records and the South African census reports;

 

3.3.3 Where the determination of race and gender of Participants are indeterminable notwithstanding the mechanisms provided for in paragraphs 3.3.1 and 3.3.2 the Participants must be regarded as non-black.

 

3.4 Participants in juristic person’s with these discretionary terms seldom have the right to vote at general meetings of the juristic person. Their rights are represented by the fiduciaries who make decisions on their behalf. For this reason the Economic Interest of such Participants as determined in paragraph 3.3 above will serve as a proxy for their Voting Rights.