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

Industry Charters

Financial Services  Charter

Schedule 1 : Interpretation and Definitions

1. Interpretation

 

1.1 Unless otherwise stated in this Code, any term or phrase assigned a specific meaning in Schedule 1 to the CoGP and used in this Code, has the meaning assigned in that schedule.

 

1.2 Affected institution means every financial institution that takes designated investments.

 

1.3 Agreed Standard Valuation means a valuation of an asset (valued in terms of the context in which this term appears) based on normal valuation methodologies (representing standard market practice) given the nature and stage of development of the asset being valued provided that:

 

1.3.1 The principles set out in the table hereunder will serve only as a guide to possible valuation methodologies that could be employed:

 

Operation

Valuation methodologies

Banking

Discounted cash flow

Price to book

Comparable Multiples

Dividend Discount Model

Capitalisation of earnings

Net asset value

Insurance

Discounted cash flow

Embedded value

Price-to-embedded value

Capitalisation of earnings

Net asset value

Brokerage firms

Discounted cash flow

Capitalisation of earnings

Net asset value

Asset managers and Collective Investment Schemes

Discounted cash flow

Capitalisation of earnings

Percentage of funds under management

Net asset value

 

1.3.2 Where the financial institution is listed on the JSE Limited, the market capitalisation of the financial institution concerned will serve as an overall benchmark for the individual valuations of the underlying assets and businesses of such financial institutions;

 

1.3.3 Cash flows to a beneficiary or shareholder will be valued on an after-tax basis.