Division of Revenue Act, 2013
R 385
Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003)Codes of Good Practice on Black Economic EmpowermentCode Series 100: Measurement of the Ownership Element of Broad-Based Black Economic EmpowermentStatement 100 : The General Principles for Measuring OwnershipAnnexe 100B : Rules on certain types of Enterprises |
1) | Rules for Broad-Based Ownership Schemes |
1.1) | The following rules apply to Broad-Based Ownership Schemes: |
1.1.1) | the Management Fees of the scheme must not exceed 15%; |
1.1.2) | the constitution of the scheme must record the rules governing any portion of Economic Interest received and reserved for future distribution or application: |
1.1.3) | at least 85% of the value of benefits allocated by the scheme must accrue to black people; |
1.1.4) | at least 50% of the fiduciaries of the scheme must be independent persons having no employment with or direct or indirect beneficial interest in the scheme; |
1.1.5) | at least 50% of the fiduciaries of the scheme must be black people and at least 25% must be black women; |
1.1.6) | the chairperson of the scheme must be independent; and |
1.1.7) | on the winding-up or termination of the scheme, all accumulated Economic Interest must be transferred to beneficiaries or an entity with similar objectives. |
2) | Rules for Employee Share Ownership Schemes |
2.1) | The following rules apply to Employee Share Ownership Schemes (ESOP); |
2.1.1) | the scheme constitution must define the Participants and the proportion of their claim to receive distributions; |
2.1.2) | a written record of the name of the Participants or the use of a defined class of natural person satisfies the requirement for identification: |
2.1.3) | a written record of fixed percentages of claim or the use of a formula for calculating claims satisfies the need for defining proportion of benefit and |
2.1.4) | the fiduciaries of the scheme must have no discretion on the above mentioned terms, and |
2.2) | The Participants must take part in: |
2.2.1) | appointing at least 50% of the fiduciaries of the scheme, |
2.2.2) | managing the scheme at a level similar to the management role of shareholders in a company having shareholding; |
2.2.3) | the constitution, or other relevant statutory documents, of the scheme must be available, on request, to any Participant in an official language in which that person is familiar; and |
2.2.4) | All accumulated Economic Interest of the scheme is payable to the Participants at the earlier of a date or event specified in the scheme constitution or on the termination or winding-up of the scheme; and |
2.2.5) | the scheme fiduciaries must present the financial reports of the scheme to Participants yearly at an annual general meeting of the scheme. |
3) | Rules for Trusts |
3.1) | The qualification criteria for the recognition of Trusts is as follows: |
3.1.1) | The trust deed must define the beneficiaries and the proportion of their entitlement to receive distributions: |
3.1.2) | A written record of the names of the beneficiaries or the use of a defined class of natural person satisfies the requirement for identification; |
3.1.3) | A written record of fixed percentages of entitlement or the use of a formula for calculating entitlement satisfies the need for defining proportion of benefit; and |
3.1.4) | The trustees must have no discretion on the abovementioned terms; and, on winding-up or termination of the trust, all accumulated Economic Interest must be transferred to the beneficiaries or to an entity representing the interest of the participants or class of beneficiaries. |
4) | Additional Criteria Applicable to Trusts: |
4.1) | For a Measured Entity to obtain the maximum points on its Ownership scorecard from shareholding by a Trust, the Measured Entity must be in possession of a certificate issued by a competent person to the effect: |
4.1.1) | That the Trust was created for a legitimate commercial reason which must be fully disclosed; and |
4.1.2) | That the terms of Trust do not directly or indirectly seek to circumvent the provisions of the Codes and the Act. |
5) | Additional Criteria Applicable to Broad Based Ownership Schemes and Employee Ownership Schemes: |
5.1) | For a Measured Entity to obtain the maximum points on it's ownership scorecard, the following additional requirements must be met by a Broad-Based Scheme or Employee Share Ownership Scheme. |
5.1.1) | a track-record of operating as a Broad-Based Ownership Scheme or Employee Share Ownership Scheme, or in the absence of such a track-record demonstrable evidence of full operational capacity to operate as a Broad-Based Ownership Scheme or Employee Share Ownership Scheme; |
5.1.2) | Operational capacity must be evidenced by suitably qualified and experienced staff in sufficient number, experienced professional advisors, operating premises and all other necessary requirements for operating a business. |