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

Codes of Good Practice on Black Economic Empowerment

Code Series 100: Measurement of the Ownership Element of Broad-Based Black Economic Empowerment

Statement 103 : Recognition of Equity equivalents for multinationals

6. Specific Rules on Multinationals


6.1) Any contributions towards the ownership Element of B-BBEE made by Multinational Businesses or South African Multinationals are measurable against the value of their operations in the Republic of South Africa.


6.2) In calculating their ownership score, Multinational Businesses and South African Multinationals must apply the Exclusion Principle to any portion of the business value of their South African operations gained from non-South African sources. A Standard valuation method must be used to determine the value of the South African operations.


6.3) In calculating their ownership score. Multinational Businesses may recognise sales of Equity Instruments in non-South African Enterprises to black people, on the following basis:


6.3.1) the non-South African Enterprise must form part of the chain of ownership between the Multinational Business and its eventual holding company; and


6.3.2) the transaction must comply with South African exchange control requirements; and


6.3.3) the percentage of the value of the Equity Instruments sold to the value of the Multinational Business represents the recognisable black claim to Economic Interest; and


6.3.4) the percentage of Exercisable Voting Rights ceded to the buyers of the Equity Instruments in the Multinational Business represents the recognisable black right to Exercisable Voting Rights; and


6.3.5) the rights of ownership in the Equity Instruments are comparable to rights that would have accrued had the Equity Instrument been in the Multinational Business.