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

Industry Charters

Information and Communication Technology (ICT) Charter

ICT Sector Code for Black Economic Empowerment

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

Statement 100: The General Principles for Measuring Ownership

6. Section 21 companies, companies limited by guarantee


A Measured Entity may elect to include or exclude Section 21 companies or companies limited by guarantee for the purposes of measuring ownership in terms of this statement.

6.1 A Section 21 company or company limited by guarantee that houses a Broad-Based Ownership Scheme or an Employee Ownership Scheme is subject to the provisions governing those types of schemes and not to this paragraph.
6.2 When a Measured Entity elects to exclude such companies, it can do so by excluding up to 40% of the level of their ownership completely from the determination of its compliance with the ownership target.
6.3 A Measured Entity electing not to exclude section 21 companies or companies limited by guarantee when it is entitled to do so, may either treat all of that ownership as non-black or obtain a competent person's report estimating the extent of black rights of ownership measurable in the Measured Entity and originating from those section 21 companies or companies limited by guarantee.
6.4 Black Participants in a Section 21 Company holding rights of ownership in a Measured Entity may contribute:
6.4.1 a maximum of 40% of the total points on the ownership scorecard of the Measured Entity if they meet the qualification criteria for Broad-Based Ownership Schemes set out in Annexe 100(B).
6.4.2 100% of the total points on the ownership scorecard of the Measured Entity if they meet the additional qualification criteria set out for Broad-Based Ownership Schemes in Annex 100(B).
6.5 If the rand value of the total BEE stake is in excess of R7.5 billion, then the company will be considered to be compliant with the equity target in the scorecard. In the case of listed companies, the prescribed minimum free float (20%) will be excluded from computation of the target, subject to a minimum of 25.1% for the purposes of minority protection. In the case of SOE's, the target is 30'% of that component of equity that is not in government hands.


The ICT Sector Codes deviates from the Generic Codes on the ownership target which has been increased to 30%. The substance of the deviation of the ICT sector Code from the Codes of Good Practice (25.1% + 1) is the recognition by the ICT sector to accelerate the pace of transformation in the sector, thus ensuring more companies in the hands of black people. The ICT sector believes that given the pace of transformation and black ownership in the sector, it may take longer to bring about real transformation in the sector if the sector is to adopt the 25% + 1 compliance target. This is also to recognise the uniqueness of the ICT sector and that it cannot be treated as any other sector, hence the deviation from the compliance target in the Codes of Good Practice.


The R 7.5 Billion figure was agreed position by the industry as a catalyst to accelerate transformation. The figure was agreed for taking into consideration the size of entities in the sector. However, this is not a static figure it could change after a period of time in the process of transformation to ensure the targeted figure of 30% black ownership is achieved.


With regard to the free float of 20 percent, the Electronic Communications Act requires that for each company to be granted a license, 30% must be owned by HDIs. With regard to companies listed in the JSE, they are required to maintain a minimum of 20% free float, i.e. shares that are freely available to the investing public. This means that 20% of the issued share capital is not under the control of the officers of the company. It was then agreed that listed companies should have 30% of the issued share capital that could be under the control of the officers, meaning that 30% of the 80% of the issued share capital. This translates to 24% of the issued share capital. It was also agreed that black investors should have their position strengthened as they are minority shareholders. It was therefore agreed that they should have 25.1% by which they could exercise negative control.


6.5.1 Application of R7.5bn For calculation purposes, the measurement of compliance to the R7.5bn must only be applied to sub-criteria 2.1.1 and 2.2.1 of the ownership scorecard. Where a measured entity has satisfied the requirement of a BEE stake value in excess of R7.5bn, the measured entity will deemed to have achieved maximum points for sub-criteria 2.1.1 and 2.2.1. For calculation of compliance to sub-criteria 2.1.2, 2.2.2 and 2.2.3, the percentage value held by Black Women and broad-based schemes in terms of the BEE State value must be determined and then such percentage must be used to calculate level of compliance against the required target/s. When calculating the level of compliance for Net Value, where in excess of R7.5bn has been attained, the percentage of debt settled calculated against the opening debt value must be determined in order to calculate level of compliance met in accordance to the time-based graduation factor. Where the total BEE stake value is less than, the score for sub-criteria 2.1.1 and 2.2.1 will be calculated using the actual percentage of black shareholding in the measured entity against the required target of 30%.
6.5.2 Review of R 7.5bn The ICT BEE Council must review annually the effect of R7.5bn before making recommendations for any changes; When determining the extent of change to the R7.5bn the Council must take the following factors into account:- The valuation of the company points to an overall enterprise value that is lower than the enterprise value at the date the original BEE transaction; or an overall market capitalisation of the JSE that is lower than the market capitalisation of the JSE at the date the original BEE transaction. Impact assessment if a company is not fairly valued by the market as, for example, in the instance where there has been a more than five percent decline in the share price of an enterprise over the preceding 4 quarters of a financial year; or the market capitalisation is lower than the fair value of a company as determined by an independent investment bank. Depth of liquidity in the market and capacity of the market to handle multiple BEE transactions from veritable sectors of the economy. The Council must publish such recommendations of change for public comment for a period of not less than 30 days.