B-BBEE Ownership. One of the most coveted and misunderstood aspects of the B-BBEE scorecard. But what does it entail, exactly? Why is it considered to be so necessary? And how does one go about achieving it?
“The Broad-Based Black Economic Empowerment scorecard considers ownership to be a priority element,” says Angie Lanham-Love, CEO of Lanham-Love Consulting, a 73.57% Black Owned Level 2 BEE Exempt Micro Enterprise that has been helping companies gain additional benefits and increased compliance across multiple elements of the scorecard for more than 20 years. “It seeks to address increasing the ownership of businesses, enterprises and corporations held by Black people in the economy.”
The level of B-BBEE ownership within a business is measured across three main categories: Economic Interest, Voting Rights, and Net Value. “Economic Interest covers the right to benefit from the economic returns of ownership of the company, such as receiving dividends and sharing in capital gains,” says Lanham-Love. “Voting Rights entails the extent to which shareholders are involved in decision-making, and Net Value focuses on wealth creation, and essentially assesses the net asset value of black investment in a company or entity.”
Obviously, the government of South Africa considers ownership to be of utmost importance. “Without some element of ownership, companies will battle to achieve compliance above a Level 7 or 8,” says Lanham-Love. “It is mathematically impossible to achieve a higher level of B-BBEE compliance without addressing this aspect. This is why it is vital to get ownership right from the start.”
If you wish to assure that B-BBEE Ownership is being handled correctly in your business, it is worthwhile to seek the help of experts, such as those at Lanham-Love Consulting. “We begin with a comprehensive, in-depth workshop with you and your team, in which we will explore the opportunities that lie within the Amended Codes of Good Practice and find the ‘best fit’ solution for you and your business,” says Lanham-Love.
“This will enable you to embrace the requirements of the Amended B-BBEE Codes, with the relevant emphasis on ownership and the specific roll-out of the B-BBEE Strategy. Furthermore, it will enable us to work with you to design an Ownership structure which will have the most impact on your Procurement value to your client base.”
The Ownership process is twofold. “First, the structure needs to be designed and built,” says Lanham-Love. “Lanham-Love Consulting handles the B-BBEE and commercial design of the structure. The lodging of the trust by the legal representatives is done by our affiliate, LLGV, which assures that the ownership mechanism is built correctly, and complies with the requirements of the B-BBEE codes.”
“Second, the structure needs to be implemented. This is done via the shareholder’s agreements, Memorandum of incorporation, loan agreements and the like. While Lanham Love Consulting doesn’t offer this service, you may elect to utilize our sister company Lanham-Love Galbraith van Reenen or your own lawyers and/or accountants for this process,” says Lanham-Love.
For peace of mind regarding your B-BBEE Ownership, speak to the experts at Lanham-Love Consulting. We are perfectly positioned to ensure comprehensive B-BBEE compliance.