THE DETERMINATION OF BLACK OWNERSHIP IN COMPANIES FOR THE PURPOSE OF BLACK ECONOMIC EMPOWERMENT (PART 2)

Abstract

This is the second part of a two-part article dealing with the determination of black ownership in companies for the purpose of black economic empowerment. The BEE codes of good practice define and measure ownership in terms analogous to the principal rights flowing from membership of a company, namely voting rights at a meeting of members and economic interest in the company. Economic interest includes, but is not limited to, a shareholder’s entitlement to receive dividends. Targets are set for the degree to which black people generally, as well as certain sub-groups of black people specifically, are entitled to the ownership elements in
companies. Safeguards are built in to discourage fronting practices. The degree of detail with which the codes attempt to prescribe the nature of black ownership in companies has the potential to lead to confusion and unintended consequences that may be contrary to empowerment objectives.