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THE

BEECHAMBER

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NEWS

PAYMENTS ACCORDING TO THE GRADUATION FACTOR

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The Graduation Factor formula is key to calculating Net Value and awards 8 points on the Ownership scorecard. It reduces the debt linked to the economic interest of Black Participants over time. The first-year repayment of the 10% target for claiming Ownership is due 12 months after the rights and obligations become enforceable, ensuring that Black Participants have value from the start. Entities often offer Black shareholding at a discount to facilitate this. Ownership Services are available for analysis of Ownership transactions.

Core to the Net Value calculation is the Graduation Factor formula that awards 8 points on the Ownership scorecard. The time-based graduation factor reduces, over time, the level of debt attributable to the economic interest held by Black Participants.

 

Q | To earn the points available, when is the first-year repayment of the 10% target to claim Ownership by using the Graduation Factor formula payable?

 

A | A `year’ is not defined in Schedule 1; therefore, it takes on the ordinary meaning of 12 months commencing on the first day of the first month and ending on the last day of the 12th month. As such, the 10% target for the first year commences on the first day that all rights and obligations in Ownership become enforceable. The intent is to ensure that there is always value in the hands of Black Participants, from day one, before awarding Net Value points. It is for this reason that entities offer Black shareholding at a discount.

 

Ownership Services are available to assist with an analysis of Ownership transactions. 

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