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THE

BEECHAMBER

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NEWS

WHAT ARE THE RULES FOR THE MODIFIED FLOW-THROUGH PRINCIPLE?

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Under the element of Ownership, there is an existing principle that allows for the modification of Black Ownership in an Ownership Structure. The rules are as follows under the General Amended B-BBEE Codes of Good Practice:

 

  • A Measured Entity applying this Modified Flow-Through Principle cannot benefit from the Exclusion Principle.

  • The Modified Flow-Through Principle applies to B-BBEE owned or controlled company in the Ownership of the Measured Entity.

  • In calculating Exercisable Voting Rights under paragraph 2.1.1, and Economic Interest under paragraph 2.2.1 of the Ownership scorecard the following applies:

    • Where in the chain of Ownership, Black people have a flow-through level of participation of at least 51%, and then only once in the entire ownership structure of the Measured Entity, such Black participation may be treated as if it were 100% Black.

  • The Modified Flow-Through Principle may only be applied in the calculation of the indicators in paragraphs 2.1.1 and 2.2.1 of the Ownership scorecard. In all other instances, the Flow-Through Principle applies.

 

Ownership Services are available to help members understand the Modified-Flow Through Principle.

  

 

 
 
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