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THE

BEECHAMBER

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NEWS

WHAT IS BLACK OWNERSHIP UNDER B-BBEE?


Housing and ownership

Under Broad-Based Black Economic Empowerment (B-BBEE) legislation, Black Ownership refers to the level of ownership in a business held by Black People, as defined in the B-BBEE Act. This includes African, Coloured, and Indian South African citizens who were disadvantaged by unfair discrimination before 1994.

Ownership is one of the five elements of the B-BBEE scorecard (alongside Management Control, Skills Development, Enterprise and Supplier Development, and Socio-Economic Development), and it carries 25 points under the General Amended B-BBEE Codes of Good Practice — making it a major contributor to a company's B-BBEE level.

To qualify as B-BBEE Black Ownership, the following key components are assessed:

  1. Voting Rights: The percentage of voting rights held by Black People.

  2. Economic Interest: The share of profits, dividends, and economic benefits Black shareholders are entitled to.

  3. Net Value: The value of Black ownership after considering liabilities (like funding or loans used to acquire the shares).

  4. Ownership by Black Women & Designated Groups may also score additional points under sub-categories.

Benefits of Black Ownership in B-BBEE:

  • Improved B-BBEE Score (critical for securing public sector contracts and private sector clients with preferential procurement goals).

  • Access to government incentives and grants.

  • Brand positioning as a transformation-conscious business.

  • Market access and strategic growth through partnerships with empowered individuals or entities.

Common Pitfalls:

  • Fronting Practices: Misrepresenting Black Ownership without real transfer of benefits or decision-making power which may be seen as Fronting Practices.

  • Non-compliance with “Net Value” requirements: Especially when shares are acquired through loans or vendor financing, value must accrue to Black Shareholders over time, and this could lead to discounting of One B-BBEE Status Level on the Scorecard.

Black Ownership under B-BBEE legislation is not just a compliance exercise, it is a key mechanism for redressing economic imbalances and ensuring sustainable economic transformation. When implemented genuinely, it benefits both the business and the broader economy by unlocking new opportunities, markets, and talent.

Ownership Services are available at the BEE Chamber to assist with navigating Ownership Transactions.

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