BBBEE Ownership Transactions

Objects of the Broad-Based Black Economic Empowerment (“BBBEE”) Act, 53 of 2003, as amended by Act 46 of 2013(hereafter the "Act"), include promoting economic transformation and achieving a substantial change in the racial composition of ownership. It is with that in mind that under the Act, "equity ownership" does not simply mean a transfer of shares. In order to enter into a legally enforceable transaction, that would allow the company to claim the points, the following elements must be present, there must be:

1. exercisable voting rights;
2. economic interest; and
3. net value.

Structures, provisions and transactions that the BBBEE Commission has expressed concerns with:

• Call options