OWNERSHIP PRACTICE

4/25/2013

CONTENT PAGE | PAGE NUMBER | QUESTION 1 | 3 | QUESTION 2 | 3 | QUESTION 3 | 3-4 | QUESTION 4 | 4-6 | DECLARATION | 7 |

QUESTION 1 1.1 75% X 25% = 18.75% 1.2 OWNERSHIP INDICATOR | WEIGHTING POINTS | COMPLIANCE TARGET | POINTS | Voting rights: | | | | Exercisable voting rights in the hands of black people | 3 | 25% + 1 Vote | 2.25 | Economic Interest: | | | | Economic interest in the enterprise to which black people are entitled | 4 | 25% | 3 |

QUESTION 2
2.1 Company 1 is 65% Company 2 is 65% x 80% =52% Company 3 is 65% x80%x90% =46.8% Company 4 is 75% Company 5 is 75% x 55%=41.25%
2.2 Company 1 and company 5 – both these companies have lower black ownership. Ownership on both these companies is above 50%
2.3 65% x 80% x 90% x 25% x 75% x 55% x 75% = 10.12%
2.4
OWNERSHIP INDICATOR | WEIGHTING POINTS | COMPLIANCE TARGET | POINTS | Voting rights: | | | | Exercisable voting rights in the hands of black people | 3 | 25% + 1 Vote | 1.21 | Economic Interest: | | | | Economic interest in the enterprise to which black people are entitled | 4 | 25% | 1.62 |

QUESTION 3 | R million | | Year 2 | Year 5 | Year 7 | Year 9 | Year 10 | Market Value of the black equity interest (A) | 170 | 150 | 160 | 200 | 250 | Market value claims against the black equity interest (B) | 90 | 65 | 70 | 50 | 0 | Market value of the measured enterprise (C) | 480 | 600 | 520 | 800 | 1000 | Deemed net value (A-B/C) | 0.167 | 0.141 | 0.17 | 0.187 | 0.25 |

Net Value – Formula A | R million | | Year 2 | Year 5 | Year 7 | Year 9 | Year 10 | Deemed Net Value (from above) B | 170 | 150 | 160 | 200 | 250 | Graduation factor (C) | 90 | 65 | 70 | 50 | 0 | Points B(1/25% x C) x 7 | 9.296 | 2.36 | 3.80 | 0.52 | 0.7 |

Formula B
10.12/25 x 7
= 2.83
QUESTION 4
4.1
OWNERSHIP INDICATOR | WEIGHTING POINTS | COMPLIANCE TARGET | POINTS | Voting rights: | | | | Exercisable voting rights in the hands of black people | 3 | 25% + 1 Vote | 3 | Exercisable voting rights in the enterprise in hands of black women | 2 | 10% | 1 | Economic Interest: | | | | Economic interest in the enterprise to which black people are entitled | 4 | 25% | 4 | Economic interest in the enterprise to which black women are entitled | 2 | 10% | 1 | Economic interest in the enterprise to which black designated groups are entitled | 1 | 2.5% | 0 | Realisation Points | | | | Ownership fulfilment | 1 | Yes / No | 1 | Net Value | 7 | 25% | 7 | Bonus Points 25% must be met first | | | | Ownership involvement by new entrants | 2 | 10% | 0 | Ownership involvement by employee schemes, co-op, BB schemes | 1 | 10% | 0 |

4.2 Black designated groups are: a) Unemployed black people not attending and required by law to attend an educational institution and not awaiting admission to an educational institution b) Black people who are youth as defined in the National Youth Commission Act of 1996 c) Black people who are persons with disabilities as defined in the codes of good practice on employment of people with disabilities issued under the Employment Equity Act d) Black people living in rural and under-developed areas
Black people” is as defined in the Broad-based Black Economic Empowerment Act no. 53 of 2003, save that it is limited to South African citizens. In terms of the implementation of the Codes of Good Practice, the term is further defined as Africans, Coloureds and Indians who are South African citizens. For avoidance of doubt, this term does not include juristic persons or any form of Enterprise other than a sole proprietor.

4.3"black new entrants" means a black Participant or Participants who: a) Hold a Voting Right and Economic Interest in a Measured Enterprise; and b) Prior to acquiring an Equity Interest in a Measured Enterprise, have not concluded similar transactions in respect of any other Enterprise which have, in aggregate, a cumulative value of R 20,000,000.00 measured in accordance with an Acceptable Valuation Standard;
4.4 The following apply to Employee Share Ownership Schemes (ESOP): a) The scheme constitution must define the participant and the proportion of their claim to receive distributions b) A written record of the name of the participants or the use of a defined class of natural person satisfies the requirement for identification c) A written record of fixed percentages of claim or the use of a formula for calculating claims satisfies the need for defining proportion of benefit and d) The fiduciaries of the scheme must have no discretion on the above mentioned terms and
The participants must take part in: a) Appointing at least 50% of the fiduciaries of the scheme b) Managing the scheme at a level similar to the management role of shareholders in a company having shareholding c) The constitution, or other relevant statutory documents, of the scheme must be available, on request, to any participant in an official language in which that person is familiar and d) All accumulated economic interest of the scheme is payable to the participants at the earlier of a date or event specified in the scheme constitution or on the termination or winding-up of the scheme and e) The scheme fiduciaries must represent the financial reports of the scheme to participants yearly at an annual general meeting of the scheme
4.5 The qualification criteria to be recognised as a trust is as follows: a) The trust deed constitution must define the participant and the proportion of their claim to receive distributions b) A written record of the names of the beneficiaries or the use of a defined class of natural person satisfies the requirement for identification c) A written record of fixed percentages of claim or the use of a formula for calculating claims satisfies the need for defining proportion of benefit and d) The trustees must have no discretion on the above mentioned terms and on winding up or termination of the trust, all accumulated economic interest must be transferred to the beneficiaries or to an entity representing the interest of the participants or class of beneficiaries
Additional criteria applicable to trusts: a) For a measured entity to obtain themaximum points on its ownership scorecard from shareholding by a trust, the measured entity must be in possession of a certificate issued by a competent person to the effect: b) That the trust was created for a legitimate commercial reason which must be fully disclosed and c) That the terms of the trust do not directly or indirectly seek to circumvent the provisions of the Codes and the Act

Declaration
I declare that the information provided is my own work. I have declared below all source documents all documents used in completing the assignment

Bibliography
Broad based BEE: the Complete guide; Vuyo Jack with Kyle Harris, first edition 2007