Paul Janisch

Consulting, opinions and speaking engagements and a few other topics that I know quite a lot about

If you are looking for a realistic perspective of empowerment in South Africa and southern Africa (including Namibia, Zambia, Zimbabwe and Botswana), I am able to provide that perspective at your AGM or any other presentation. It's relatively clear from this blog that I know what I'm talking about. Over the last 20 years I've gained a very thorough understanding of the following topics

• Government procurement
• Parastatal procurement
• BEE trends within Africa
• Impact of BEE legislation
• Multinationals and empowerment within Africa

And I am very happy to provide you with an overview of these topics.

In addition I have consulted to a wide number of public and private organisations throughout South Africa on

• Public Private Partnerships
• Listed shareholding analysis
• Tax advice on BEE initiatives and tax structures (through a partner)
• Opinions on empowerment commitments that may be contractually binding
• BEE plans for tenders
• Joint Venture BEE certificates
• General opinions (similar to this one)

Or if you need someone to come in and find those points within your organisation for your next verification please contact me and we can discuss what is required. You can email me or phone me on (+2783) 227-1375.

Why BEE and public private partnerships could work

Courtesy of Moneyweb.  They published my article

 

Why BEE and public private partnerships could work

While relatively new to South Africa, public-private partnerships have incredible potential to deliver on empowerment measures.

By Paul Janisch 10 Feb 2023  11:40 

A recent article indicated that Transnet is considering outsourcing its container corridor between Durban and Johannesburg.  The proposal appears to be some sort of an interim solution with the winning bidder handing it back to Transnet in 20 years.

To me this seems like a public-private partnership (PPP). It also suggests that state-owned entities (SOEs) may be softening their attitude to these partnerships.

PPPs are without doubt the most effective tool the government has to achieve its Black Economic Empowerment (BEE), reconstruction and development programme and other empowerment-related goals. Yet this method of procurement is not making the most of these opportunities.

The problem seems to be that the transaction advisors that are used in the early stages of the feasibility study are not suitably aware of empowerment requirements and structures that PPPs would like to achieve in the long term. The majority of these bid documents contain antiquated empowerment requirements that might deliver a narrow type of empowerment structure that ultimately benefits very few people.

The empowerment criteria for PPPs are contained in Module 2 of the National Treasury PPP Practice Note of 2004. The practice note precedes the Department of Trade and Industry’s broad-based BEE codes of good practice (COGP) by about three years, but a careful reading of both the COGP and the practice note reveals that they are remarkably similar and that a standard COGP implementation will more than likely cover almost every requirement that Module 2 has laid out.

 Interestingly the Municipal Service Delivery and PPP Guidelines have deviated from Treasury’s module 2 and incorporated the DTI’s codes of good practice into its requirements – suggesting perhaps that the Treasury module will follow suit in the future.

The stated empowerment objectives of PPPs include

• Increasing levels of black ownership and management
• Development of local skills
• Development of supporting entrepreneurship
• Creation of local jobs (directly and indirectly)

It is the last three objectives that tend to be ignored in most PPPs.

The management and ownership requirements are pushed to the fore and more often than not benefit people who may not reside or have any roots in the area that the PPP has targeted.

It may appear that empowerment has been achieved but, without the required emphasis on local economic development, the local population might come out of this process completely neglected.

Perhaps the best way to explain this process is to use an example of a PPP that we worked on in a remote area of the Eastern Cape.

Case study

The specific project was located in a region that was a labour sourcing area during apartheid. It is still suffering from the chronic ravages of this policy and as a result has virtually no infrastructure, with an economically active population that is mostly female with a high HIV infection rate.

It stands to reason that any investment in this area must have some positive impact on the local community. Our job was to ensure that the empowerment requirements would continuously develop that local community.

Using both module 2 and the DTI’s codes as a starting point we recognised that the construction phase was unlikely to employ any of the local population on a permanent basis. As such, budgets that would typically be allocated under a standard BEE scorecard were re-allocated to other areas of the scorecard that would see a greater investment in the local community.

We specified that the local community (i.e. people living within a 50km radius of the target area) was to be used, because the DTI’s BEE scorecard only speaks of black people – not local people. This means that without specifying local investment it is conceivable that a company operating in this area could be fully compliant by investing in any other area. The facilities’ management scorecard built on the BEE foundations laid by the construction phase and increased the number of local people employed on a permanent basis over a ten-year period. The modifications to the scorecards were within the ambit of module 2.

The single most important feature of a PPP is that the Treasury Manual insists that all empowerment requirements are made contractually binding on the winning consortium, with penalties for non-compliance.

Of course this requires both the government and the private party to measure their BEE performance. If the prescribed scorecard deviates so far from a standard scorecard then there is no conventional method of measurement. Verification agencies have been mandated to measure empowerment based on either the DTI’s scorecard or a sectoral charter and do not have the legal capacity to measure any other type of scorecard that deviates from these norms. This means that an additional third party has to be contracted to measure and report on this.

PPPs are still relatively new to South Africa and their efficacy is not yet fully tested. But there is little doubt that they have incredible potential to deliver on government’s empowerment measures.

It is very important that these measures are carefully thought out at the early stages of any PPP, because it may be very difficult to change them ten years down the line when it is realised that they are not achieving what all stakeholders hoped they would. Proper advice at the outset mitigates this risk.

Paul Janisch is a BEE consultant with wide experience in the transaction phase of a number of PPPs

Concourt won't hear the Tourism minister's appeal

Because it's moot.  That means that the SCA has spoken.  As per the Daily Maverick

The Constitutional Court has refused to hear an appeal against a ruling that found that Broad-Based Black Economic Empowerment (BBBEE) should not have been used as a criterion for the government’s Covid-19 tourism relief grants.

Brought by the Minister of Tourism and Others to appeal a Supreme Court ruling in favour of AfriForum and Solidarity, the application sought legal certainty on whether the minister was obliged or entitled to include BBBEE status among the criteria that the Department of Tourism used to select small businesses (SMMEs) that qualified for the Tourism Relief Fund.

The Supreme Court had ruled that the minister was neither obliged, nor was she entitled, to include race-based information in the selection criteria used to select SMMEs to be given the grants. 

In March 2020, after the Minister of Cooperative Governance and Traditional Affairs had declared a state of disaster in the country, the national lockdown forbade those who were not essential services workers from travelling for work or social visits – and only businesses that delivered essential services were allowed to operate. 

I can just see the arrogant anc minister (hence incompetent) instructing her lawyers to sort out these white people, because the anc is now more about populist anti-white sentiment than anything else - hell they even booted carl niehaus out, can't fault them for that really.

Her policy was wrong.  It was unconstitutional, it  was her saying to a certain race group of tax payers that their tax money is welcome but  we're not going to use it on you. 

Now we we've got everybody's great aunt call the shots about Eskom.  She's a complete fuck up, and it's unlikely that Cyril (notice he's still uppercase even though he's up there in the fuck-up stakes).  To get an idea of  her power read on  (their uppercase, not mine)

Under a state of disaster, Dlamini Zuma's actions are not subject to review by Parliament. She can extend the national state of disaster indefinitely. Efforts to reform disaster laws, to change both those things, went nowhere.

During the Covid-19 state of disaster, the courts proved both slow and generally loathe to intervene.

That leaves Ramaphosa as the only check on Dlamini Zuma's powers. He can, instantaneously and without reason, remove her from her post, which would immediately end her ability to issue decrees. Given the deep divide within his party, though, firing Dlamini Zuma would almost certainly trigger an attempt to remove Ramaphosa himself – with a real chance of succeeding.

Electricity would get its own minister, Ramaphosa said on Thursday night, "to assume full responsibility for overseeing all aspects of the electricity crisis response".

Except not quite. Any normal ministerial powers are overridden by a state of disaster, and in a state of disaster other ministers, say a new minister of electricity, has exactly such additional powers as are delegated by the minister of cooperative governance.

So, for good or ill, ultimate responsibility will still rest with Dlamini Zuma, as long as she holds that post.

What should we call this - Corruption 3000.0?  It's time, this incompetence and arrogance is too much.

And SONA - malema, I'd like to say special.  There's nothing special there, just predictability.  eff-up's antics aside.  Cyril's speech is  nothing special because he never delivers on his promises anyway. 

 

Ownershield's website is live - a shameless plug. Please go and visit

Thanks to Howard and his team at Syncrony Digital.

Ownershield is a unique ownership advisory company.  It sticks to these rules

Sustainability.

Ownership is an emotional topic, but if a company is going to go down that route then the solution must be able to weather BEE norms and interpretations

Tax efficiency.

As compelling as it is to extend shareholding to a connected individual, company, trust or any other corporate vehicle; the company selling the shares is going to be subject to extra taxation, like Capital Gains Tax

Participation of new entrants.

All of us know how to own things, but few of us know how to own an asset that will grow in value. This is an extension of entrepreneurship and can be learned, but it also needs to be mentored and nurtured.

Reversibility.

Where both parties can instigate termination proceedings without having to undergo an expensive and lengthy process.

Fully managed.

There are no extra administrative costs or processes with Ownershield. All ownership vehicles are managed by Ownershield, this includes all the BEE entities involved in the transaction.

Ownershield offers a dynamic range of ownership solutions that cater for all sizes of companies operating in South Africa. All solutions are based on a subscription model without a set up fee.

OWNERSHIELD FOCUSES ONLY ON OWNERSHIP SOLUTIONS. By engaging with us you can be assured that we will not regard you as fodder for other products.

 

These go to 11

If you ask James to quote the title of this post, he'll do it in a passable Nigel Tufnel accent. In fact his general ability to do accents is rather good, cue – g'day mate.

It's been a year for all of us. In spite of the difficulties he has remained the most amazing young man. He may be 11 but he still has the enthusiasm of a little boy. I've mentioned this before but he is fiercely passionate about stuff that he's deeply passionate about. At the moment it's history, specifically the second world war. This is great because I'm interested in that stuff, in fact I can see that we will be spending a lot of time at the War Museum this December.

This is pretty much 2022 done for James, it was the first normal year he'd had in three years. School had gone back to normal, he was able to freely mingle with his friends and he was forced to play sport. Hmmm not the best friends are James and sport. His school insists you play all sports, and there were glimpses of enjoyment, but not much. If he is to choose a sport then it will be swimming. And he's started water polo lessons. That's good news.

Our domestic situation has changed and I'm fortunate enough to see my kids in the day. I don't see them at night and haven't found a place where each kid has their own room. But there have been enthusiastic sleepovers in the lodgings. Him on a camp bed at the foot of my bed, but not for long. Still there's that enthusiasm, he does see a lot positivity in what's going around him. I draw a lot of inspiration from this.

For some reason I am suffering from chronic writer's block at the moment. I'll end it here. JimJam you are my hero. Your inner strength is contagious. You are still a very popular kid who makes friend very easily. And also you slot in so naturally with friends that you haven't seen for years. You are also a bright kid with an incredible thirst for knowledge. I love you very much and I know your brother does too even though he hides it so well.

End of BEE requirements for state procurement – maybe not so much

Enochonwood got round to gazetting the amended PPPFA regulations after the constitutional court told him that the last ones were shit. I would caution the reader to steer clear of (what's another word for sensational, I've used that word too often) headlines like

Big changes for BEE laws in South Africa

Because these headlines aren't quite on the money. The difference between the former regulations and these regulations is that preference points aren't awarded for BEE levels like they were in the past. Now they are awarded for

"specific goals" means specific goals as contemplated in section 2(1)(d) of the Act which may include contracting with persons, or categories of persons, historically disadvantaged by unfair discrimination on the basis of race, gender and disability including the implementation of programmes of the Reconstruction and Development Programme as published in Government Gazette No. 16085 dated 23 November 1994;

The term "specific goals" here is paraphrased from section 2(1)(d) of the PPPFA. I underlined the word MAY because there could be other criteria. However those criteria are not mentioned in the regulations. What we do know is that the PPPFA states in 2(1)(e)

any specific goal for which a point maybe awarded, must be clearly specified in the invitation to submit a tender

This is where I get scared. In the last regulations you knew that if you were a level 1 then you'd get 10 or 20 points. Room for gerrymandering was somewhat limited. We now have an element of uncertainty. In fact I will posit that the scope for corruption might go up substantially because preference points can be directly allocated to a specific bidder. Think about it – a bid could say preference points will be allocated to a certain family who were removed from Bryanston and taken to the Middelburg magistrate's court (I should coco). It's not impossible that this could happen – not with our quality of daft looters.

Don't celebrate too early. Empowerment criteria are still a big part of the PPPFA. They are just a little better hidden, unlike the sign below.

Discheskombobulated

This does need to be discussed. Wait it's not a discussion, it's a monologue.

There are two empowerment stories that have made the headlines. The first is Dischem. I don't' want to go too deeply into this story. When I first saw the Whatsapp I thought it was fake news. In fact my mind suggested to me that this was some brand of anti-Semitism. I have met Ivan Saltzman a few times. He's an interesting guy, definitely sharper than most people. You wouldn't think it when you met him, but I think that's his style. So it turns out that this story was true. Dischem has too many white managers (90%of the manager are purportedly white males). Ivan says tohis staff, we could be hit with a fine of 10% of our turnover so no more wittes, OK?

This didn't make sense for two reasons. Firstly that employment equity requirement is in draft form and is unlikely to make it beyond promulgation because it will be fought all the way. And that's right, this government is incompetent and useless and they deserve to have their race-based quotas destroyed by the courts. Secondly, Dischem would probably destroy the department of labour in court. We are talking about sheerincompetence here, doesn't take a great lawyer to win this one – especially if the department hires the advocate for the stars.

I thought there must be some other reason. Was it because they needed to renew a licence? Are they gunning fo a large tender? The last official word is that Ivan was scared of the fine and he withdrew the notice, he was facing a bit of a commercial boycott and general press disgust – although he did find an unlikely ally in the black business council.

Then this weekend there was a sensational heading in the Sunday Times (as usual it's behind a paywall so you can't read it) To save Eskom, empowerment must go

That's not really the sentiment of the Eskom chair – Mteto Nyati. What he said was

1. Change the procurement rules to get rid of middlemen that mark things up by multiples of millions. He specifically spoke about foreign purchases. You see the so-called localisation rules create BEE "entrepreneurs" (read rent-seeking enablers) who act as agents and get paid a fortune. Eskom can't afford this. Id est "Procurement rules are not agile as they should be, including rules which say you cannot use suppliers that are not local. When the supplier of equipment is international you have to use a middleman to satisfy the localisation rule. There's no place for those kinds of practices now. We need to remove costs from the equation." He then continues "Internal corruption is largely at the back of empowerment processes that promote local small business (what he doesn't say is – businesses who cannot actually deliver on what they are selling, we are not talking about semi-skilled stuff, this is high end stuff)
2. "The other area where we can help is around skills, and rigid rules around who to employ in terms of equity targets. Right now we need to be focussing on the best person for the job… regardless of how they look."

That's it. Naturally the bbc, who are Dischem's best friends have now become Eskom's new enemy.

The Black Business Council (BBC) has slammed Eskom board member and former MTN CEO Mteto Nyati for his statement that South Africa's empowerment rules hamper the power utility's performance. The BBC believes Nyati's words are a deliberate diversion from improving its Energy Availability Factor to 75% and providing South Africans with a reliable electricity supply. "The Black Business Council strongly condemns the irresponsible and reckless utterances purported to be those of Mr Mteto Nyati regarding transformation and localisation," it said in a statement. "The purported views deliberately omit to mention corruption that was committed by white-owned companies at Eskom, as highlighted by the Zondo Commission." It added that Nyati's views project that blacks are being done a favour in their own country, where they are a majority.

There you have it, multinational companies that do not have a complexion are now white as well as the guptas and salim essa.

I don't know what else to say. I have no time for the black business council, and they probably have less time for me.

In short, Eskom is not reneging on its broader empowerment commitments. If you provide goods or services that are not critical to their operations you're still going to need ownership. If you are a manager that is a generalist then EE rules will apply. This is bad headlining and sensational bbc-ing.

When courting a potential business partner, doos and donts

Let's say you are a wide boy from Durban who has an auditing qualification and talks up a good story.  You call up a certain BEE consultant with a view to gain all his business.  A conversation ensues.

The BEE consultant being the disagreeable and arrogant fuck that he is tells you what he is looking for.  You tell the arrogant fuck how you handle SANAS and you only had a few non-conformances in your last assessment.  You are impressive. 

The arrogant fuck (who shall be referred to as AF from now on) asks you about financial years and do you know about the most recent SANAS case.  Yes you tell the AF, however certain codes like the construction code prescribe a financial year (it doesn't, wide boy was a little too wide to actually know  what he is talking about).

One lime and soda and half a coffee later (which wide boy gets to pick up), wide boy asks AF how he can get all AF's business.  AF says (in his best Kid Colt voice) "waal, we are now going into the ownership field providing solutions using share options. I can give you a QSE ownership certificate imminently."

AF mistakenly thought this was a generous offer.  Oh no, wide boy is too wide  for that. Not worth his time.  He's a SERIOUS player, he wants one of AF's big clients.

AF -  I can't risk it.

WB - Ownership only  is not worth my while.

Meeting ends

What a useless fucking wanker wide boy turned out to be.  There's no ways I am going to give you one of my serious clients when I don't know how you work.  The people I deal with would probably do the ownership verification for free because they want my business.

Wide boy can fuck off.

 

A skilled approach to skills development

Some of my good readers (hopefully very few) know Chavvy Moray Eel and his insignificant skills development company. Chavvy is like many of the other charlatan service providers in this country. They'll charge you a fortune for BEE compliance because they put the fear of god into them and they know their clients know a hell of a lot less than they do. They, like all of us, have a relationship with a verification agency where Larney will ensure that you get all the points that you paid more than you should have for. So good is Larney that she will threaten her clients with fronting the awful awdoz if they dare venture away from Chavvy's business.

Not all are Chavs like Chavvy, but many are. I've seen them all. One company ripped off one of my clients and then couldn't even get him onto the scorecard.

Let's stick to the rules here. Don't spend money if it's not going to get you onto the scorecard. This is the first thing I do. I look at the feasibility of the client getting onto the BEE scorecard and then I modify the programmes to achieve those points. If it's not going to work out then I'll suggest the client gets a non-compliant BEE scorecard for R5500 (which in itself is expensive) but remember that for a company that has no ownership 54.9 points and 9 points produce the same result – non compliant. Don't' spend a fortune to get onto the scorecard. Don't bother if you can't. Of course the ownership element can easily be sorted out with Ownershield, so that problem can now go away.

The next stop is skills development. It is chronically expensive, ludicrously so. I still struggle to think how that business sector in this country could have agreed to that. When you start looking at a skills development programme look at the cheapest points. I'm now talking about the generic scorecard. I start off at the learnership programme, more often than not you don't need that many learnerships/internships in place to get those points. I would aim for about 5.5 out of the six. Unfortunately Indian skills development doesn't do much for points so I tend to leave them out. Then look at disabled skills. It's a lot cheaper than any other programme and is not subject to the EAP. At this point you should be looking at something close to 9 points. If you have done the learnership programme properly then you will have put your highest paid black people on a learnership programme because you can count their salaries as skills spend. By the way, herein lies the dichotomy of the skills development element. If you are going to get more points for the higher paid people, then why would you bother with the lower paid people who need it the most.

Forget about bursaries. They were bolshie bob's final confirmation that he was a useless commie who was blinded by ideology and was completely unsuited to anything other than an academic post in a small eastern European country.

Then we need to see if you can get most of the available grant money to cover the expense of the skills programme. I didn't know that you could do this until I asked Amanda Earle of HR Ignite to meet with some of my clients. This is Amanda's forte and she's really good at it. She has set herself the task of getting the grants to pay for the training of all the staff, in other words the 1% SDL covers the 6% BEE spend AND white and foreign skills development.

It was Amanda who stressed that you need to have a sussed skills development partner. A company that is not going to rip you off and will push for the results that you want at the least cost. And this is how I happened upon Johan Barkhuizen (who insists on being called Barkies) and Corne Basson of Ultivate. I had the pleasure of joining Barkies in a meeting in Bloemfontein. We left at six in the morning and had an hour meeting at 11:30 and went back. But it was a very significant meeting because Barkies told the client that he didn't need 1000 outsourced learners to achieve their BEE targets. 180 learners would do, 120 of which were internal people who earned about 200k a year. This would translate into about R24million skills spend. And the 12H deduction is still applicable.

This appears to be Ultivate's mission. Get your internal people trained and then look at external learnerships to cover the disabled spend. Ultivate is not so much a skills development provider. They are more of a broker, they will go and find the best service providers to deliver the courses. On top of this they will negotiate the best prices for their clients. They understand that there are a large number of service providers in the market place. It's a competitive business, why should the client pay more. We could call it discount skills I suppose.

One of the things that really excites me about Ultivate's position on skills is the emphasis on internships. When I say internships I refer to those internships that the codes talk about. If you read the definition in that god awful matrix you'll notice the ABET students can be regarded as interns. Barkies and Corne ask the simple question as to why this concept cannot be extended to other types of skills. Sure you won't get the tax breaks, but you will get the salary spend. Also why should an internship be a 12 month programme. Why not make it 6 months with an assessment at the end.

Why not?

Why is this even news. The BEE Commissioner has no cred, even her useless government ignores her

This was sent to me by a few people.  It's noise, it's nonsense, and isn't even good journalism.  The awdoz is not good at her job.  That job should not exist in the first place.  There's not much going on there. They've lost two cases that I know about - both highlighting their incompetence.  The latter case is a better one for me because it's SASOL OIL.  Not a small company.  Shows that they've got balls.  It also shows that large business has had enough of government.

These were the findings

[69] Having heard counsel for the parties, the following order is made:

69.1.1 The Commission’s Sasol Oil dated 7 October 2019, including its ‘finding’ in paragraph 6 and 7, its ultimatum in paragraph 8 and 17, and its threats in paragraph 9, is reviewed, declared invalid and set aside.

69.2 The Commission is interdicted from

i.Making unlawful demands of Sasol Oil, and

ii.Threatening to invoke its powers against Sasol Oil if it does not comply with the Commission’s unlawful demands

69.3 The Commission is ordered to pay Sasol Oil’s costs including the costs of three counsel

Not to be outdone - the awesome releases a report that drew its information from a very small sample of  companies and so she concludes that government needs to clamp down and make BEE compliance compulsory.  It's not going to happen.  They'll take your business by force if they want it.  But they don't have the credibility nor legitimacy to start listening to the awful awdoz and her crew of clowns.

The Broad-Based Black Economic Empowerment Commission (B-BBEE Commission) has published its annual broad-based black economic empowerment (B-BBEE) trends report for2021, showing a decline in compliance and a drop in black ownership of businesses in South Africa.

The report is based on data derived from annual compliance reports submitted to the B-BBEE Commission by JSE-listed entities, organs of state, public entities, and Sectoral Education and Training Authorities (SETAs).

According to legal firm Webber Wentzel, the commission saw fewer compliance reports submitted in 2021, with the current data uploads decreasing by 76% from 5,818 in 2019 to 1,373 in 2021.

The B-BBEE Commission said that this downturn in the submission of compliance reports was due to the fact that the Broad-Based Black Economic Empowerment Act does not adequately cater to the consequences of non-compliance with the Act’s requirements.

The B-BBEE Commission has therefore recommended that the B-BBEE Act be amended to include consequences of non-compliance in the form of administrative penalties and criminal sanctions. It also wants to provide quicker resolution of B-BBEE violations by establishing a specialised tribunal.

“The B-BBEE Act, according to the B-BBEE Commission, should also provide for mandatory uploading of B-BBEE certificates by B-BBEE verification agencies on the B-BBEE Commission’s certificate portal,” Webber Wentzel said.

Presenting other ownership options

Always a pun. I am not the first to think about the concept of options or warrants. I won't tell you who did it first because theirs is too simplistic; focusing on white owned businesses and only QSEs or EMEs. I was talking to my old friend Rudolf Rautenbach who told me about Ownershield. Rudolf is a little cleverer than most in this industry. We lost Gerhardus Burger to Australia, Chris van Wyk to Mauritius and Kevin Lester to Anglo. These were three of the brightest minds in the BEE business. Rudolf has stepped up and filled the weighty shoes that Mr Burger filled by becoming THE BEE tax expert in South Africa. Part of Rudolf's experience lies in capital gains tax. This is a bugger because if you do an ownership transaction, uncle fascist SARS is going to want it's undeserved piece of the pie in the form of CGT.

This is a problem and quite possibly a major deterrent to companies having to undergo a BEE transaction. This does somewhat highlight the punitive nature of the entire BEE system. I would tell the potential partner that they must pay the CGT otherwise no deal. I digress.

Rudolf says that options are a viable vehicle for BEE ownership not only because it doesn't attract CGT. He lists a few benefits

1. It's a top up method. If you have say 25% you could top it with 26% of options and you'll get your level two as an EME or QSE
2. It's a good option for larger companies as well. If this programme exists in the codes then it will pass a verification
3. It can be used by all companies.  The structures may differ slightly but it's widely applicable

I have selected the reference to options and warrants from the Financial Sector Code (the only code that was properly negotiated and drafted) , but the words are exactly the same in the generic codes.

8    OPTIONS AND SHARE WARRANTS

8.1    Exercisable voting rights and economic interest will be recognised where a participant holds an instrument granting the holder the right to acquire an equity instrument or part thereof at a future date, if the following requirements are met:

8.2    The exercisable voting rights attached to that instrument are irrevocably transferred to the holder for the option period and are exercisable by the holder before acquiring the equity instrument.

8.3    The value of any economic interest is irrevocably transferred for the option period and paid to the holder of that instrument before the exercise of that right.

8.4    The value of an instrument must be determined by using a standard valuation method for calculating the net value.

This is where Ownershield appears to be different to other companies. Most target white -owned business that turnover less than R50m. However Ownershield looks at it from the perspective of a prospective black shareholder as well. What if the prospective shareholder (who is black but I'm not going to repeat this) agrees to take an option for 36 months. They get the benefits of ownership because of the voting rights and dividends. They may be able to store up enough money because of that dividend flow to exercise the option when it matures. And they are gaining experience of ownership. Hell there may even be executive employment opportunities. We could call this a long date – where the two parties go out with each other and then decide to marry. As opposed to an arranged marriage at the outset (which is bound to fail).

Having noted that. The option route is still good for white owned companies. There are failsafe mechanisms in the structure that will protect all parties. We can't pretend that that ownership is easy. It's not. It's a hard slog. Different cultures and different expectations get in the way. There's one example of an English speaking white South African working in a very Afrikaans environment in some dorp somewhere and he can't fit in, it's a very poor cultural fit AND THEY ARE ALL WHITE. Also if either party decides this isn't working, cancel the option agreement. Everyone walks away.

I'm not a big believer in the ethical nature of BEE nor do I believe in the spirit of it, mostly because the government's bona fides is not genuine and they have messed it all up. But for some reason I think the option erm.... option is probably the closest to the spirit of these draconian codes.

This is a solution for all businesses, even CCs. Doesn't matter how big or small you are and doesn't' involve preferential shares and a dodgy law firm in Bloem. And the turn around time is quick there's no CIPRO or the master of the high court. None of that. Yes there are a number of documents and agreements that need to be signed, there's also compliance with the Companies Act. Rudolf has got all that sorted. In fact if you don't want to manage it at all, he'll doo that for you too.

You can contact Rudolf here. Hell if I'm nice to him he might include me in the meeting.