Whilst we wait for Cyril to do something about this abomination known as the BEE codes I might as well provide my loyal readership with a short tutorial on ownership.
Before I start I need to stress that ownership is not the answer to South Africa's problems. Well in excess of 95% of all the businesses (whether they be formal or informal) have no intrinsic value. Their value lies in the person who started that business's energy and effort. When that person dies, retires or emigrates the chances are that that business will close down. There might be some value in stock or assets but without that person running it it won't survive. I can almost see what bolshie bob is spoiling at here. He would say "I am the most useless communist and the scourge of South African business, you are speaking the truth my white monopoly capitalist wannabe. But if you do a proper handover of ownership and involve black people in the running of the business then it will survive." Too true my Bolshevik brother - but human nature isn't like that. And no amount of EAPing is going to change it. You keep on dreaming whilst you enjoy your very generous pension after you have walked away from the mayhem you have caused.
Exactly how much ownership do need so that you don't get fired a level. The short answer is 10.03%. Please look at the calculation below. We know that you need 3.2 points for net value in order not to drop a level. My rudimentary Excel skills tell me that under perfect circumstances you can get to 3.2 points under formula A with 1% ownership (Acts.co.za is now a subscription site I can't refer you to the formulas). But you won't get the 3.2 points under formula B and the rule is that the lesser result of A and B becomes the net value answer. In order to get 3.2 points under formula B you need 10.03% ownership. Obviously you will need to pay attention to the requirement under formula A to keep it at at 3.2 points.
| Ownership level | 1.0% |
| Deemed value | |
| Value of shares in black hands on date of measurement | 2.00 |
| Value of outstanding debt | 1.00 |
| Value of company on date of measurement | 100.00 |
| Deemed value result | 1.00% |
| The net value formula to use is the one that is lower of the two | |
| Net value formula 1 | |
| Year 1 | 10% |
| Year 2 | 20% |
| Years 3-4 | 40% |
| Years 5-6 | 60% |
| Years 7-9 | 80% |
| Year 9-10 | 100% |
| Net Value | 3.20 |
| Net value formula 2 | |
| Percentage black economic interest | 5% |
| Target for ownership | 25.10% |
| Net value formula B | 1.59 |
| Subminimum | 3.2 |
| Minimum ownership levels | Net Value levels for Formula B |
| 1.00% | 0.32 |
| 2.00% | 0.64 |
| 3.00% | 0.96 |
| 4.00% | 1.27 |
| 5.00% | 1.59 |
| 6.00% | 1.91 |
| 7.00% | 2.23 |
| 8.00% | 2.55 |
| 9.00% | 2.87 |
| 10.00% | 3.19 |
| 10.03% | 3.20 |
| 10.10% | 3.22 |
| 11.00% | 3.51 |
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