What is BEE Ownership?

What is BEE Ownership?

BEE ownership refers to the extent to which black individuals, as defined by BBBEE legislation, hold a direct shareholding or equivalent stake in a company. This means that black South African citizens (in the context of BBBEE) have an ownership stake in companies, which is measured to calculate a business’s BEE Recognition Level.

BBBEE ownership aims to address the inequalities of the past by ensuring that black South Africans have genuine and sustainable participation in the South African economy. The principle behind this pillar is that ownership equals empowerment.
When black individuals own a significant share of a company, they benefit from dividends, capital growth, and decision-making power. This shifts wealth and influence towards previously disadvantaged groups, contributing to long-term socio-economic growth.

Benefits of BEE Ownership:

• • Improved BEE Score: The ownership element is a priority on the BBBEE scorecard, making up 25 points. Strong performance in this area boosts your overall BEE status, however not achieving a minimum of 10,8% Ownership you will be discounted a level.
  • Access to Business Opportunities: Companies with higher BEE scores are more likely to win government tenders, enterprise development opportunities, and partnerships with large corporates.
  • Attracting Investors: Businesses that are seen to be committed to transformation and inclusion are more attractive to certain investors, partners, and clients, both locally and internationally.

Types of BEE Ownership Structures

Ownership structures under BEE vary and are designed to suit different business needs while still benefiting black shareholders. Here are a few common types of ownership schemes:

• • Direct Ownership: This is where black individuals or groups acquire shares directly in a company. It offers them direct voting rights and a share of the company’s profits.
  • Broad-Based Ownership Schemes (BBOS): These are ownership schemes that benefit a large group of black South Africans, such as communities or workers. BBOS are often set up as trusts or non-profit organizations and can deliver broad-based empowerment.
  • Employee Share Ownership Programs (ESOPs): ESOPs allow employees, including those from disadvantaged backgrounds, to own a part of the company they work for. This promotes greater participation and wealth sharing among workers.

The BEE Ownership Requirements

Here’s a breakdown of the BEE ownership requirements, which determine how a company’s ownership structure is evaluated and scored for BBBEE compliance:

• • • Business Ownership: The percentage of the business directly owned by black individuals or groups, reflecting their control and stake in the company’s operations.
    • Voting Rights: The extent to which black shareholders have the power to vote and influence major decisions in the company.
    • Economic Interest: The portion of the profits or dividends received by black shareholders or the entitlement to economic share. 
    • Net Value: The actual value of the ownership stake that black shareholders hold, free from debt or liabilities.
    • Bonus Points: Certain ownership structures (like broad-based schemes or employee share ownership programs) can earn companies bonus points on their BEE scorecard.

The BEE Ownership Scorecard

BBBEE ownership is one of the most weighted elements on the BBBEE scorecard, contributing to a company’s overall BEE level. Here is how the BEE ownership calculation is measured:

• • Percentage Black Ownership: The percentage of a company owned by black individuals.
  • Percentage Black Women Ownership: Businesses with black women shareholders score additional points.
  • Voting Rights: Ensuring that black shareholders not only own a portion of the business but also have a voice in key decisions.
  • Economic Interest: The portion of profits black shareholders are entitled to receive.