Options as a viable ownership structure

Paragraph 3.13 pf STATEMENT 100: THE GENERAL PRINCIPLES FOR MEASURING OWNERSHIP discusses the requirements for options. In essence the paragraph notes that if an option is held with unlimited voting rights, economic interest and the full points for Net Value are realised, concomitant to the percentage of the shares that the option allocates in the company; then the measured entity may regard this option as being de facto shareholding.

The generic codes do not provide a reason behind the provision of options. The rationale for options may be found in the Strategy for Broad-Based Black Economic Empowerment. The relevant paragraphs are 2.2.3 and 2.6.3.

2.2.3 refers to the legacy of Apartheid and notes that (Apartheid) excluded black persons from the long-run process of capital accrual and growth. 2.6.3 discusses the highly indebted nature of many of the structures and special purpose vehicles that were used by black people in the acquisition of shares companies.

It appears that options are an attempt to mitigate these two situations by providing black people (through any suitable instrument) to gain ownership experience and to amass the necessary capital to pay for those shares when the option matures. This of course follows standard commercial principles that the company is able to ride out the peaks and troughs of the current economy and generate dividends which can be used for this purpose.

Not only do options appeal to the essence of black economic empowerment (the spirit) they are a quick and safe method of attracting ownership points on most BEE scorecards. They are most often used by smaller entities (turnover less than R50m) but are also found in larger organisations for ownership compliance or as a top up.

15 Sep 2025