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Busting the myths about B-BBEE

Ownership of one’s business is a very emotional issue, both for the owner and for those who don’t own businesses.  With black people being disposed of land, human rights and dignity in the past, the government has placed a great deal of focus about black people owning productive assets.

A few ownership myths have been allowed to circulate throughout the country over the last years.

You have to give your shares away to black people.

This is contrary to all black economic empowerment policy in the country.  If anything, all B-BBEE Codes anticipate the fact that black people need to meet a strict payment plan for the shares over ten years.

The only type of ownership is direct ownership, with a natural black person being the shareholder.

There are multi-ownership vehicles that can be used.  These include companies, trusts, the sale of productive assets within the business, employee ownership schemes and share options.

The black owner either needs to be represented or sit on your board.

When one talks about ownership there are two criteria

  • Voting rights on those shares at an annual general meeting (AGM)
  • An entitlement to the benefits that flow from the ownership of the shares, like dividends

There is no link between ownership and management.  They are separate elements and measured separately.  This allows for passive shareholding.