The B-BBEE Verification Process around Ownership.
The questions MSCT BEE Services, as your B-BBEE Rating agency will always ask are:
· Is the intent of the BEE Act being met with regards to ownership?
· Are the black beneficiaries genuinely realising economic benefit from this ownership structure and participating meaningfully in the measured entity or economy?
· How much overall value do the black shareholders truly derive from the ownership structure? See our related post on Net Value which describes the principle.
· Are the rules of the chosen ownership scheme being met?
· How can we prove this?
In order to test the above questions, the below are some of the main documents that will be requested as a part of the verification process depending on the ownership structure chosen. The two main ownership structures of direct and indirect shareholding are detailed below but as mentioned, there are several ownership schemes available to measured entities, each with their own rules and lists of documents that will be requested.
Please contact MSCT BEE Services for the expanded lists under each ownership structure. It may seem overwhelming at the time, but our expertly trained team of verification analysts can walk you through this easily.
For the measured entity:
The shareholding organogram
Signed and dated, most recent share register
All reconciling share certificates
Company Valuation using a Standard Valuation Method in line with the MOI or Shareholders agreement
Company Memorandum of Incorporation (MOI)
Shareholders meeting minutes
A confirmation of the economic interest and voting rights of all shareholders
A confirmation of the debt or liability outstanding on the black shareholding to assess net value
B-BBEE Affidavit/ Certificate of the trust
The Trust Deed
Masters Certificate for the Trust(s)
Financial data in the form of Management Accounts or Financial Statements
Trust meeting minutes
Schedule of Beneficiaries and Trustees
Beneficiary and Trustee IDs
Proof of dividends paid where applicable
Confirmation that the Trust was created for a legitimate commercial reason and does not seek to directly or indirectly circumvent the codes
The key point to remember regarding ownership (and management control) is that it is measured at current, at the date of measurement by your B-BBEE Rating agency as opposed to for the measurement period which could be up to 18 months prior depending on the sector code your company falls under.
This is also why your verification process should not drag on for an extended period of time and your readiness at the point of engagement with your B-BBEE Rating agency is important – with the extensive list of evidence required, it becomes cumbersome and time consuming for you as the measured entity to source new, updated documents.
In verification, starting your planning with the end in mind is key to a smooth and efficient process, and MSCT BEE Services are here to assist you with this.