JSE Ownership Survey – EconoBEE Newsletter – 06 October 2011

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JSE Black Ownership

The JSE has brought out its annual survey – black ownership of the JSE. See here.

The report states that black people own at least 17% of the top 100 JSE companies. They then use the dti’s methodology of the exclusion principle, whereby certain mandated investments can be excluded from the ownership calculation. This includes shares held by pension funds on behalf of policy holders, shares held by government, where it is impossible to identify the demographics of the shareholder, or where the shareholder has no control over which shares are purchased by his unit trust.

Following this method, up to 40% of the ownership calculation can be excluded, meaning that the 17% is calculated out of 60%. The report’s conclusion is that black people own 28% of available shares of the JSE top 100 companies.

The report continues by stating that the dti’s B-BBEE targets for ownership are 25% (this is dependent on the sector – the construction sector target is 27.5%), and states that the top 100 companies black shareholding exceeds the dti’s targets.

We welcome the improvement, but still note that 72% of shares are in white hands. This number is not too different to the stats presented by the Commission for Employment Equity that stated that about 74% of all top management jobs are occupied by white managers.

The report does mention the dti’s target and presents themselves as beating the targets. What should be recognised is that the dti’s targets are broad-based, even for ownership, and this the report does not report upon.

For example the targets are:

25% of shares with voting rights in black hands
10% of shares with voting rights in the hands of black women
25% of shares with economic interest rights in black hands
10% of shares with economic rights in the hands of black women

There are even targets for broad-based schemes.

The highest number of points available for ownership refers to net value, which is a complex calculation based on the effective ownership by black people – this takes into account any debt outstanding on the shares to be purchased. Many B-BBEE deals have failed, or ownership been reduced due to the inability of the black participant to repay the debt.

A different, and maybe better way to analyse JSE share ownership would be to look at the top 100 companies’ BEE scorecards, especially the ownership element.


Creative fronting cheats the system

Mail and Guardian – LISA STEYN – Sep 30 2011 00:00

As tighter laws have been implemented to stop fronting, companies are also innovating in ways to cheat the system.

Despite stricter rules and regulations, methods of fronting (misrepresenting a black economic empowerment, scorecard) have evolved and BEE verification agencies continue to see an increase in the number of cases. In recent months EconoBEE, a BEE consultancy, has reported at least 20 cases to the department of trade and industry and the South African National Accreditation System (Sanas).

Chief operating officer Gavin Levenstein said that before the company reported an issue to the department it was investigated fully to be sure not to waste the department’s time and not to accuse any business falsely. “We do this because we are concerned about fronting, but also because we do not want our clients to earn points from invalid certificates and then themselves get accused of questionable practices.”

But fraudulent practice is becoming more prevalent and more devious. “It used to be fairly obvious and relatively easy to catch out, but the methods of hiding these days are becoming more and more difficult to discover,” he said. In their investigations, EconoBEE has identified four common ways of fronting:

Read more…


Procurement and Enterprise Development Conference & PPPFA coming into effect

We have now opened bookings for our 4th annual BEE Procurement and Enterprise Developemnt Conference. During the conference we will show you how to maximise your points on those two elements with minimum effort to gain maximum results.

Date – BEE Procurement and Enterprise Development Conference:
8th November 2011 – CPT – Belmont Conference Centre
15th November 2011 – DBN – Makaranga Garden Lodge
22nd November 2011 – JHB – Emperors Palace

Time: 8:30 for 9:00 – 17:00
Price: R3990 incl VAT (R3500 excl VAT).

In addition we have organised a very special half day course for the new government tender regulations. Learn how the new tender process affects your business, gain a competitive advantage and win more tenders.

Date – PPPFA and your Tender:
9th November 2011 – CPT – Belmont Conference Centre
16th November 2011 – DBN – Makaranga Garden Lodge
24th November 2011 – JHB – Emperors Palace

Time: 7:30 for 8:00 – 12:30
Price: R1710 incl VAT (R1500 excl VAT).


Need a Valid BEE CertificateContact us for more info





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EconoBEE Newsletter
06 October 2011

In this issue

  • JSE Black Ownership
  • Creative fronting cheats the system
  • Procurement and Enterprise Development Conference & PPPFA coming into effect

In other news

About EconoBEE

EconoBEE is an expert BEE consultancy. EconoBEE helps businesses Become BEE Compliant, prepare for verification, earn maximum BEE Points and ensure that they achieve the BEE Level they need to get more business.

Our services include BEE Management Systems, Training, EME Pack, Complete Managed Services; consulting and advisory and Procurement Solutions.

As leaders in the industry we are driven to help maintain and develop knowledge in the BEE industry.

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Executive summary of B-BBEE

Turnover below R5 million per annum – automatic BEE status

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We have prepared an easy to follow guide “B-BBEE in 5 Minutes” and “Crash Course to BEE Verification” which explains BEE in a simple step by step approach.

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