Broad Based BEE (Please keep an open mind)

[sox63]

I just wanted to get your thoughts on this one, and please feel free to contribute constructive criticism.

Where I work there was also one of those BBBEE initiatives, you know the one where the employees can just "purchase" shares and it all well and good, the pool of wealth is evenly distributed.

However my observation with this and many others, eg, Multichoice, Nedcor, etc is that it is difficult for all these people to organise themselves into a coherent unit to represent their agendas at the Annual General Meeting of shareholders. Are we losing that one aspect of BEE of having a strong representation at board level to push through transformation initiatives? It is what I have noticed with where I work and it upsets me.

Any thoughts?

 

[rwenzori]

I just wanted to get your thoughts on this one, and please feel free to contribute constructive criticism.

Where I work there was also one of those BBBEE initiatives, you know the one where the employees can just "purchase" shares and it all well and good, the pool of wealth is evenly distributed.

However my observation with this and many others, eg, Multichoice, Nedcor, etc is that it is difficult for all these people to organise themselves into a coherent unit to represent their agendas at the Annual General Meeting of shareholders. Are we losing that one aspect of BEE of having a strong representation at board level to push through transformation initiatives? It is what I have noticed with where I work and it upsets me.

Any thoughts?

I have to admit I am not up with all the latest, nor with all the legalities. I was under the impression that the shares did not have voting rights until paid for, in many cases.

What I would do if I was in the position of CEO/whatever of a decent company, would be to place the shares in a trust owned and controlled by the employees. Once dividends have bought the shares, any subsequent dividends to be divided out annually to all the employees on some basis ( probably equal, and only if an employee for > a year, yadda, yadda, details, details ). The trust would be represented on the board in rough proportion to its shareholding. In fact, I have often thought that it should be compulsory for companies over a certain size to issue say 20% more shares to be placed in such a trust.

The sad thing is that most shareholders ( institutions ) are in it for the biggest-buck-this-year, so that their investment portfolios and unit trusts can look good. They will drop your shares in a nanosecond, and have no long-term interest in the company or the wellbeing of its employees. Pr1cks in other words.

 

[Syndyre]

What sort of transformation initiatives are you referring to? As shareholders wouldn't their aim be the same as everyone else's, i.e. maximising the share price?

 

[sox63]

What sort of transformation initiatives are you referring to? As shareholders wouldn't their aim be the same as everyone else's, i.e. maximising the share price?

True, however some investors have other agendas, case in point is the PIC, and I hear through the grapevine that Mvela and Shanduka can throw their weight around when it comes to issue such as employment equity. Now before all of you jump on me about employment equity, I see every day that companies claim to be a shining example of BEE, however that is at the top and there is very little transformation at the bottom wrt to Management.

 

[Sneeky]

However my observation with this and many others, eg, Multichoice, Nedcor, etc is that it is difficult for all these people to organise themselves into a coherent unit to represent their agendas at the Annual General Meeting of shareholders. Are we losing that one aspect of BEE of having a strong representation at board level to push through transformation initiatives? It is what I have noticed with where I work and it upsets me.

Any thoughts?

Sox, not entirely sure what you are unhappy or unsure about as you are presented with oppertunities to benefit handsomely here and all over?As a shareholder yu have the same rights as any other shareholder so where is the problem?

wrt the shareholders and forming a unit, as has been stated by Alacos on this site regarding a TELKOM matter, any 100 shareholders can convene a general meeting, to discuss whatever they feel is troubling them.
So as minority shareholders you need to group together to this minimum then you have significant power should you need to use it.
http://mybroadband.co.za/news/Telecoms/1244.html

If I was a potential BBEEE beneficiary I would be canvasing around all my friends and their friends (trustworthy) and forming trusts where everyone pools money together in equal amounts to take maximum advantage of all these schemes. Even if you only by a couple of shares in each.
There are many and there will be many more.
This goose is laying golden eggs everywhere. The gift horse is here, take advantage.

 

[rwenzori]

I see every day that companies claim to be a shining example of BEE, however that is at the top and there is very little transformation at the bottom wrt to Management.

Companies will do as little as possible to implement such policies as long as they can get their ratings and appear to be doing wonderful things.

 

[Syndyre]

True, however some investors have other agendas, case in point is the PIC, and I hear through the grapevine that Mvela and Shanduka can throw their weight around when it comes to issue such as employment equity. Now before all of you jump on me about employment equity, I see every day that companies claim to be a shining example of BEE, however that is at the top and there is very little transformation at the bottom wrt to Management.

True, I think whether we agree or disagree with BEE most of us would agree that if its going to be done it should benefit the people lower down rather than the Ramaphosa's and Sexwale's again and again.

 

[dlk001]

A lot of companies simply comply w.r.t ownership and the rest is just seen a token.

w.r.t Mining

My thinking is, DME should grant mining permits for BEE deals based on ownership and broad-based initiatives planned with set foreseeable milestones. e.g. (education, skills transfer, management, social upliftment, mobilizing Local Economic Development etc)

Then, renewals of those licenses should be based on a scorecard that measures progress on broad-based initiatives.

 

[Syndyre]

A lot of companies simply comply w.r.t ownership and the rest is just seen a token.

w.r.t Mining

My thinking is, DME should grant mining permits for BEE deals based on ownership and broad-based initiatives planned with set foreseeable milestones. e.g. (education, skills transfer, management, social upliftment, mobilizing Local Economic Development etc)

Then, renewals of those licenses should be based on a scorecard that measures progress on broad-based initiatives.

Is ownership that important? If you initiated the broad-based initiatives wouldn't ownership follow eventually anyway and in a more natural and organic way?

 

[dlk001]

Is ownership that important? If you initiated the broad-based initiatives wouldn't ownership follow eventually anyway and in a more natural and organic way?

Some level of ownership is important.

It would depend on the nature of the BEE deal. Some companies like Anglo have existing resources and structures to do more broad-based initiatives than others. An Anglo deal would tend to be more broad-based focused.

Some small companies that are exploiting a greenfields project will not have such resources. So, most of their broad-based would be "planned" rather than "initiated". This type of deal would tend to be more "Ownership" focused with planned broad-based initiatives. When the time comes for renewal of the mining rights, then DME should focus more on progress w.r.t the broad-based initiatives.