Capital markets typically rely heavily on the use of financial intermediaries, and the ability to trade rapidly and largely anonymously. These attributes do not make for an easy fit with the need to measure black economic empowerment. A substantial proportion of the shares of many issuer companies are indirectly held via financial institutions.
To date, the BEE framework in South Africa has largely failed to deal with these characteristics of modern capital markets. Typically, only sizeable and self-identifying BEE shareholders have been measured. This has resulted in systematic underestimation of black participation in public companies in South Africa.
We believe that the inclusion of Mandated Investments in the calculation of black ownership is factually more accurate and more reflective of the true broad-based beneficiation, through ownership.
Our process for achieving this and reporting the results is through an Independent Competent Persons Report’ (ICPR) methodology.