Transform SA Digital Issue 25 - Magazine - Page 11
MTN ZAKHELE FUTHI AT
ODDS WITH BBB-EE CODES
OF GOOD PRACTICE
In 2019, The Broad-based Black Economic Empowerment (B-BBEE) Commission found
out that telecommunications giant MTN’s Zakhele-Futhi empowerment scheme did
not meet certain objectives of the Empowerment Act and as a result recommended
MTN launched Zakhele Futhi, a Black Economic Empowerment (BEE) share scheme
on 26 November 2016. Black would-be investors were invited to pay R20 for each of
Zakhele Futhi share, with a minimum investment of R2,000.
The commission based its findings on several restrictions and limitations placed on
the black shareholders, which it believed were at odds with the requirements for
ownership in the Codes of Good Practice.
“The commission has issued remedial recommendations to address the defects
identified in the MTN Zakhele-Futhi scheme, which include changes to the governing
documents, such as the memorandum of incorporation and the relationship
agreement concluded in respect of MTN Group and MTN Zakhele-Futhi, to grant
black shareholders effective rights, control, participation and economic benefits in
respect of their stake,” the commission said in a statement.
On 25 November 2019, MTN Zakhele Futhi share price dropped to R1.10 when it
was listed on the JSE Empowerment segment to give its 89,000 black investors to
freely trade shares with their counterparts. Another recommendation made by the
commission was that black shareholders should be allowed to exercise their rights
in virtue of being shareholders to nominate representation on the board of MTN;
remove the veto rights that MTN has in respect of the trickle dividend and the general
dividend that would flow to black participants. Also, among other things, give MTN
Zakhele-Futhi shareholders a right to appoint its own chairperson of the board and
board members, who need not be appointed by MTN.
The commission said the board of MTN were required to undergo training on B-BBEE
and corporate governance, which training must be extended to fiduciaries of MTN
Zakhele-Futhi at the cost of MTN. “MTN is also expected to develop and submit a
compliance programme to ensure future compliance with the B-BBEE Act, and to seek
prior advice from the commission in respect of any ownership scheme they may wish
to implement in the next two-year period,” it said.
SOVEREIGN WEALTH FUND
South Africa is about to establish
a Sovereign Wealth Fund (SWF) to
redistribute wealth. This was revealed the
Minister of Finance in his budget speech.
“A Sovereign Wealth Fund is an important
long-term tool for saving and investment
for future generations”
The creation of an SWF will hold equity
stakes in companies on behalf of all South
Africans instead of individuals doing so as
a result of BEE. The SACP has welcomed
the announcement as the idea was
initially proposed by the party. The fund
will have a target capital amount of about
CAN FIX SOUTH
Government will be implementing BBBEE codes to
address unemployment in South Africa. This is stated
in the new Draft National Youth policy for 2020 –
2030. According to the document, gazetted by the
Department of Planning, Monitoring and Evaluation,
government is planning to get more South African
youth into education and employment opportunities
over the next 10 years.
“The alignment of all legislation, codes and charters
that flow from the BBBEE Act will ensure that the state
procurement lever is used more effectively to advance
socio-economic targets in certain geographies and
industries,” states the document.
In May 2019, the Department of Trade and Industry
(DTI) published amendments to the BBBEE Codes of
Good Practice which came into effect on 31 November
last year and will affect businesses around the country.
South Africa’s unemployment rate remains five times
the rate for the rest of the world. However, to most
South Africans, this distressingly high rate does not
capture the full extent of joblessness.
Skills Development is going to be a priority for
achieving South Africa’s economic growth and
employment goals. This BBBEE element will measure
the extent to which employers carry out initiatives
designed to develop the competencies of black
employees. and black.
Companies are also encouraged to align their
enterprise development and supplier development
initiatives with their supply chain requirements or
Volume 25 • 2020