Net Value is a concept under the B-BBEE Ownership scorecard measuring the unencumbered shareholding.
Net Value is a concept under the B-BBEE Ownership scorecard measuring the unencumbered shareholding in the hands of black shareholding. It is therefore critical to understand the importance of that when entering a B-BBEE deal.
What you’ll learn
- Understand the formulas to determine Net Value.
- Calculate Net value based on the provided requirements.
- Understand the theory behind net value and its application.
- Obtain tips and tricks to fully comply.
Course Content
- Introduction –> 2 lectures • 5min.
- Net Value –> 7 lectures • 38min.
Requirements
Net Value is a concept under the B-BBEE Ownership scorecard measuring the unencumbered shareholding in the hands of black shareholding. It is therefore critical to understand the importance of that when entering a B-BBEE deal.
– Rules to abide by
– Formulas
– Calculations
Under the generic scorecard, 8 points is allocated to Net Value under the ownership scorecard. Should a measured entity not receive a minimum of 3.2 / 8 for this indicator, it effectively means that the measured entity would be discounted with one level.
It can become a technical point, but effectively it measures the value created in the hands of black people taking into consideration variables like:
1. The debt portion coupled to the shares – if there is a debt portion, either to the measured entity itself or a third party, this will have an effect on the value creation.
2. The value of the measured entity – if this decreased since the acquisition date, this effectively means the value of the share has decreased as well. The debt(liability) portion will most like increase due to interest, and therefore your value has decreased compared to debt, and this will have a negative effect on the outcome.
The Amended Codes provide a graduation factor over 10 years to reach unencumbered black shareholding.