BEE and the Financial Sector Charter. Introduction In August 2002, at the NEDLAC Financial Sector Summit, the financial sector committed itself to the

BEE and the Financial Sector BEE and the Financial Sector CharterCharter

IntroductionIntroduction

In August 2002, at the NEDLAC Financial In August 2002, at the NEDLAC Financial Sector Summit, the financial sector Sector Summit, the financial sector committed itself to the development of a committed itself to the development of a Black Economic Empowerment (BEE) Black Economic Empowerment (BEE) Charter. Charter.

S 1. Charter Preamble: S 1. Charter Preamble: Commitment made noting…Commitment made noting…

that South African society remains that South African society remains characterised by racially based income characterised by racially based income and social services inequalities - which is and social services inequalities - which is not only unjust, but inhibits the country’s not only unjust, but inhibits the country’s ability to achieve its fully economic ability to achieve its fully economic potential;potential;

BEE is aimed at addressing inequalities;BEE is aimed at addressing inequalities; It will unlock the sector’s potential, and It will unlock the sector’s potential, and

promote its global competitivenesspromote its global competitiveness

Parties to this charter are….Parties to this charter are….

Committed to promoting a globally Committed to promoting a globally competitive financial sectorcompetitive financial sector that reflects the demographics of South that reflects the demographics of South

Africa, andAfrica, and contributes to the establishment of an contributes to the establishment of an

equitable society by providing accessible equitable society by providing accessible financial services to black people and financial services to black people and directing investment into targeted sectors of directing investment into targeted sectors of the economy.the economy.

This financial sector charter…This financial sector charter…

Was voluntarily developed by the sector;Was voluntarily developed by the sector; Is a ‘Transformation Charter’ ito BEE;Is a ‘Transformation Charter’ ito BEE; Constitutes a framework and establishes the Constitutes a framework and establishes the

principles upon which BEE will be implemented;principles upon which BEE will be implemented; Represents a partnership programme;Represents a partnership programme; Establishes targets;Establishes targets; Outlines processes for implementing the charter Outlines processes for implementing the charter

and mechanisms to monitor and report on and mechanisms to monitor and report on progress.progress.

InterpretationInterpretation

BEE accreditedBEE accredited - being validated in terms of this - being validated in terms of this charter as a BEE company, or having achieved charter as a BEE company, or having achieved a certain standard of BEE contribution in terms a certain standard of BEE contribution in terms of a charter scorecard.of a charter scorecard.

BEE transactionsBEE transactions – acquisition by blacks of – acquisition by blacks of direct ownership in financial sector entity, and direct ownership in financial sector entity, and JV’s in BEE companiesJV’s in BEE companies

Black companiesBlack companies - companies that are more - companies that are more than 50% owned and are controlled by black than 50% owned and are controlled by black people.people.

Interpretation cont…Interpretation cont…

Black empowered companiesBlack empowered companies – more than 25% – more than 25% owned by black people and where substantial owned by black people and where substantial participation in control is vested in black people.participation in control is vested in black people.

Black influenced companiesBlack influenced companies – companies that – companies that are between 5% and 25% owned by black are between 5% and 25% owned by black people and with participation in control by black people and with participation in control by black people.people.

Black peopleBlack people – All Africans, Coloured and – All Africans, Coloured and Indians who are South African citizens and Indians who are South African citizens and includes black companies – also in certain includes black companies – also in certain circumstances, includes permanent residents of circumstances, includes permanent residents of the Republic of South Africa.the Republic of South Africa.


Black women-empowered enterpriseBlack women-empowered enterprise – companies that – companies that are more than 30% owned by black women, and where are more than 30% owned by black women, and where substantial participation in control is vested in black substantial participation in control is vested in black women.women.

Broad-based ownershipBroad-based ownership – where an empowerment – where an empowerment shareholder represents a broad base of members such shareholder represents a broad base of members such as employees or where the benefits support a target as employees or where the benefits support a target group, for example black women, people living with group, for example black women, people living with disabilities and the youth.disabilities and the youth.

ControlControl – authority to manage assets, the determination – authority to manage assets, the determination of policies and direction of business oparations. of policies and direction of business oparations. [ indicators listed in def’n – e.g. voting rights and general [ indicators listed in def’n – e.g. voting rights and general participation in control structures and in executive participation in control structures and in executive management]management]

Direct ownershipDirect ownership – ownership of an equity – ownership of an equity interest together with control over all of the interest together with control over all of the voting rights attaching to that equity voting rights attaching to that equity interest.interest.

Empowerment financingEmpowerment financing – provision of – provision of finance for or investment in:finance for or investment in: Targeted investment; andTargeted investment; and BEE transactionsBEE transactions


Financial sectorFinancial sector – all the classes of financial – all the classes of financial institution defined below.institution defined below. BanksBanks Long-term insurersLong-term insurers Short-term insurersShort-term insurers Re-insurersRe-insurers Managers of formal collective investment schemes in Managers of formal collective investment schemes in

securitiessecurities Investment managers and other entities that manage Investment managers and other entities that manage

funds on behalf of the publicfunds on behalf of the public Any other institution in the financial sector may opt inAny other institution in the financial sector may opt in


Indirect ownershipIndirect ownership – investor owns equity in a – investor owns equity in a company on behalf of beneficiaries and there may company on behalf of beneficiaries and there may not be direct participation by the beneficiaries in not be direct participation by the beneficiaries in the voting rights.the voting rights.

ManagementManagement Senior management – cost to the employer is Senior management – cost to the employer is

R450 000 pa or more [excludes executive management]R450 000 pa or more [excludes executive management] Middle management – between R250 000 and Middle management – between R250 000 and

R450 000 paR450 000 pa Junior management – R150 000 and R250 000 paJunior management – R150 000 and R250 000 pa Salary bands will be increased in line with the consumer Salary bands will be increased in line with the consumer

price index (“CPIX”)price index (“CPIX”)


ProcurementProcurement – all expenditure to acquire goods – all expenditure to acquire goods and or services including capital expenditure, and or services including capital expenditure, but excluding:but excluding:

Broker commissions;Broker commissions; Commissions paid to insurance intermediaries;Commissions paid to insurance intermediaries; Property and rental purchasesProperty and rental purchases Salaries and wagesSalaries and wages Procurement spending where there is a monopolyProcurement spending where there is a monopoly Procurement where supplier imposed by global policy Procurement where supplier imposed by global policy

for technical reasonsfor technical reasons Social investment spendingSocial investment spending


Interpretation contInterpretation cont

Sound business practice – business practice Sound business practice – business practice conducive to maintaining and promoting, conducive to maintaining and promoting, Confidence in the sector etc [see definition]Confidence in the sector etc [see definition]

Targeted investment – financing of or equity Targeted investment – financing of or equity investment in SA projects where gaps /backlogs investment in SA projects where gaps /backlogs in economic development and job creation have in economic development and job creation have not been adequately addressed by financial not been adequately addressed by financial institutions [such as in low income housing etc]institutions [such as in low income housing etc]

ChallengesChallenges

Section 3: Challenges facing the Section 3: Challenges facing the Financial SectorFinancial Sector

Financial sectors plays a central role in enhancing Financial sectors plays a central role in enhancing growth and development. South African financial sector growth and development. South African financial sector is world class, but is confronted with a number of is world class, but is confronted with a number of challenges:challenges: The sector is dominated by a few very large institutionsThe sector is dominated by a few very large institutions Low levels of black participation, especially of black womenLow levels of black participation, especially of black women Access to financial services difficult for blacksAccess to financial services difficult for blacks No effective provision of credit to black entrepreneursNo effective provision of credit to black entrepreneurs National level of savings and investment is inadequateNational level of savings and investment is inadequate Insufficient investment into targeted investments of national Insufficient investment into targeted investments of national

prioritypriority Funds circulates outside the formal financial system, stokvels,Funds circulates outside the formal financial system, stokvels, Limited support for new black firmsLimited support for new black firms Need to find meaningful ways to support the Prouldy South Need to find meaningful ways to support the Prouldy South

African CampaignAfrican Campaign

Challenges cont…Challenges cont…

By addressing the challenges, the financial By addressing the challenges, the financial sector will make a significant contribution sector will make a significant contribution towards economic growth and also towards economic growth and also promote growth in the financial sector.promote growth in the financial sector.

To address BEE, the following imperatives must be To address BEE, the following imperatives must be satisfied:satisfied:

Long term financial stability and sectors capacity to finance Long term financial stability and sectors capacity to finance economic growth to be maintainedeconomic growth to be maintained

Enhance access to financial services for blacksEnhance access to financial services for blacks A savings culture to be developedA savings culture to be developed Investing in the skills development and training of existing Investing in the skills development and training of existing

and new black professionals and managersand new black professionals and managers Black leadership must be fosteredBlack leadership must be fostered Promote triple bottom line (economic, environmental, Promote triple bottom line (economic, environmental,

social) accountability, including good corporate governancesocial) accountability, including good corporate governance

Challenges cont…Challenges cont…

Challenges contChallenges cont

Representation of black women and black people Representation of black women and black people living with disabilities must be increasedliving with disabilities must be increased

Black firms providing services and products to the Black firms providing services and products to the financial services industry must be increasedfinancial services industry must be increased

Business to support black entrepreneurs Business to support black entrepreneurs Direct savings towards targeted investment of Direct savings towards targeted investment of

national prioritynational priority The sector must lower the barriers to entry and must The sector must lower the barriers to entry and must

promote the empowerment objectives of this charterpromote the empowerment objectives of this charter

SECTION 4.Application of the SECTION 4.Application of the Financial Sector CharterFinancial Sector Charter

Targets applied from 1 January 2004 untilTargets applied from 1 January 2004 until31 December 2014.31 December 2014.

the Charter Council will review and make decisions the Charter Council will review and make decisions regarding the implementation of the charter on an ongoing regarding the implementation of the charter on an ongoing basis, andbasis, and

Principles contained in the charter will be relevant beyond Principles contained in the charter will be relevant beyond 2015. 2015. In 2009 the Council will have a mid-term review In 2009 the Council will have a mid-term review Ownership provisions will be reviewed in 2011 to establish Ownership provisions will be reviewed in 2011 to establish

shortcomingsshortcomings In 2015 the Council will undertake a second comprehensive review In 2015 the Council will undertake a second comprehensive review

to decide further steps.to decide further steps.

The provisions of the charter are to be The provisions of the charter are to be achieved in a manner consistent with achieved in a manner consistent with sound business practicesound business practice

Provisions of the charter will not apply in the same Provisions of the charter will not apply in the same manner to all financial institutions. The following manner to all financial institutions. The following examples of qualifications are provided for:examples of qualifications are provided for: Human Resource Development – less than 50 staff members Human Resource Development – less than 50 staff members

[but still bound by other BEE legislation][but still bound by other BEE legislation] Empowerment Financing – less than R10mEmpowerment Financing – less than R10m If a global policy applies – ratio’s changeIf a global policy applies – ratio’s change Retirement funds –less than 50 members=certain exclusions – if Retirement funds –less than 50 members=certain exclusions – if

more than 50, different exclusionsmore than 50, different exclusions All Provisions – less than 50 staff members & less than R10m All Provisions – less than 50 staff members & less than R10m

designated investmentdesignated investment Anyone can opt in!Anyone can opt in! Any exclusions = need to apply to Council and motivate Any exclusions = need to apply to Council and motivate

exclusionexclusion

Application of the Application of the Financial Sector Charter cont…Financial Sector Charter cont…

Graeme Dorrington

different exclusions for different qualifications

Parties to the Charter agree that Parties to the Charter agree that when sourcing products and services from the when sourcing products and services from the

financial sector, competing for business, they will use financial sector, competing for business, they will use the charter rating to explain their BEE contributionthe charter rating to explain their BEE contribution

Specifically agreed, when competing for business, the Specifically agreed, when competing for business, the charter rating to explain their BEE contributioncharter rating to explain their BEE contribution

Tenders - Government will base their Tenders - Government will base their adjudication of BEE contribution on the charter adjudication of BEE contribution on the charter ratingrating

Private sector should base its evaluation of the Private sector should base its evaluation of the BEE in terms of this charterBEE in terms of this charter

Application of the Application of the Financial Sector Charter cont…Financial Sector Charter cont…

Human Resource DevelopmentHuman Resource Development

Each financial institution undertakes to:Each financial institution undertakes to: Promote a non-racial, non-sexist environment;Promote a non-racial, non-sexist environment; Increase the participation of black people in Increase the participation of black people in

skilled, strategic and operational leadership;skilled, strategic and operational leadership; Invest in leadership to enable them to play a Invest in leadership to enable them to play a

central role in driving the transformation central role in driving the transformation programmeprogramme

In addition to the obligations of Employment In addition to the obligations of Employment Equity and Skills Development legislation – Equity and Skills Development legislation – Each financial institution will have a minimum Each financial institution will have a minimum

target of 20% to 25% black people at senior target of 20% to 25% black people at senior management (management (> R450 000pa)> R450 000pa) level by 2008; level by 2008;

4% black women at senior management level (4% black women at senior management level (> > R450 000pa)R450 000pa) by 2008; by 2008;

30% black people at middle management level 30% black people at middle management level ((> R250 000pa)> R250 000pa) by 2008; by 2008;

Human Resource Development Human Resource Development cont…cont…


10% black women at middle management level (10% black women at middle management level (> > R250 000pa)R250 000pa) by 2008; by 2008;

40% to 50% black people at junior management level 40% to 50% black people at junior management level

((> R150 000pa)> R150 000pa) by 2008; by 2008; 15% black women at junior management level (15% black women at junior management level (> >

R150 000pa)R150 000pa) by 2008; by 2008; A 2014 target of 33% of the relevant total back A 2014 target of 33% of the relevant total back

representation target has been set for black women representation target has been set for black women representation at all four levels.representation at all four levels.

The Council will establish other 2014 targets for The Council will establish other 2014 targets for management and executive level – before 2008management and executive level – before 2008

Over and above any skills levies, from the Over and above any skills levies, from the effective date of the charter to 2008, spend 1,5% effective date of the charter to 2008, spend 1,5% of total basic payroll per annum on training of of total basic payroll per annum on training of black employees.black employees.

Skills development initiative shall be directed at Skills development initiative shall be directed at skills programmes that promote black skills.skills programmes that promote black skills.

Financial sector undertakes to implement a Financial sector undertakes to implement a Learnership Programme which will employ up to Learnership Programme which will employ up to 4,5% of its total staff in the form of black 4,5% of its total staff in the form of black matriculants in registered learnerships.matriculants in registered learnerships.


Each financial institution undertakes to Each financial institution undertakes to develop and report on:develop and report on: Career pathing to facilitate progress in their Career pathing to facilitate progress in their

black employees careers;black employees careers; Implementation of mentorship programmes;Implementation of mentorship programmes; Targeted recruitmentTargeted recruitment Cultural diversity and gender sensitivity Cultural diversity and gender sensitivity

programmes;programmes; Introduce training programmes in line with the Introduce training programmes in line with the

NQF requirements.NQF requirements.


Chapter 6.Procurement PoliciesChapter 6.Procurement Policies

Financial institutions will implement a targeted Financial institutions will implement a targeted procurement strategy. The target will be 50% of procurement strategy. The target will be 50% of the value of all procurement from BEE the value of all procurement from BEE accredited companies by 2008 and 70% by accredited companies by 2008 and 70% by 2014.2014.

A minimum of two thirds of that expenditure A minimum of two thirds of that expenditure must be spent with BEE accredited companies must be spent with BEE accredited companies as the primary vendor. The residual one third as the primary vendor. The residual one third may be channeled via a primary vendor.may be channeled via a primary vendor.

Financial institutions will:Financial institutions will: Provide support to black SMEs, setting aside areas Provide support to black SMEs, setting aside areas

of procurement reserved or preferred for black of procurement reserved or preferred for black SME’s only;SME’s only;

Promote early payment;Promote early payment; Encourage existing suppliers to address BEE;Encourage existing suppliers to address BEE; Explore ways of supporting the Proudly South Explore ways of supporting the Proudly South

African Campaign;African Campaign;

The Charter Council will review the 2008 and The Charter Council will review the 2008 and 2014 targets in 2005.2014 targets in 2005.

Procurement Policies cont…Procurement Policies cont…

Enterprise DevelopmentEnterprise Development

The sector will:The sector will: Improve levels of assistance to BEE accredited companies – Improve levels of assistance to BEE accredited companies –

such as infrastructure support, secondment of staff etc. such as infrastructure support, secondment of staff etc. Measurable financial support will be scored under procurementMeasurable financial support will be scored under procurement

Support establishment of BEE accredited companies through Support establishment of BEE accredited companies through which the sector sells its products and services – this will be which the sector sells its products and services – this will be scored under procurementscored under procurement

Support j.v’s debt financing of and equity investment in BEE Support j.v’s debt financing of and equity investment in BEE companies – this will be scored under Targeted investmentscompanies – this will be scored under Targeted investments

the sector undertakes to, where appropriate, refer the sector undertakes to, where appropriate, refer business opportunities to and procure financial services business opportunities to and procure financial services from, black owned financial institutionsfrom, black owned financial institutions

Access to Financial ServicesAccess to Financial Services

the Sector recognises that access to retail the Sector recognises that access to retail financial services is fundamental to BEEfinancial services is fundamental to BEE

specific actions were agreed in relation to:specific actions were agreed in relation to: Ensuring the provision of financial services including:Ensuring the provision of financial services including:

Affordable banking services;Affordable banking services; savings schemes;savings schemes; Credit for small and micro enterprise and poor households.Credit for small and micro enterprise and poor households.

Aim isAim is to enhance accumulation of savings and direct them to to enhance accumulation of savings and direct them to

development initiativesdevelopment initiatives Increase access to financial services to a greater segment of Increase access to financial services to a greater segment of

the population, such as access to savings products, life the population, such as access to savings products, life assurance products etcassurance products etc

Access to Financial Services contAccess to Financial Services cont

Sector agrees:Sector agrees: to annually invest a minimum of 0.2% of post tax to annually invest a minimum of 0.2% of post tax

operating profits in consumer education – operating profits in consumer education – empowering consumers to make informed decisions empowering consumers to make informed decisions about their finances.[ from charter effective date to about their finances.[ from charter effective date to 2008] 2008]

Focus of education to empower consumers to make Focus of education to empower consumers to make informed decisions about their finances and lifestylesinformed decisions about their finances and lifestyles

To eliminate discrimination in the provision of financial To eliminate discrimination in the provision of financial servicesservices

By 2005 there will be standards to monitor and By 2005 there will be standards to monitor and evaluate the above initiatives on access.evaluate the above initiatives on access.

Section 9.Empowerment FinancingSection 9.Empowerment Financing

All the parties commit themselves to working in All the parties commit themselves to working in partnership with Government and to mobilise partnership with Government and to mobilise resources for empowerment financing.resources for empowerment financing.

Preliminary calculations estimate new Preliminary calculations estimate new empowerment financing from the sector could empowerment financing from the sector could exceed R75bnexceed R75bn

Investment in transformational infrastructure will Investment in transformational infrastructure will depend on mechanisms to identify and analyze depend on mechanisms to identify and analyze potential projectspotential projects

Principles of BEE transactionsPrinciples of BEE transactions

BEE ownership initiatives should be aimed at promoting BEE ownership initiatives should be aimed at promoting the sustainable participation of black people in the sectorthe sustainable participation of black people in the sector

Ownership to be encouraged where it adds value to the Ownership to be encouraged where it adds value to the co and includes management and controlco and includes management and control

Funding structures to facilitate the transfer of full Funding structures to facilitate the transfer of full economic interest to the BEE partner, aimed at long economic interest to the BEE partner, aimed at long term shareholder- type relationships.term shareholder- type relationships.

Retention of shareholding to be promotedRetention of shareholding to be promoted Broad based empowerment to be promoted -Employee Broad based empowerment to be promoted -Employee

ownership to be promotedownership to be promoted

Graeme Dorrington

eg investment in f.p.co

Ownership in the financial sectorOwnership in the financial sector

Each financial institution will have a target Each financial institution will have a target of a minimum of 25% black ownership at of a minimum of 25% black ownership at holding company level by 2010;holding company level by 2010; 10% by way of direct ownership by black 10% by way of direct ownership by black

people;people; Bonus points to be warded if more than 10% Bonus points to be warded if more than 10%

is directly ownedis directly owned

Ownership in the financial sector Ownership in the financial sector cont…cont…

Direct ownership should include:Direct ownership should include: Direct ownership as a result of BEE Direct ownership as a result of BEE

transaction financingtransaction financing Broad-based ownership;Broad-based ownership; Disposal of any assets or businesses by the Disposal of any assets or businesses by the

financial institution to black people as a going financial institution to black people as a going concern;concern;

Direct shareholding, at subsidiary level ;Direct shareholding, at subsidiary level ; Joint venture or partnership arrangementsJoint venture or partnership arrangements

Ownership in the financial sector Ownership in the financial sector cont…cont…

Any transaction which involves BEE parties Any transaction which involves BEE parties acquiring equity on a conditional, deferred basis, acquiring equity on a conditional, deferred basis, with no issue of equity carrying upfront with no issue of equity carrying upfront economic interest for the avoidance of doubt, economic interest for the avoidance of doubt, will not fall to be counted as direct ownership;will not fall to be counted as direct ownership;

If direct ownership transaction unwinds, it must If direct ownership transaction unwinds, it must be referred to the Charter Council – who will be referred to the Charter Council – who will analyse the original transaction –was it a analyse the original transaction –was it a genuine transaction?genuine transaction?

if owned more than 25 % by empowered co, the if owned more than 25 % by empowered co, the institution can take into account the direct black institution can take into account the direct black ownership in that other companyownership in that other company

Control in the financial sectorControl in the financial sector

A target of 33% black people on the board A target of 33% black people on the board of directors by 2008;of directors by 2008;

A minimum of 11% black women on the A minimum of 11% black women on the board by 2008;board by 2008;

A target of a minimum of 25% black A target of a minimum of 25% black people at executive level by 2008;people at executive level by 2008;

A minimum of 4% black women at A minimum of 4% black women at executive level by 2008.executive level by 2008.

Shareholder activismShareholder activism

Sector recognises shareholder activism critical for Sector recognises shareholder activism critical for growth in the sectorgrowth in the sector

Institutions undertake, within parameters of good Institutions undertake, within parameters of good corporate governance, to:corporate governance, to: Promote influence of black owners at board levelPromote influence of black owners at board level Encourage training and awareness of shareholdersEncourage training and awareness of shareholders

Fund managers and asset consultants commit to Fund managers and asset consultants commit to improve their knowledge and that of union trustees improve their knowledge and that of union trustees regarding BEE transactions and targeted investmentsregarding BEE transactions and targeted investments

Pension Fund trustees encouraged to promote the Pension Fund trustees encouraged to promote the objectives of the charter in the entities in which they objectives of the charter in the entities in which they have taken significant investmentshave taken significant investments

Corporate Social InvestmentCorporate Social Investment

A target of 0,5% per annum of post tax operating profits to A target of 0,5% per annum of post tax operating profits to corporate social investment (CSI).corporate social investment (CSI).

CSI means projects aimed primarily at black groups that will CSI means projects aimed primarily at black groups that will contribute to transformation.contribute to transformation.

Projects may include, but will not be limited to:Projects may include, but will not be limited to: EducationEducation TrainingTraining Development ProgrammesDevelopment Programmes EnvironmentEnvironment Job CreationJob Creation Arts & CultureArts & Culture HealthHealth SportSport

Regulatory issuesRegulatory issues

Regulatory environment must promote the Regulatory environment must promote the Charter’s empowerment objectivesCharter’s empowerment objectives

If regulatory environment inhibits compliance it is If regulatory environment inhibits compliance it is to be changed to allow for complianceto be changed to allow for compliance

This is published as a Transformation Charter in This is published as a Transformation Charter in terms of BEE legislationterms of BEE legislation

Minister requested to publish a Code of Good Minister requested to publish a Code of Good Practice to give effect to the adjudication of Practice to give effect to the adjudication of tenderstenders

Charter Council – an independent body to Charter Council – an independent body to oversee the implementation of the Charteroversee the implementation of the Charter

Council will :Council will : Conduct reviewsConduct reviews Evaluate and review targets and strategies in a Evaluate and review targets and strategies in a

changing environmentchanging environment Confirm ratings of financial institutionsConfirm ratings of financial institutions Issue guidance notes on interpretation of the CharterIssue guidance notes on interpretation of the Charter Evaluate new areas of interventionEvaluate new areas of intervention Accredit agencies to perform auditsAccredit agencies to perform audits Promote, along with government, institutions and BEE Promote, along with government, institutions and BEE

advisory Council, the implementation of the Charteradvisory Council, the implementation of the Charter

ImplementationImplementation

Implementation contImplementation cont

Reporting and ReviewReporting and Review Each financial institution will report annually to the Each financial institution will report annually to the

Charter Council. If a financial institution is a member Charter Council. If a financial institution is a member of a group, it should report as part of the group in the of a group, it should report as part of the group in the South African holding company.South African holding company.

The first annual report will be for the year ending 31 The first annual report will be for the year ending 31 December 2004.December 2004.

All financial institutions will publish, for general All financial institutions will publish, for general information, an annual BEE report which will include information, an annual BEE report which will include the audited scorecard.the audited scorecard.

The ScorecardThe Scorecard The scorecard forms an integral part of the The scorecard forms an integral part of the

financial sector charterfinancial sector charter The scorecardThe scorecard

provides measurement indicators for purposes of provides measurement indicators for purposes of measuring BEE progress. measuring BEE progress.

Will be used by:Will be used by: Financial institutions for self assessmentFinancial institutions for self assessment Charter Council to measure BEE progressCharter Council to measure BEE progress Government in adjudicating contracts awarded to financial Government in adjudicating contracts awarded to financial

institutionsinstitutions The private sector in awarding contract to financial institutionsThe private sector in awarding contract to financial institutions

Financial institutions which are exempted from any Financial institutions which are exempted from any paragraph in the charter will not be required to paragraph in the charter will not be required to complete the specific section in the scorecard.complete the specific section in the scorecard.

Scorecard continuedScorecard continued

measures three core elements of BEE measures three core elements of BEE -Ownership and control of enterprises and assets, -Ownership and control of enterprises and assets, -HR development and EE, -HR development and EE, - - Indirect empowerment through preferential Indirect empowerment through preferential procurement procurement

BEE Ratings:BEE Ratings: 0 to 40 = limited contributer0 to 40 = limited contributer 40 to 65 – satisfactory contributer40 to 65 – satisfactory contributer More than 65 = good contributerMore than 65 = good contributer

Financial Charter uses more complex overall weighted average Financial Charter uses more complex overall weighted average mechanism – from an ‘A’ for more than 80 points to an ‘E’ for less mechanism – from an ‘A’ for more than 80 points to an ‘E’ for less than 40pointsthan 40points

Charter signed byCharter signed by

Association of Black Securities and Investment Association of Black Securities and Investment ProfessionalsProfessionals

Banking Council of South AfricaBanking Council of South Africa Foreign Bankers Association of SAForeign Bankers Association of SA Institute of Retirement FundsInstitute of Retirement Funds Life Offices’ Association of SALife Offices’ Association of SA South African Insurers AssociationSouth African Insurers Association Association of Collective InvestmentsAssociation of Collective Investments Bond Exchange of SABond Exchange of SA Investment Managers Association of SAInvestment Managers Association of SA JSE Securities Exchange SAJSE Securities Exchange SA South African Reinsurance Offices’ AssociationSouth African Reinsurance Offices’ Association

Documents

BEE and the Financial Sector Charter. Introduction In August 2002, at the NEDLAC Financial Sector Summit, the financial sector committed itself to the