MTN’s Zakhele Futhi inconsistent with BEE Act

Source: https://www.sanews.gov.za/south-africa/mtns-zakhele-futhi-inconsistent-bee-act

Thursday, July 11, 2019
Telecommunications network provider MTN’s Zakhele Futhi’s scheme has been found to be inconsistent with South Africa’s Broad Based Black Economic Empowerment (BBBEE) Act. The BBBEE Commission on Thursday announced that the scheme, which was announced by MTN on 12 September 2016, is inconsistent with the act that provides a legislative framework for the promotion of Black Economic Empowerment (BEE).

“The Commission found that the black ownership held through MTN Zakhele-Futhi is contrary to the objectives of the B-BBEE Act and further that the MTN Zakhele Futhi, as a broad-based ownership scheme, did not comply with the rules in Annexe 100 (D) of Statement 100 of the Codes of Good Practice,” said the Commission.

This outcome follows an investigation initiated in 2017 by the Commission against the MTN Group. The broad-based black economic empowerment initiative was put in place by MTN when the existing MTN Zakhele Scheme that was launched in 2010 and unwinded on 24 November 2016.

The initiative was valued at R9.9 billion, which was intended to afford qualifying black individuals and groups the opportunity to apply for shares in MTN Zakhele-Futhi, an entity through which the multitudes of black participants that would subscribe to this scheme will hold ownership.

In turn, MTN Zakhele-Futhi would acquire approximately 4% equity in MTN at a 20% discount, making the black participants who subscribed to the MTN Zakhele-Futhi Scheme indirect shareholders in MTN.

The Commission — which is an agency of the Department of Trade and Industry — said the scheme is contrary to the Act on the basis of a number of restrictions and limitations placed on the black shareholders, which are at odds with the requirements for ownership in the Codes of Good Practice.

For the rest of the post please see:

https://www.sanews.gov.za/south-africa/mtns-zakhele-futhi-inconsistent-bee-act

The summary of the findings and recommendations of the Commission can be accessed on:

https://www.bbbeecommission.co.za/findings-against-mtn-group/