The introduction of the notion of Broad-based Black Ownership BBOS found its way into our legislation as a reaction to the early BEE ownership structures, which both society and government felt were benefitting only a few. The DTi, as the drafters of the Codes legal regime, introduced a deeming provision, wherein the race and gender identity of a social developmental type ownership shareholder, such as a legal trust, is determined by the race and gender of the beneficiaries.
There is no doubt that broad-based black ownership (BBOS) can be vehicle for transformation, and can have a developmental impact in the lives of many under privileged black South Africans. Both educational trusts and entrepreneurial trusts have created new businesses and many bursaries for people who would not be educated if not for them.
However, due to the beneficiaries evolving over time, and not always being able to represent their interests at shareholder level, it is critical that these schemes are established in such a way that fronting is avoided and financial benefits flow to the shareholder immediately. Advance Corporate Advisors has experience and expertise in the structuring of such transactions.