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Bee Partnership Agreement

A BEE partnership contract can be very useful from a commercial point of view, but must be carefully set up. There are other ways for small businesses to become compliant, but a BEE ownership agreement can have greater benefits for the business. The amended B-BBEE codes will result in companies that do not have black shareholders falling by a BEE level. Noko warns: “The reality is that many companies that have not reached the 25% + 1 black ownership target and are classified as BEE Level 1 contributors will find it impossible to move above a Level 6.” Experienced entrepreneurs looking for something that offers them some differentiation are aware that the right B-BBEE can confer a competitive advantage on their business. But, Noko says, it`s important to do the basics right: • Black shareholders must have both voting rights and economic rights (i.e. receive dividends from the company). • Avoid passive shareholders (B-BBEE verification agencies may consider this as fronting). Opt for partners who are willing to work in business (the participation of the board of directors guarantees additional BEE points). • Clearly define roles in the company.

Directors have fiduciary responsibilities and any new BEE partner must be prepared to assume this responsibility. • Find partners you enjoy working with – don`t let yourself be broken into an agreement. • The bee partner is expected to pay for the real value of its shares. Remember that against the National Credit Act, he promises to allow someone to accept a large debt without him having the means to repay it. • Create a shareholders` agreement with the new partner. Add clauses limiting the sale of shares within a specified period of time (indicate that these shares can only be sold to another BEE partner). • If you are financing the deal yourself or have a guarantee based on the use of dividends to repay the debt, make sure that good business practices prevail and that you can pay dividends. • If you sell shares on the basis that the new owner earns dividends, you need to make sure that such dividends come. Noko concludes: “Don`t be seduced by shortcuts. Seek professional advice on compliance and B-BBEE compliance agreements. After all, it`s the success of your business that`s at stake. » Continuous partnership: bee smart city and SMART CITY SOLUTIONS As part of interGEO “While promoting transformation is an honorable and necessary goal for our country, the validity of BEE partnerships is the main consideration for BEE Commissioner Zodwa Ntuli,” says Phil Bowes, Director of Vinpro`s Transformation and Development Department. .

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