Amended Codes Of Good Practice Essay

Any new year presents new challenges. One of 2016’s challenges is the implementation of the Amended Codes
of Good Practice, in respect to coming to ‘grips’ with the application and interpretation of the numerous complex clauses and concepts. The ‘Continued Consequence’ principle is, arguably, one of the most complicated areas of the Amended Codes. In addition, they have introduced changes to the qualification and calculation of the ‘Continued Consequence’ principle. In this article we endeavour to unpack the complexity of this principle.
The ‘Continued Consequence’ principle was written into the
initial 2007 Codes of Good Practice in an effort to provide ‘Black’ shareholders with liquidity and a subsequent ease of exit from a current equity

The Amended Codes allows an organisation to claim points from ‘Continued Consequence’ for a period that is equal to the total period for which the ‘Black’ shareholder held their investment. 
 
A maximum 40% of the Ownership score may be derived from the application of the ‘Continued Consequence’ principle. Of the 25 points available, this calculates to 10 points towards Ownership on a scorecard. 
 The Ownership points per scorecard indicator are calculated by multiplying the following:
1 The percentage rights of Ownership for each indicator attributable to the ‘Black’ participant immediately prior to exit;
2 Net Value percentage achieved for such shares as at the date of

The calculation is based on all elements, however, excludes Ownership;
4 The available scorecard points per indicator.
Lucy is a ‘Black’ female who acquired 10% of the shares in SSS Consulting (Pty) Ltd on 1 June 2010. At the date of the transaction, SSS Consulting (Pty) Ltd was valued at R10.000.000,00 with a Level 7 B-BBEE status level. She acquired her shares for R950.000,00 which was fully financed through vendor financing. Lucy qualified as a ‘Black’ new entrant when she purchased her shares, meaning she had previously not acquired a shareholding (in aggregate) in any other organisation in excess of R20.000.000,00 (“old”Codes).
On 30 September 2015, Lucy sold 100% of her stake at a market value of R1.500.000,00 with an amount of R600.000,00 still owing on the shares.
Shortly before her exit, SSS Consulting (Pty) Ltd achieved a Level 5 B-BBEE status based on the “old” Codes for the 31 January 2015 financial year with a total of 63.72 scorecard points. SSS Consulting (Pty) Ltd obtained 10.4 points for