The market value of Black Economic Empowerment (BEE) companies listed on the JSE Securities Exchange (JSE) has fallen to only 2% of the overall market capitalisation of the JSE. Many BEE companies have disappeared from the exchange and there have been many failures.<br /> <br /> In the context of the report of the BEE Commission (BEE Com), it is essential to understand why these failures have occurred and it is essential to research methods of structure, capitalisation and listings to ensure that ownership of the economy is fairly distributed in future as per the recommendations of the BEE Comm. The motivation for this research project is based on the fact that as a member of the Historically Disadvantaged Group in this country, and after having qualified in the Faculty of Law with a commercial background, I would like to attempt to make a meaningful contribution to the transformation that should take place to facilitate equality of ownership of the economy.<br /> <br /> The proposed research is critically important as the recommendations of the Commission have to be implemented as a matter of urgency, given the current slow growth rate of the economy and given the fact that as many more new enterprises could be listed on the JSE, it would provide further access to jobs, thereby positively impacting on the unemployment situation thereby contributing to poverty relief.

The market value of Black Economic Empowerment (BEE) companies listed on the JSE Securities Exchange (JSE) has fallen to only 2% of the overall market capitalisation of the JSE. Many BEE companies have disappeared from the exchange and there have been many failures.<br /> <br /> In the context of the report of the BEE Commission (BEE Com), it is essential to understand why these failures have occurred and it is essential to research methods of structure, capitalisation and listings to ensure that ownership of the economy is fairly distributed in future as per the recommendations of the BEE Comm. The motivation for this research project is based on the fact that as a member of the Historically Disadvantaged Group in this country, and after having qualified in the Faculty of Law with a commercial background, I would like to attempt to make a meaningful contribution to the transformation that should take place to facilitate equality of ownership of the economy.<br /> <br /> The proposed research is critically important as the recommendations of the Commission have to be implemented as a matter of urgency, given the current slow growth rate of the economy and given the fact that as many more new enterprises could be listed on the JSE, it would provide further access to jobs, thereby positively impacting on the unemployment situation thereby contributing to poverty relief.

Thesis (MDF)--Stellenbosch University, 2011. / This study considers the impact that the particular funding structure used in the financing of black economic empowerment (BEE) transactions has on the expected outcome. Various structures are evaluated, each with their particular advantages and disadvantages. The report details the history of South Africa, the Industrial Development Corporation (IDC), as well as the black economic empowerment phenomenon. An in-depth commentary on the financing structures used for BEE transactions within the IDC is presented together with a new, remodeled structure to be used in the analysis as part of a comparative study to determine whether the existing preferential Vanilla Special Purpose Vehicle (SPV) structure garners the most appropriate result for the BEE entrepreneur. The statistical study tests whether the Vanilla SPV structure, where the financier is reliant on dividends for the repayment of their preference shares, is a better structure than the reworked SPV structure, where the financier is reliant on free cash flow for repayment. The results infer that access to free cash flow is preferred by both the financier, as well as the BEE party, as vesting is higher and the bullet payment required to attain that vesting is significantly lower.