1.1 In August 2002, at the NEDLAC Financial Sector Summit, the financial sector committed itself to the development of a Black Economic Empowerment (BEE) charter.
ï¿½ despite significant progress since the establishment of a democratic government in 1994, South African society remains characterised by racially based income and social services inequalities.
ï¿½ BEE is a mechanism aimed at addressing inequalities and mobilising the energy of all South Africans.
ï¿½ inequalities also manifest themselves in the country's financial sector. A positive and proactive response from the sector through the implementation of BEE will further unlock the sector's potential, promote its global competitiveness, and enhance its world class status; ï¿½ equally, the financial stability and soundness of the financial sector and its capacity to facilitate domestic and international commerce is central to the successful implementation of BEE.
1.2 We, the parties to this charter, therefore commit ourselves to actively promoting a transformed, vibrant, and globally competitive financial sector that reflects the demographics of South Africa, and contributes to the establishment of an equitable society by effectively providing accessible financial services to black people and by directing investment into targ eted sectors of the economy.
ï¿½ outlines processes for implementing the charter and mechanisms to monitor and report on progress.
2.1 Affected institution means every financial institution that takes designated investments.
ï¿½ where the financial institution is listed on the JSE Securities Exchange South Africa the market capitalisation of the financial institution concerned shall serve as an overall benchmark for the individual valuations of the underlying assets and businesses of such financial institution such that, on a sum-of-the-parts basis, these would represent a value no higher than such market capitalisation.
ï¿½ Cash flows to a beneficiary or shareholder will be valued on an after-tax basis.
2.3 BEE, as defined in the Broad-Based Black Economic Empowerment legislation, means the economic empowerment of all black people, including women, workers, youth, people with disabilities and people living in rural areas, through diverse but integrated socio-economic strategies.
2.4 BEE accredited means being validated in terms of this charter as a BEE company, or being validated as having achieved a certain standard of BEE contribution in terms of a recognised BEE charter scorecard or accreditation system.
ï¿½ joint ventures with, debt financing of or other form of credit extension to, and equity investments in BEE companies (other than SMEs).
2.6 BEE companies refers to companies as defined in paragraphs 2.7, 2.8, 2.9, and 2.12.
2.7 Black companies mean companies that are more than 50% owned and are controlled by black people.
2.8 Black empowered companies mean companies that are more than 25% owned by black people and where substantial participation in control is vested in black people.
2.9 Black influenced companies mean companies that are between 5% and 25% owned by black people and with participation in control by black people.
2.10 Black people means all Africans, Coloureds and Indians who are South African citizens and includes black companies. However, in paragraphs 5 and 11 the term shall include permanent residents of the Republic of South Africa. The word "black" when used in conjunction with other words shall have the same implications.
2.11 Black SME means a small or medium enterprise (with a turnover ranging from R500,000 per annum to R20 million per annum) which is a black company or a black empowered company.
2.12 Black women-empowered enterprise means companies that are more than 30% owned by black women, and where substantial participation in control is vested in black women.
2.13 Broad-based ownership is where an empowerment shareholder represents a broad base of members such as employees (to the extent that the options have actually been exercised), collectives and/or communities, or where the benefits support a target group, for example black women, people living with disabilities and the youth. Shares are held directly or indirectly through non-profit organisations and trusts. At the same time, directors and management of the groups should predominantly comprise black people.
2.14 Charter Council means the Charter Council established in terms of paragraph 15.1.
2.15 Company means an enterprise registered in terms of the Companies Act, 1973, close corporations, trusts and any other such enterprise formed for business purposes.
2.16 Control centres on the authority and power to manage assets, the determination of policies and the direction of business operations.
ï¿½ participation in executive management.
2.17 Discrimination: means discrimination as defined in the Promotion of Equality and Prevention of Unfair Discrimination Act.
2.18 Designated investment means any form of statutory or voluntary deposit, saving, investment or risk insurance placed or made by the South African public (whether of a wholesale or retail nature, but not by one financial institution in another).
2.19 Development Finance Institutions or "DFI's" means finance entities created or funded by a tier of Government. These include, but are not limite d to, the DBSA, IDC, PostBank, NEF, Land Bank, Khula, NHFC, the PIC, the Umsobomvu Fund, and Provincial Development Corporations.
2.20 Direct ownership means ownership of an equity interest together with control over all of the voting rights attaching to that e quity interest.
ï¿½ BEE transactions.
appropriate and affordably priced products and services for effective take up by LSM 1-5; and structuring and describing financial products and services in a simple and easy to understand manner.
2.23 Enterprise development means support for existing, or the fostering of, new black SMEs and BEE companies in the financial and other sectors of the economy.
2.24 Executive management means X number of people identified by the Board of Directors by name and position as the top managers of tha t financial institution, where X = 0.4% of the total staff of the financial institution employed in South Africa, with a minimum of 9 people and a maximum of 50.
2.25 Financial sector means all the classes of financial institution defined in paragraph 2.26.
2.26 Financial institutions means banks, long -term insurers, short -term insurers, re-insurers, managers of formal collective investment schemes in securities, investment managers and other entities that manage funds on behalf of the public, including retirement funds and members of any exchange licensed to trade equities or financial instruments in this country and entities listed as part of the financial index of a licensed exchange. Any other institution in the financial sector, including licensed exchanges, may opt in.
savings products and services, being a first order basic and secure means of accumulating funds over time. (e.g.
credit for low-income housing (as defined in paragraph 2.34.3, but with a minimum income of R500 per month), financing agricultural development, or establishing, financing or expanding a black SME (as defined in paragraph 2.
insurance products and services being the mitigation of impac t of defined first order basic risks. (e.g. life insurance, funeral insurance, burial society, household insurance and health insurance).
2.28 Global policy means a globally and uniformly applied restriction, regulation, or directive imposed on a foreign owned financial institution by the parent company or on any financial institution by a regulator which governs that financial institution.
2.29 Indirect ownership occurs where an institution or other investor owns equity in a company on behalf of beneficiaries and there may not be direct participation by the beneficiaries in the voting rights.
ï¿½ Junior management means all employees with a package (excluding bonuses) in respect of which the cost to the employer is between R150,000 and R250,000 per annum.
If the bonus is in excess of 50% of total remuneration then 50% of the bonus will be included as part of the package.
The salary bands will be increased in line with the consumer price index ("CPIX") on the 1st of January each year commencing on 1st January 2004.
2.31 Procurement means all expenditure to acquire goods and or services including capital expenditure, but excluding ï¿½ broker commissions; ï¿½ reinsurance premiums; ï¿½ commissions paid to insurance intermediaries; ï¿½ property and rental purchases (although property management is specifically included); ï¿½ expenditure classes covered elsewhere in the charter e.g. salaries and wages.
ï¿½ all V.A.T payable.
2.32 Regulation or regulate when used in this charter shall have a common law or economic meaning depending on the context in which it is used.
ï¿½ BEE transactions taking place on a willing buyer and a willing seller basis.
2.34 Targeted Investment means debt financing of, or other form of credit extension to, or equity investment in South African projects in areas where gaps or backlogs in economic development and job creation have not been adequately addressed by financial institutions.
transformational infrastructure projects that support economic development in underdeveloped areas and contribute towards equitable access to economic resources.
ï¿½ municipal infrastructure and services.
agricultural development involving integrated support for resource-poor farmers, through enabling access to and the sustainable use of resources.
low-income housing for households with a stable income in excess of R1,500 per month and less than R7,500 per month. This income band will be increased in line with the CPIX on the 1st of January each year commencing on 1 January 2004.
All references to a year mean 31 December of that year (e.g. 2008 means 31 December 2008).
3.1 In most economies the financial sector plays a central role in enhancing growth and development. The South African financial sector is generally recognised as world class in terms of its skilled workforce, adequate capital resources, infrastructure and technology, as well as a conducive operating, regulatory and supervisory environment.
ï¿½ it is characterised by the presence of a few very large institutions. Many of the smaller and foreign institutions have exited the market in recent years; ï¿½ there are low levels of black participation, especially of black women, in meaningful ownership, control, management and high-level skilled positions in the sector; ï¿½ there has been an inadequate response by the sector to the increasing demand for access to financial services; ï¿½ the sector has not effectively provided credit to entrepreneurs, particularly black businesses; ï¿½ the national level of savings and investment is inadequate to support sustained economic growth and individual financial security; ï¿½ there is insufficient investment of the savings pool under the control of the sector into targeted investments of national priority; ï¿½ a large pool of funds circulates outside the formal financial system, including but not limited to funds held by stokvels, informal traders and in other forms of short-term savings; ï¿½ there has been limited support for new black firms in the financial sector by Government and the private sector; and ï¿½ they need to find meaningful ways to support the Proudly South African Campaign.
3.2 By addressing the abovementioned challenges, the financial sector will make a significant contribution towards economic growth, development, empowerment and reduction of inequalities and poverty in our society. The initiatives envisaged will also promote growth in the financial sector.
3.3 The growth and development of the financial sector is central to the successful implementation of BEE and is an overriding principle and objective of this charter.
ï¿½ the regulatory environment and architecture of the sector must promote the empowerment objectives of this charter, lower the barriers to entry and facilitate competition.
4.1 This charter applies to the South African operations of the financial sector.
4.2 The targets in this charter will be applied from 1 January 2004 (the "effective date") until 31 December 2014.
4.3 In 2009 (based on the reports for the year ended 31 December 2008), the Charter Council will undertake a comprehensive mid-term review and make decisions regarding the implementation of the charter in its second term. The ownership provisions will be reviewed in 2011 to address identified shortcomings. The ownership provisions will be reviewed by the Charter Council in 2011 to decide what further steps (if any) to address identified shortcomings should be taken at individual financial institution, sub sector, sector or national levels.
4.4 The parties to this charter agree that the principles contained in the charter will be relevant beyond 2015. In 2015 (based on the reports for the year ended 31 December 2014) the Charter Council will undertake a second comprehensive review of progress in terms of the charter, and draw conclusions as to the impact of the charter on the sector and the economy, and make decisions as to what further steps (if any) to address identified shortcomings should be taken at individual financial institution, sub sector, sector or national levels.
4.5 All the provisions of the charter are to be achieved in a manner consistent with sound business practice.
4.6 Certain of the provisions of the charter will not apply in the same manner to all financial institutions.
Exemption from the Human Resource Development provisions If the financial institution has less than 50 staff members, it will be exempt from the provisions of paragraphs 5, 11.3 and 11.4 of the charter unless it opts to be so bound. But it will nevertheless remain bound by all labour legislation (and specifically the provisions of the Employment Equity, Labour Relations and Skills Development Acts).
If the financial institution has less than R10 m of designated investments it will be exempt from the provisions of paragraph 9 of the charter unless it opts to be so bound.
If the financial institution has less than 50 staff members and less than R10 m of designated investments, it will be exempt from all the provisions of the charter unless it opts to be so bound.
it is precluded from accommodating local ownership participation, it will be exempt from the ownership provisions of paragraph 10 of the charter.
Exemption from the Access provisions ï¿½ If the financial institution is a wholesaler, in the sense that it is not a provider of first-order financial products and services, it will be exempt from the provisions of paragraph 8 of the charter unless it opts to be so bound. ï¿½ If the financial institution is a retailer of first-order financial products and services but, on grounds presented to and accepted by the Charter Council, it would be inconsistent with its business model for it to extend those products or services to low-income communities, it will only be responsible for the consumer education component of access (paragraph 8.4), and the points will be adjusted accordingly.
If a retirement fund has less than 50 staff members, it will be exempt from all the provisions of the charter other than paragraphs 9 and 12.
If a retirement fund has more than 50 staff members, it will be exempt from all the provisions of the charter other than paragraphs 5, 11.3 and 11.4, and paragraphs 9 a nd 12.
4.7 All financial institutions claiming exemptions in terms of this paragraph must submit a return to the Charter Council providing motivation and evidence supporting the exemption.
4.8 The participation of DFIs in certain aspects of the charter is required in order to give full effect to the intent of the charter.
ï¿½ the financial institution opts in.
4.10 Notwithstanding the provisions of paragraph 4.9 above, the boards of directors of all financial institutions will ensure that transformation plans are rolled out through all the divisions and subsidiaries of the group, and that measurement mechanisms are put in place, responsibility given and performance evaluated at all levels and in all areas.
4.11 The parties to this charter agree that the public and private sectors, when sourcing products and services from the financial sector, should apply the charter and its scorecard.
the parties to this charter agree that the private sector should base its evaluation of the BEE contribution of members of the financial sector on the charter rating which has been accorded in terms of this charter.
5.1 Disparities in the South African workplace resulting from past discriminatory practices and laws are not only unjust, but also have direct negative implications for economic efficiency, competitiveness and productivity. It is therefore in the country's long-term national interests that a broad-based and diverse pool of skills is developed for the sector to unleash the potential of all South Africans.
invest in and equip current and future leadership incumbents in the sector with the appropriate knowledge and capacity to enable them to play a central role in driving the transformation programme.
based on an estimated ratio of 1.
based on an estimated ratio of 12% for 2002, each financial institution will have a target of a minimum of 15% black women at junior management level by 2008.
5.4 In recognition of the low starting points and targets, and the need for higher levels of black women representation at all three levels and at executive level, a 2014 target of 33% of the relevant total black representation target has been set for black women representation at all four levels. The financial sector commits, before 2008 and through a mechanism established by the Charter Council, to establish the other 2014 targets for all management levels and at executive level (dealt with in paragraphs 11.3 and 11.4).
5.5 Over and above any skills levies payable by a financial ins titution, each financial institution will, from the effective date of the charter to 2008, spend 1.5% of total basic payroll per annum on training of black employees.
5.6 This skills development initiative shall be directed at skills programmes that promote black skills in the sector in line with a skills audit for each sub-sector. These skills audits may be undertaken by the financial institution, the sub -sectors or by the respective SETAs and the programmes shall be formalised and commenced by 1 July 2005.
5.7 The financial sector undertakes to implement a Learnership Programme in terms of which, over one learning cycle of three intakes, each financial institution will employ up to 4.5% of its total staff in the form of black matriculants, or the NQF Level Four equivalent, in registered learnerships. Direct spending in excess of that recovered from the SETAs or Government will form part of the skills development targets in 5.5. The sector commits to review its matriculant learnership programme after the first cycle in consultation with the department of labour, with a view to implementing a second cycle. This commitment is subject to satisfactory resolution of the principles and funding of matriculant learnerships with Government and the relevant SETAs.
where possible, in conjunction with institutions of higher learning, introduce training programmes in line with the NQF requirements and establish undergraduate and post graduate diplomas and degrees in financial services.
6.1 Financial institutions will implement a targeted procurement strategy to enhance BEE. Provided there are charters in the information and communications technology ("ICT"), the advertising and the automotive and building sectors, and that international suppliers are subject to those charters, the target will be 50% of the value of all procurement from BEE accredited companies by 2008 and 70% by 2014.
6.2 A minimum of two thirds of that expenditure must be spent with BEE accredited companies as the primary vendor. The residual one third may be channelled to BEE accredited companies via a primary vendor, which is not a BEE accredited company, with only the BEE portion of the expenditure counting towards the target. Where a supplier is a BEE accredited company, which also sources from other BEE accredited companies, only the expenditure at the first tier will count towards the target.
provide support to black SMEs to enable them to benefit from targeted procurement programmes.
report on all spend as per the categories that fall within the definition of BEE accredited; an d explore meaningful ways of supporting the Proudly South African Campaign.
The Charter Council will review the 2008 and 2014 targets in 2005, to assess the status of charters in other sectors, and to assess the impact of 6.1 on procurement of services from black-owned SME'S. The Charter Council will specifically review the targets for claims procurement in the shortterm insurance sub-sector in 2005.
improving the levels of assistance provided to BEE accredited companies in the financial sector and other sectors of the economy through skills transfer, secondment of staff, infrastructure support, and giving technical and administrative support and assistance.
supporting the establishment and growth of BEE accredited companies as broking agencies and/or enterprises in the financial sector through which the sector sells its products and services. Measurable financial support given in this connection will be scored under procurement; and joint ventures with, debt financing of, and equity investments in BEE companies, in the financial sector and other sectors of the economy. Measurable financial support given in this connection for a Black SME may be scored under Targeted Investments, or, for a BEE company, it may be scored under BEE transactions financing, measured on the basis of Rand spend.
7.2 The financial sector will ensure that where appropriate, it refers business opportunities to, and procures financial services from, black owned financial institutions.
The financial sector's support for the development of second and third tier financial institutions may take, but shall not be limited to taking, the form of measures set out in paragraphs 7.1.1 and 7.2 8.
8.1 The financial sector acknowledges that access to first-order retail financial services is fundamental to BEE and to the development of the economy as a whole.
8.2 In terms of the Declaration of the Financial Sector Summit on 20th August 2002, it was agreed that strategies would be put in place to ensure that the financial sector is more efficient in the delivery of financial services, which enhance the accumulation of savings and direct them to development initiatives.
ï¿½ credit for small and micro enterprise and poor households.
ï¿½ supporting higher levels of savings and investment overall.
8.3 In respect of this charter, the financial sector commits itself to substantially increase effective access to first-order retail financial services to a greater segment of the population, within LSM 1-5.
by 2008 to make available appropriate first-order retail financial services, affordably priced and through appropriate and accessible physical and electronic infrastructure such that: ï¿½ 80% of LSM 1-5 have effective access to transaction products and services (defined in paragraph 2.27.1); ï¿½ 80% of LSM 1-5 have effective access to bank savings products and services (defined in paragraph 2.27.
ï¿½ a percentage (to be settled with the life assurance industry) of LSM 1-5 households have effective access to life assurance industry products and services (defined in paragraphs and 2.27.4); ï¿½ 1% of LSM 1-5 plus 250,000 have effective access to formal collective investment savings products and services (defined in paragraph 2.27.
ï¿½ 6% of LSM 1-5 have effective access to short term risk insurance products and services (defined in paragraph 2.27.4).
in accordance with the arrangements concluded with Government and the DFIs in terms of paragraph 9.1.3, to originate the low -income housing loans, agricultural development loans, and loans to black SMEs, necessary to achieve the desired breakdown of targeted investment established in terms of paragraph 9.1.3. For the purposes of determining the value of loans originated in terms of this paragraph, any loan which falls within the definition of a first-order retail financial service or product as set out in paragraph 2.27.3 will be taken into account.
Each sub-sector will determine, in consultation with the Charter Council how the sub -sector targets will be divided between the individual financial institutions in the sub-sector.
8.4 Each financial institution commits, from the effective date of the charter to 2008, to annually invest a minimum of 0.2% of post tax operating profits in consumer education.
8.5 The financial sector furthermore commits to: ï¿½ the elimination of discrimination in the provision of financial services; ï¿½ supporting the establishment of third tier community based financial organisations or alternative financial institutions.
By 2005, the financial sector, together with Government, undertakes to establish standards to monitor access and to design a mechanism for the ongoing evaluation and review of the impact of its initiatives on access.
All the parties to the charter commit themselves to working in partnership with Government and its DFIs to mobilise resources for empowerment financing.
Based on preliminary calculations, it is estimated that the aggregate amount of new empow erment financing from the financial sector could exceed R75bn. All parties agree to working together to meet the objective of increasing the total amount of empowerment financing.
9.1.3.6 the extent to which and how past empowerment financing transactions will be taken into account in terms of paragraph 9.1.6.
Investment in transformational infrastructure will, in part, depend on the establishment of a mechanism to identify and analyse potential projects (including appropriate skills and post funding care).
The total amounts to be invested in BEE transaction financing and targeted investments in terms of 9.1.3.2 will be calculated as percentages of the total designated investments in the financial sector as at 31 December 2003, and currently estimated to be of the order of R2,000 bn. Those percentages of designated investments in each affected financial institution will constitute the targets for BEE transaction financing and targeted investment respectively.
Without reducing the total amount for new empowerment financing by the sector, the targets of individual affected institutions might be adjusted to take account of empowerment financing which they have on their books on the effective date of the charter.
Different affected institutions within the sector may choose to participate to a greater or lesser extent in each of the components of targeted investment, depending on where they are relatively better positioned to do so.
ï¿½ any financing and investment which falls within the definition of a first-order retail financial service or product as set out in paragraph 2.27.3 will be taken into account.
Each affected institution shall annually report its investment into each of the four targeted investment areas so that the aggregate can be monitored and actions taken to ensure that the desired results are achieved.
The Charter Council will review the financial sector's impact on the four classes of targeted investments at the end of the period determined in terms of paragraph 9.1.3.4.
Pension fund trustees, fund managers and consultants play a critical role in influencing the flow of funds. Initiatives will therefore be developed to enhance their understanding of investments in general and specifically their participation in targeted investments and BEE transaction financing and to make a material contribution to shareholder activism as contemplated in paragraph 12.
Initiatives aimed at achieving broad -based empowerment will be promoted.
Joint ventures or partnership arrangements should be meaningfully structured with equitable portions of the responsibility and benefit to each party.
10.1 Each financial institution will have a target of a minimum of 25% black ownership, measured at holding company level, by 2010.
10.2 A minimum of 10% of the target set in terms of paragraph 10.1 must be satisfied by way of direct ownership by black people, provided further that the financial institution complies with the provisions of paragraph 11.1 concerning the appointment of black directors.
Should the balance or any part of the balance of 15% be achieved by way of direct ownership a maximum of four bonus points will be awarded.
10.3 Direct ownership as contemplated in 10.2 should where possible meet the principles outlined in paragraph 9.
dire ct shareholding or ownership with control, commensurate with the level of ownership concerned, at subsidiary or divisional level; or joint venture or partnership arrangements.
10.4 Any transaction which involves BEE parties acquiring equity on a conditional, deferred basis, with no issue of equity carrying upfront economic interest, shall, for the avoidance of doubt, not fall to be counted as direct ownership for the purposes of paragraph 10.3 until such time as the equity is actually transferred.
10.5 A maximum of 15% of the target set in terms of paragraph 10.1 may be satisfied by way of indirect ownership by black people at group or subsidiary level. Financial institutions may only score indirect ownership points if they have reached a level of 10% direct ownership, and if they have taken active measures to meet the responsibilities outlined in section 12 of this charter. Indirect ownership will be measured on a basis to be agreed and approved by the Charter Council.
10.6 For the purposes of this charter, black ownership will be calculated as the agreed standard valuation of the black interests referred to in paragraph 10.3 expressed as a percentage of the agreed standard valuation of the South African operations of the financial institution on the date of the transaction. Where a BEE transaction results in black people acquiring 100% of an asset, operation, business or subsidiary from a financial institution the agreed standard valuation of that asset shall be deemed to be the transaction consideration applicable to the BEE transaction concerned, and the aforementioned percentage shall be calculated based on the agreed standard valuation (as defined) of the South African operations on the date of the transaction.
10.7 Only historical direct ownership transactions, which remain wholly or partially current on the effective date, can be included in the calculations of direct ownership. After the effective date, all direct ownership transactions can be included in the calculation of direct ownership, even if they unwind, provided they meet the principles of BEE transactions as provided in paragraph 9.2.
10.8 Any direct ownership transaction, which unwinds, must be referred to the Charter Council for analysis as to whether, when it was originally concluded, the transaction genuinely complied with the intent of paragraph 9.2. If the Charter Council decides that it was not, it may not be taken into account in calculating direct ownership.
10.9 If a financial institution is at least 25% owned by another financial institution, it may, in the calculation of direct black ownership, take into account a portion of the direct black ownership in that other company based on the percentage shareholding of that other company in the financial institution concerned.
10.10 10.10.1 Due to their unique nature, foreign banking groups with a branch structure will have the same target as is set out in paragraph 10.1, but will be permitted to address that target either by transactions contemplated in paragraphs 10.2 and 10.3 of this charter; or by financing identified BEE transactions in addition to the investment contemplated in paragraph 9.1.5. Points and bonus points for such financing will be scored in the same way as if the financing (calculated as a percentage of the agreed standard valuation of the South African operations of the foreign banking group) equated the same percentage of direct ownership in terms of paragraph 10.2. At least 25% of this financing must be committed to BEE transactions in the financial sector.
Not more than 18 points may be earned in aggregate in terms of 10.10.1 and 10.10.2. BEE transactions identified in terms of 10.10.2 will, for the purposes of this charter, be treated as if they were ownership transactions, and shall be governed by all the provisions of paragraph 10, and shall not be measured or treated interchangeably with BEE transactions in paragraph 9.1.5.
11.2 Each financial institution will have a target of a minimum of 11% black women on the board of directors by 2008.
11.4 Based on an estimated ratio of 2% for 2002, each financial institution will have a target of a minimum of 4% black women at executive level by 2008.
12.1 The financial sector recognises that shareholder activism is a critical component of continued confidence and long-term growth of the sector.
encourage shareholder awareness through triple bottom line reporting, reporting on performance in terms of the charter and information about the institution and the sector; and facilitate, where possible, black companies or individuals voting on behalf of indirect owners.
12.3 Fund managers and asset consultants commit, as part of their obligations in the charter, to comply with the provisions of 12.2 and to improve their knowledge and that of union trustees regarding BEE transactions and targeted investment.
12.4 Pension fund trustees are encouraged to play an increasingly active role in promoting the objectives of the charter on their respective boards and in the entities in which they have taken significant investments.
13.1 Each financial institution will have a target of directing 0.5% per annum of post tax operating profits to corporate social investment (CSI) between the effective date of the charter and 2014.
13.2 CSI means projects aimed primarily at black groups, communities and individuals that have a strong developmental approach and contribute towards transformation.
ï¿½ Sport: support of developmental programmes.
14.1 The regulatory environment and architecture of the sector must promote the empowerment objectives of this charter, ensure appropriate standards of entry, operation and disclosure and facilitate competition.
14.2 The parties to this charter agree that, in consultation with Government, the relevant aspects of the regulatory environment which inhibit compliance with the provisions of this charter will be identified and amended to allow for compliance. By the effective date of the charter the specific areas of regulatory review will be defined and attached as an annexure to the charter.
14.3 A key principle informing this charter is that of support for community reinvestment. Any legislation aimed at giving effect to community reinvestment or which requires the setting of targets for the financial sector or any part of it should be brought within the framework of this charter.
14.4 The charter will be published as a Transformation Charter in terms of the Broad-Based BEE legislation. The Minister of Trade and Industry will be requested to publish a Code of Practice which will give effect to the provisions of paragraph 4.11.2.
ï¿½ A Charter Council will be established as an indep endent body with a mandate to oversee the implementation of the charter. ï¿½ The Charter Council will address the issues of principle and, in particular ï¿½ conduct the reviews and take the decisions referred to in paragraphs 4.3 and 4.
ï¿½ if there is a material change in the circumstances or the environment in which the charter has to be implemented, it will consider whether the targets and implementation strategies are still appropriate, and if not how they should be varied.
ï¿½ There will be equality between industry association representatives and all others on the Charter Council. The Charter Council must fairly reflect the interests of all the financial institutions.
ï¿½ Decisions of the Charter Council will be taken on a consensual basis. If, on any issue, the Charter Council is unable to achieve consensus, there will be a dispute-breaking mechanism in the Charter Council either by some agreed mechanism within the Charter Council, or by reference to arbitration or mediation.
ï¿½ engage with Government, public sector finance institutions, the BEE Advisory Council and other regulatory agencies to promote the implementation of the charter.
There will be a right to take any decision of the executive on review or appeal to the Charter Council.
The Charter Council will ensure that the executive is adequately resourced, capacitated and supported to fulfil its mandate as envisaged in the charter. A business plan will be commissioned which will, amongst other things, outline a budget for the work of the Charter Council. Financial Institutions will be required to fund the Charter Council in accordance with the budget.
Each financial institution will report annually to the Charter Council on its progress in implementing the provisions of this charter.
ï¿½ The financial institution opts in.
The first annual report will be for the year ending 31 December 2004, and must be submitted to by 31 March 2005.
Thereafter each financial institution will report as at 31 December each year thereafter, and submit the report by 31 March of the following year.
All financial institutions will publish, for general information, an annual BEE report. The BEE report will include the audited scorecard and an account of progress in discharging unquantified responsibilities as contained in paragraph 15.2.6.
Besides the general reviews outlined in 4.3 and 4.4, the following specific areas have been identified for review, and where necessary, the setting of targets: ï¿½ all targets for black women representation on the basis of the reports for 2006; ï¿½ 5.5 on employment equity targets for 2014 and 11 at board and executive management levels; ï¿½ 5.7 on learnerships; ï¿½ 6.4 on procurement; ï¿½ 8.
ï¿½ 14 on regulations.
Progress on the following unquantified responsibilities (as set out in the charter) should be reported on annually by financial institutions and submitted together with the scorecard, to the Charter Council. ï¿½ 4.10 ï¿½ 5.
16.1 The scorecard set out in Annexure A forms an integral part of the financial sector charter and provides an objective and broad-based set of measurement indicators for purposes of measuring BEE progress in and between financial institutions, in different sub sectors and in the financial sector as a whole.
ï¿½ the private sector in the awarding of contracts to financial institutions.
16.2 Financial institutions, which are exempted from any paragraph in the charter in terms of paragraph 4 will not be required to complete the specific section in the scorecard, subject to paragraph 4. Under such circumstances, the points allocated to the paragraph from which the financial institution is exempted will be cancelled, and it will score out of the remaining points and calculate its score as a percentag e of that reduced remainder.