BUS COMMUTER AND COACH SERVICES SUB-SECTOR CODE FOR B-BBEE – Guiding Principles

Source: Gazette 32511

Guiding principles

The detailed Bus Sub-sector B-BBEE Scorecard is included under section 5 of the document. The B-BBEE Scorecard, as agreed between the stakeholders, contains indicators with detailed notes to guide role players. The bus sector scorecard stretches over a 5 year period, and points will be scored using the 5 year targets.

The Coach Sub-sector B-BBEE Scorecard indicators and time frames are the same as for the bus commuter industry, although there are differences in terms of some of the targets. As is the case with the bus commuter sub-sector scorecard, a scorecard is employed in the measurement of contributions to B-BBEE. Differences from the bus commuter industry scorecard are indicated in the text of this document.

The BEE compliance of bus operators with this scorecard will be measured against a total score achieved across all indicators (i.e. the sum of the individual scores on the B-BBEE indicator scorecard).

OWNERSHIP

The guiding principle is to increase black ownership across the spectrum of the bus and coach industry. We also aim to increase the economic sustainability of black ownership.

Stakeholder Undertakings

The government aims to:

1. Clarify public transport policy with specific reference to the funding model; targeting of subsidies, growth of the industry, future of the negotiated/tendering system and so forth.
2. In the design of tenders/negotiated contracts make provision for small operators, women enterprises and other designated groups.
3. Engage public and private sector funding agencies to develop innovative funding mechanisms for B-BBEE companies seeking to invest in the sector.
4. Ensure that policies are in place to facilitate the entry of new players into the entire industry, including subsidized buses, cross border transport and domestic long distance. This will require co-ordination of initiatives between the DOT, the C-BRTA and the provincial operating license boards to review legal impediments that may prevent small operators from entering the industry.

Industry ownership measures include the following:

ECONOMIC INTEREST

1. Measured entities within the bus commuter industry, will achieve maximum points when the percentage of the total issued shares held by black persons exceeds 35% – the applicable direct shareholding is 25% for the coach services industry;
2. Measured entities will achieve maximum points when the portion of the total shareholding (i.e. the number of black women shareholders expressed as a percentage of the total shareholding) is or exceeds 10% of the total shareholding held by black women shareholders — The applicable percentage for the coach industry is equal to or greater than 10%; and
3. Black natural people—A measured entity will achieve maximum points when the portion of the total shareholding held by black natural persons exceeds 2.5%.

VOTING RIGHTS

1. A measured entity will achieve maximum points if more than 35% vote of the total voting rights is held by black shareholders. The applicable percentage for the coach industry is greater than 25% + 1 vote;
2. A measured entity in the bus commuter industry will achieve maximum points if 10% or more of the total voting rights are held by black women shareholders. The applicable percentage for the coach industry is greater than 10%;

For Qualifying Small Enterprises (QSEs) as defined in this charter, the following criteria and targets shall apply:

a. Economic interest in the hands of Black people, for which the target will be 35% for the commuter industry and 25% for the coach industry;

b. Voting rights in the hands of Black people, for which the target will be 35% for the commuter industry and 25% + 1 vote for the coach industry.

In order to assist in ownership transformation, the industry is committed to developing creative funding mechanisms, e.g. vendor finance and earn-in models, to facilitate funding for companies.

MEASUREMENT PRINCIPLES AND APPLICATION OF THE CODE

Measurement principles associated with the ownership element are contained in Statement 100 of Code 100 of the Generic Codes of Good Practice.

The formulae required in the determination of the ownership score is contained in Annexure 100 (c) of Statement 100 of Code 100 of the Generic Codes of Good Practice.
The recognition of the sale of assets under the ownership element has the same meaning as that contained in Statement 102 of Code 100 of the Generic Codes of Good Practice. The target contained in the ownership element of this sub-sector code will apply.

The recognition of the equity equivalent programmes for multinationals has the same meaning and interpretation as that contained in Statement 103 of Code 100 of the Generic Codes of Good Practice. The formulae required in the determination of the ownership score based on equity equivalent contributions are contained in Annexure 103 (A) of Statement 103 of Code 100 of the Generic Codes of Good Practice.

Measurement principles relating to the ownership element for QSEs are contained in Statement 801 of Code 800 of the Generic Codes of Good Practice.

The next article will summarize the requirements for management control and employment equity.