MTN says it has addressed concerns about its empowerment scheme
Commissions finds the BEE structure did not adhere to the objectives of the Empowerment Act
MTN Group says it has addressed concerns about its black economic empowerment (BEE) scheme after a commission found that the structure did not adhere to the objectives of the Empowerment Act.
On Thursday, the broad-based BEE (B-BBEE) commission, which monitors Empowerment Act progress and compliance, issued final findings and recommendations following an investigation into the network operator’s Zakhele Futhi empowerment scheme.
The BEE vehicle, which was launched in 2016 and owns about 4% of MTN, was set up to afford qualifying black investors the opportunity to apply for shares at a discounted rate.
But according to the B-BBEE commission, the restrictions and limitations placed on the black shareholders were at odds with the requirements for ownership in the codes of good practice.
The commission issued remedial recommendations, including changes to the scheme’s governing documents, including the relationship agreement granting black shareholders effective rights, control, participation and economic benefits in respect of their stakes.
“MTN Group takes note of the commission’s announcement that MTN’s voluntary remedial actions have addressed concerns raised by the commission,” the network operator said late on Thursday in response to questions.
MTN said the scheme “meaningfully advances empowerment”, conforms to the relevant legislation, promotes the objectives of that legislation, and that its terms and structure “are reasonable and commercially justifiable”.
“However, MTN recognises that empowerment is a journey and remains committed to advancing transformation, and it is in that spirit that in engagements with the commission, MTN in good faith voluntarily offered to effect certain enhancements to the scheme.
“Both of MTN’s schemes were implemented by way of transparent public offers and in line with similar schemes implemented by other major JSE-listed companies.”