Telecommunications network provider MTN’s Zakhele-Futhi’s empowerment scheme will list on the JSE on November 25, the Johannesburg-based telco said on Monday.
MTN’s previous scheme, MTN Zakhele, listed on the JSE in 2015, but delisted in the next year as the scheme was wound up.
Recently, MTN’s Zakhele-Futhi’s scheme was found to be inconsistent with South Africa’s Broad-Based Black Economic Empowerment (BBBEE) Act.
In July, the BBBEE Commission disclosed that the scheme, which was announced by MTN on 12 September 2016, is inconsistent with the act that provides a legislative framework for the promotion of BBBEE.
“The Commission found that the black ownership held through MTN Zakhele-Futhi is contrary to the objectives of the B-BBEE Act and further that the MTN Zakhele Futhi, as a broad-based ownership scheme, did not comply with the rules in Annexe 100 (D) of Statement 100 of the Codes of Good Practice,” said the Commission.
This outcome follows an investigation initiated in 2017 by the Commission against the MTN Group. The broad-based black economic empowerment initiative was put in place by MTN when the existing MTN Zakhele Scheme that was launched in 2010 and unwinded on 24 November 2016.
The initiative was valued at R9.9 billion, which was intended to afford qualifying black individuals and groups the opportunity to apply for shares in MTN Zakhele-Futhi, an entity through which the multitudes of black participants that would subscribe to this scheme will hold ownership.
In turn, MTN Zakhele-Futhi would acquire approximately 4% equity in MTN at a 20% discount, making the black participants who subscribed to the MTN Zakhele-Futhi Scheme indirect shareholders in MTN.
The Commission — which is an agency of the Department of Trade and Industry — said the scheme is contrary to the Act on the basis of a number of restrictions and limitations placed on the black shareholders, which are at odds with the requirements for ownership in the Codes of Good Practice.
MTN informed investors on Monday that the JSE has granted the approval of a listing of the entire issued ordinary share capital of MTN Zakhele Futhi on the BEE segment of the main board of the exchange.