From compliance to credibility: The CFO's guide to BEE success

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Critics have raised valid concerns around corruption, elite capture, and the emergence of a “tender class”. For years, many companies have relied on ownership structures designed primarily to satisfy the requirements of the BEE Codes. Some of these structures have worked well; others have delivered BEE points without delivering economic substance to Black South Africans.

The shift from tick-box to meaningful participation

It’s clear that tick-box approaches to BEE are not enough. In light of the growing levels of scrutiny around how BEE is structured and who really benefits, CFOs and finance executives cannot treat BEE ownership as a mere compliance exercise.

BEE has to become credible; structured to give Black participants real capital at risk, genuine decision-making power, transparent economics, and meaningful long-term benefits. It should be commercially sound and able to withstand external scrutiny.

The future lies in ownership arrangements that extend meaningful participation to those who create value - the Black investors, employees, senior managers, and entrepreneurs who play a critical role in driving performance and strategy.

These participants bring more than political alignment. They bring expertise, capital, and operational leverage. When properly incentivised, they can unlock long-term commercial advantage.

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When BEE ownership works on paper - but fails in practice

Despite the growing focus on substance over form, many BEE transactions still only meet compliance requirements on paper. In practice, they often fall short.

We have encountered structures that resemble private equity arrangements in name, where companies effectively act as the limited partner while an intermediary fund manager is presented as the empowerment vehicle.

Too often these intermediaries have minimal or no capital at risk, limited governance independence, and little to no operational track record. In some cases, the “Black fund manager” plays a purely symbolic role, with no real authority or exposure. Contractual mechanisms quietly enable the reversal of ownership.

These structures may pass verification for now. But they rarely pass muster in the boardroom. And increasingly, they represent real reputational, legal, and commercial risk.

Black PE funds: Powerful, but easily misused

Black private equity funds are among the most powerful tools for sustainable empowerment. When properly structured, they channel third-party capital into businesses, build black investment capability, and support real economic participation. And the BEE Codes rightly allow for their use.

In a well-designed fund, limited partners provide capital, while Black general partners contribute both capital and strategic leadership. They manage investments, assume risk, and share in the upside. This is genuine empowerment.

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The problem arises when there is no substance. In poorly designed structures, Black general partners are appointed in name only. They bear little to no financial risk, have limited insight into the deal, and operate under terms that can be unilaterally amended by others. Control remains with the existing shareholders, economic benefits are cosmetic, and exit strategies are engineered by the existing shareholders.

This kind of structuring doesn’t just fail the spirit of empowerment, it creates criminal fronting risk exposure. As regulators and verification agencies dig deeper, CFOs cannot afford to rely on technical compliance alone.

The CFO’s responsibility: Commercial, ethical, strategic

CFOs occupy a unique position at the intersection of financial governance, strategy, and ethics.

When assessing BEE ownership transactions, the real test is not simply whether the deal is technically compliant, but whether it is defensible, auditable, and sustainable.

That means asking deeper questions:

• Do the participants have real capital at risk?
• Are general partners empowered to make decisions?
• Is the economic upside shared in line with private equity metrics?
• Can the terms of the transaction be unilaterally amended by the existing shareholders or their representatives?
• Would this deal withstand external scrutiny?

These are not legal or technical questions: They are leadership questions and they fall squarely within the modern CFO’s domain.

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Empowerment that builds value

Well-structured BEE ownership does more than just manage compliance risk. It creates commercial opportunities.

Credible BEE ownership can open procurement doors, attract aligned capital, strengthen employee engagement, and build trust with customers and stakeholders. It aligns naturally with the broader shift toward inclusive capitalism and ESG conscious governance, where long-term value is measured in resilience, fairness, and future-fit sustainable business models.

CFOs who lead on this front are not only protecting the downside, they’re also positioning their organisations for future growth.

Build what will last

The line between compliance and credibility is becoming increasingly clear. Structures that once passed with minimal oversight are now being tested in deeper, more public ways. For this reason, CFOs must bring their full judgment to bear. If a structure is built to last, it will be evident in its governance, economics, and alignment with the company’s long-term objectives.

The future of empowerment depends not just on regulation, but on leadership. And finance leaders are in the right place to set the standard.