Equity Equivalent Investment Programmes: B-BBEE for multinationals
At a glance
What it is: An alternative to selling equity, for multinationals operating in South Africa
Who uses it: Foreign multinationals that cannot dilute ownership to local black shareholders
How it works: You fund approved programmes instead of giving away equity
Recognition: Earns B-BBEE ownership points comparable to a real equity deal
Oversight: Programmes must be approved, with the dtic and B-BBEE Commission involved
What it is
A multinational often cannot sell equity in its South African operation — global policy or group structure simply does not allow it. The Equity Equivalent Investment Programme lets such a company earn B-BBEE ownership recognition another way: by investing in approved programmes that build black-owned businesses and skills. "Equity equivalent" means it stands in for equity.
The important point: an EEIP is a commitment over time, not a payment. The recognition depends on funding a properly approved programme, and sticking to it.
Who this affects
Foreign multinationals
If your group will not dilute equity but you need B-BBEE points to trade with the state and large corporates, an EEIP can fill the ownership gap.
South African subsidiaries
The local entity is usually where the B-BBEE scorecard sits. The EEIP commitment is measured there, even though head office funds and approves it.
Questions to ask first
Can we sell equity at all, or is an EEIP genuinely our only route to ownership points?
Which programmes qualify, and who approves them?
How much must be committed, and over what period?
How will the points we earn be measured and verified each year?
Have we built the internal approvals and budget to sustain the commitment?
How an EEIP works
1. Confirm that selling equity is genuinely not an option for your group.
2. Identify an approved EEIP programme that fits your sector.
3. Agree the commitment — the amount, and the period.
4. Align the commitment with the South African entity's B-BBEE scorecard.
5. Fund the programme on schedule, and keep the verification evidence each year.
Common mistakes
Treating an EEIP as a quick fix, without the multi-year commitment behind it.
Choosing a programme that is not approved, so the spend earns nothing.
Committing at group level without aligning the South African entity's scorecard.
Stopping the funding part-way and losing the recognition.
Related
Sources
Broad-Based Black Economic Empowerment Act
Amended B-BBEE Codes of Good Practice; dtic EEIP guidance
Multinational needing B-BBEE points?
We can help you work out whether an EEIP is the right route, and structure the commitment.
