ZIMBABWE Law and Practice Contributed by: Norman Chimuka and Tonderai Sena, ChimukaMafunga Commercial Attorneys
1. Types of Company, Share Classes and Shareholdings 1.1 Types of Company The main types of companies that can be formed in Zimbabwe are: • private liability companies; • public limited companies; • co-operative companies; • foreign companies; • private business corporations; and • statutory entities. 1.2 Types of Company Used by Foreign Investors Foreign investors generally prefer to incorporate pri- vate limited companies (PLCs) for the following rea- sons. • Limited liability: The liability of the investor(s) is limited to their shareholding and they are generally shielded from personal liability for the company’s debts and obligations. • Ownership structure: PLCs allow foreign investors to maintain majority ownership and strategic con- trol over the company. • Ease of formation: Establishing a PLC in Zimbabwe is relatively quicker and less cumbersome com- pared to public entities. • Fundraising: The company can quickly raise addi- tional capital through the share subscription or sale of shares with fewer procedural and regulatory hurdles. 1.3 Types or Classes of Shares and General Shareholders’ Rights The main types or classes of shares issued by com- panies formed in Zimbabwe are: • Ordinary/common shares: These are the basic, most common type of shares. Ordinary sharehold- ers have voting rights and are entitled to a pro- portionate share of the company’s residue upon liquidation. Under the law, every company should have ordinary shares.
• Preference shares: These are shares that have been accorded priority over ordinary shares in respect of voting and financial rights. • Redeemable shares: These are shares that can be bought back by the company at a predetermined price and time. Redeemable shares may be ordi- nary or preference shares. • Convertible shares: These are shares that can be converted back into ordinary shares at a particular period of time. The rights and preferences attached to each class of shares are generally set out in the company’s memo- randum of association. 1.4 Variation of Shareholders’ Rights The rights of shareholders include but are not limited to the following: • the right to participate in general meetings and vote on their shares; • the right to receive dividends as and when they are declared; • the right to share in the residue of a company on liquidation; • the right to participate in rights issues in proportion to the number of their shares (pre-emption rights); and • the right to receive information on the company’s performance and material updates. Shareholders’ rights may be varied in one or more of the following ways: • in accordance with the company’s constitutive documents; • issuance of new shares; • through share conversions; • special resolution adopted in general meetings; or • through shareholder agreements. 1.5 Minimum Share Capital Requirements There are generally no statutory minimum share capi- tal requirements for the incorporation of companies in Zimbabwe. However, a securities exchange (for example, the Zimbabwe Stock Exchange or Victoria Falls Stock
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