ZIMBABWE Law and Practice Contributed by: Norman Chimuka and Tonderai Sena, ChimukaMafunga Commercial Attorneys
Exchange) regulates the share capital requirements of a company which applies for listing on a stock exchange for, inter alia, complying with the sharehold- er spread. Further, financial institutions such as banks and insurance companies are required to comply with minimum capital requirements as may be prescribed from time to time. 1.6 Minimum Number of Shareholders The minimum number of shareholders for the com- panies listed in 1.1 Types of Company is generally one. However, the requirements may vary in some regulated sectors, for example banking and insur- ance sectors. In addition, listed entities have more than one shareholder as they are required to comply with shareholder spread requirements. Apart from the reserved sectors under indigenisation laws, there is no requirement for any shareholder to be resident in Zimbabwe. 1.7 Shareholders’ Agreements/Joint Venture Agreements Shareholders’ agreements and joint venture agree- ments are commonly used in private limited com- panies. Both are used to ensure sound and effective business management, regulate the rights and duties of shareholders and manage conflicts. 1.8 Typical Provisions in Shareholders’ Agreements/Joint Venture Agreements The typical provisions included in shareholders’ agree- ments and joint venture agreements are as follows: Shareholders’ agreements: • share transfer provisions (eg, pre-emptive rights); • drag-along and tag-along rights; • voting rights and decision-making procedures; • dividend policies; • regulation of conflict of interest and insider deal- ings; • dispute resolution mechanisms; • exit and buyout provisions; and • confidentiality and non-disclosure clauses. Joint venture agreements:
• ownership structure and equity contributions; • participating interests of the joint venture partners; • management and operational control; • funding and financing arrangements; • risk and profit/loss sharing arrangements; • decision-making processes and deadlock resolu- tion; • intellectual property rights and licensing; • term of the joint venture and exit/termination provi- sions; and • dispute resolution procedures. Shareholders’ agreements and joint venture agree- ments are generally legally enforceable contracts in Zimbabwe provided that the provisions thereof do not contravene any statute or applicable law. In most instances, these agreements contain a severability clause which specifies that an illegal or unenforce- able provision shall be severed from the rest of the agreement and the validity, legality and enforceability of the remaining provisions of the agreement shall not be impaired or affected in any way by such illegality or unenforceability. Shareholders’ agreements and joint venture agree- ments are typically private and confidential docu- ments. They are not required to be filed with or made public in any registry. The contents of these agree- ments are not publicly accessible unless the parties choose to disclose the information or a dispute arises that leads to court proceedings. 2. Shareholders’ Meetings and Resolutions 2.1 Types of Meeting, Notice and Calling a Meeting All companies are required to hold an annual general meeting (AGM) at least once every 12 months. The notice period for an AGM is a period of at least 21 days of written notice to shareholders. The notice period can be shortened if all the members entitled to attend and vote thereat agree. The following issues are normally discussed and approved at an AGM:
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