ZIMBABWE Law and Practice Contributed by: Norman Chimuka and Tonderai Sena, ChimukaMafunga Commercial Attorneys
• failure by a subscriber to pay the subscription price; • surrender by a shareholder to the company in the exercise of dissenting shareholder appraisal rights; • court order; and • as provided in the articles of association or share- holders’ agreement. 4.2 Buybacks A company can purchase its own shares provided that the purchase was authorised in advance by the company in a general meeting. The authority to buy back the shares: • must specify: (a) the price, or the maximum and minimum prices, at which the shares may be acquired; (b) the maximum number of shares which may be acquired and the class thereof; and (c) the date on which the authority will expire; • shall not be valid where the shares are to be pur- chased otherwise than on a securities exchange registered under the Securities and Exchange Act [Chapter 24:25], if any person holding shares to which the authority relates has voted for the resolu- tion conferring the authority. In the case of a private company or public company, the authority for a buyback is not required when a class of shares are all to be purchased or are to be purchased pro rata from all the shareholders who hold shares of the class concerned. In the case of publicly listed companies, a share buy- back must be specifically approved by shareholders in a general meeting, and the repurchase by a company of its own securities in any one financial year must not exceed 40% of the company’s issued share capital of the class of shares concerned.
for setting the amounts and the record dates of, and payment dates for, and procedures in connection with, the payment of dividends and other distributions. Further, in accordance with Section 62 (2)(h) of the COBE Act, the court may order payment of a dividend following a legal action by a member. Dividends are paid out of the profits or reserves of a company. Before declaring a dividend, the company must have sufficient distributable reserves, meaning accumulated profits and reserves available for distri- bution. The company’s board of directors determines the timing and amount of dividend payments, con- sidering factors like profitability, cash flow, growth prospects, and future capital requirements. Dividend payments must also adhere to legal requirements, such as ensuring the company remains solvent and has positive retained earnings. A private business corporation is not required directly or indirectly to pay any dividend to any member by reason only of his or her membership unless, imme- diately after the payment or transfer, the private busi- ness corporation’s assets, fairly valued, will exceed its liabilities and it will be able to pay its debts as they become due in the ordinary course of its business. A dividend may also be paid in any other form other than cash, for example assets or shares (dividend in specie). 6. Shareholders’ Rights as Regards Directors and Auditors 6.1 Rights to Appoint and Remove Directors Shareholders can appoint and remove directors from the board of the company, subject to the rights and powers specified by the law, the constitutive docu- ments of a company, shareholders’ agreements and applicable securities exchange rules. Appointment of directors can be done as follows: • proposing a resolution for addition to the agenda of a general meeting; or • direct appointments authorised by the company’s articles of association or shareholders’ agreement.
5. Dividends 5.1 Payments of Dividends
Dividends are paid to shareholders as and when same are declared by the board of directors and approved by shareholders. In accordance with Section 218 (2)(e) of the COBE Act, the board of directors is responsible
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