ZIMBABWE Law and Practice Contributed by: Norman Chimuka and Tonderai Sena, ChimukaMafunga Commercial Attorneys
11.4 Recent Trends There are no empirical statistics available regarding particular industries/sectors being targeted by activ- ist behaviour. Activist shareholders are those that respond to specific issues relating to the companies in which they hold shares. 11.5 Most Active Shareholder Groups There are no empirical statistics available to support the view that particular groups/types of shareholders are more active than others. Be that as it may, it is normally the minority groups of shareholders which engage in shareholder activism to protect themselves. Major shareholders do not need to engage in activism as they have a plethora of avenues for controlling the affairs of the company. 11.6 Proportion of Activist Demands Met As established in 11.4 Recent Trends and 11.5 Most Active Shareholder Groups , there are no empirical statistics available on the success of activist crusades or campaigns. 11.7 Company Prevention and Response to Activist Shareholders A company may adopt the following strategies in responding to an activist shareholder: • acknowledge and respect the concerns raised; • initiate negotiations; • adopt and implement the proposals raised; • provide clear and credible responses backed with data; and • seek professional advice from legal, financial and public relations advisers. A company can take the following practical steps to minimise the risk of shareholder activism: • open and regular shareholder and stakeholder engagement; • regular declaration of dividends; • engage in corporate social responsibility; and • constantly implementing good corporate govern- ance changes.
• Section 167 (3) of the COBE Act: This gives the shareholders the right to vote and present their concerns at a general meeting. • The National Code on Corporate Governance: This empowers shareholder activists to promote good corporate governance practices by selling their shares, exercising their right to vote at gen- eral meetings and enforcing certain disclosure and transparency requirements. • The Listing Rules: These empower the sharehold- ers to enforce certain disclosure and transparency requirements. Considering the above, the legal and regulatory tools available to activist shareholders are judicial remedies, statutory provisions, voting power, and regulatory oversight. 11.2 Aims of Shareholder Activism The key aims of the activist shareholders include: • to promote good corporate governance practices; • to voice shareholders’ concerns to the directors or other shareholders; • to improve the company’s financial performance; • to influence the company’s strategic policies and decisions; and • to push for operational improvements. 11.3 Shareholder Activist Strategies The following strategies are commonly employed by activist shareholders: • voter pooling arrangements whereby shareholders combine their voting rights to vote for or against • increasing shareholding in the company; • influencing the appointment of directors; • influencing employees, customers and other stake- holders of the company; • negotiations with directors and other shareholders; • litigation; and • press and media campaigns. The typical agendas of the activist shareholders are outlined in 11.2 Aims of Shareholder Activism . certain resolutions; • hostile takeovers;
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