ZAMBIA Law and Practice Contributed by: Emmanuel Manda, Simon Kapampa, Innocent Mung’omba and Kaluwe Libeleki, Musa Dudhia & Co.
7.2 Type of Disclosure Required Generally, the regulatory disclosures and approvals as set out in 5.1 Requirement to Disclose a Deal are required for the issuance of shares in a business combination. Further, in a public issue of shares, a prospectus is required to invite the public to acquire shares in a public company. The prospectus must be registered with the Registrar of Companies prior to its issuance to the public and must contain, inter alia, all information that prospective purchasers of the shares or debentures and their advisers would reasonably expect to be provided in order to make a decision on the purchase. 7.3 Producing Financial Statements Regulatory disclosures such as disclosures to the CCPC require the parties to an M&A transaction to file their latest audited financial statements. In terms of the Companies Act, the financial statements of a company in Zambia must comply with standards pre - scribed by the Zambia Institute of Chartered Account - ants (ZICA). ZICA currently utilises the IFRS as the reporting standard. In relation to public companies, the Takeover Rules also require that an announcement of an offer should also include confirmation by the financial adviser or by another appropriate third party that resources are available to the offeror sufficient to satisfy full accept - ance of the offer. 7.4 Transaction Documents Generally, where a deal is required to be disclosed, all material transaction documents are subject to full and prompt disclosure. In relation to public companies, the Takeover Rules specifically require all persons con - cerned with takeovers and mergers to make full and prompt disclosure of all relevant information and take every precaution to avoid the creation or continuance of an uninformed market.
ties Act, and also informed by principles of common law. These duties include the following: • exercising independent judgement; • acting in the best interest of the company; • avoiding conflict of interest; and • ensuring that the company complies with all appli - cable laws and regulations. In Zambia, directors’ duties are generally owed to the company and not the individual shareholders. How - ever, the Court of Appeal in the case of Chirwa and Others v Mini Mart Development Corporation Appeal No. 68/2021 clarified that it would be contrary to the core of the theory of corporate governance to hold that a director can act to the detriment of sharehold - ers in the name of acting in the best interest of the company. 8.2 Special or Ad Hoc Committees It is common for boards of directors to establish spe - cial or ad hoc committees in business combinations. These committees are typically formed to oversee specific aspects of the transaction, provide additional expertise, and ensure that the board’s decision-mak - ing process is thorough and unbiased. 8.3 Business Judgement Rule The courts in Zambia would generally defer to the judgement of the board of directors in takeover situa - tions if the following conditions are satisfied: • the decision is made in good faith for a proper purpose; • the members of the board of directors do not have a personal interest in the decision; • the board of directors reasonably believe the deci - sion is in the best interest of the company; and • the company is appropriately informed of the sub - ject matter of the decision. 8.4 Independent Outside Advice In terms of the Companies Act and to the extent per - mitted by the articles of incorporation, board com - mittees may consult with or receive advice from any person. Further, in terms of the Takeover Rules, the board of a public company that receives an offer is required to retain an independent financial adviser to
8. Duties of Directors 8.1 Principal Directors’ Duties
The principal directors’ duties in a business combina - tion are set out in the Companies Act and the Securi -
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