ZIMBABWE Law and Practice Contributed by: George Gapu, Fidelis Manyuchi and Tapiwa John Chivanga, Scanlen & Holderness
4. Stakebuilding 4.1 Principal Stakebuilding Strategies Bidders are generally free to build a stake in a target but there is no requirement to do so before mounting a takeover. However, as per the Companies and Other Business Entities Act (Chapter 24:31), a person who alone or together with any associate acquires or owns more than 20% of the ordinary shares of a public com - pany shall, no later than 15 days from the date that such person acquires such number of shares, send written notice to the company stating the person’s name, the names of the associates, if any, the number of shares of the company belonging to him or her or to each of them (as the case may be), and whether the person intends to acquire a control block. Additionally, subsection 1 of Section 236 of the aforesaid Act obliges a person who intends, alone or together with one or more associates, to acquire, taking into account the number of shares belonging to the person and the associate(s), a control block to send written notice to the company stating such inten - tion. A control block is defined as 35% or more of the total ordinary shares of a company and any preference shares that have the right to vote with ordinary shares. 4.2 Material Shareholding Disclosure Threshold Section 235 (1) of the Companies and Other Busi - ness Entities Act (Chapter 24:31) mandates that any person who, or entity that, whether alone or together with another, acquires more than 20% of a target public company must disclose said acquisition to the company in question and indicate whether or not they intend to acquire a control block. Additionally, subsection 1 of Section 236 of the aforesaid Act obliges a person who intends, alone or together with one or more associates, to acquire, taking into account the number of shares belonging to the person and the associate(s), a control block to send written notice to the company stating such inten - tion. A control block is defined as 35% or more of the total ordinary shares of a company and any preference shares that have the right to vote with ordinary shares.
It should also be noted that every company is instruct - ed under the Act to maintain an accurate and up-to- date register of the beneficial owner(s) of the company (register of beneficial owners), and said register shall be filed with the Registrar of Companies. Any changes to the beneficial ownership information must be filed within seven days thereof. This information shall be available for inspection by the Financial Intelligence Unit or other law enforcement agencies. 4.3 Hurdles to Stakebuilding In Zimbabwe, companies can introduce rules and regulations governing stakebuilding through their con - stitutive documents, such as articles of incorporation or by-laws. However, these rules cannot stipulate a threshold lower than that prescribed by the Compa - nies and Other Business Entities Act (Chapter 24:31). Furthermore, public companies in Zimbabwe have certain protections against unwanted takeovers. For instance, if a control block of shares is sought to be acquired, the company can stop the acquisition through a shareholder meeting decision, adopted by a majority vote of ordinary shareholders, excluding votes of shares held by the acquiring party and their associates. Additionally, shareholders can make a court applica - tion to stop the proposed takeover. If a person and their associates acquire a control block of a public company, they must notify shareholders in writing and offer to acquire the remaining shares at a fair price, unless a shareholder meeting waives this right. Other hurdles to stakebuilding in Zimbabwe include: • pre-emption rights – existing shareholders may have pre-emption rights to purchase new shares before they are offered to external investors; • shareholder approval requirements – certain trans - actions, such as significant share acquisitions or mergers, may require shareholder approval; • director approval requirements – companies may require director approval for certain transactions, such as share acquisitions or disposals; • restrictions on foreign ownership – certain sectors in Zimbabwe, such as mining or agriculture, may have restrictions on foreign ownership;
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