ZIMBABWE Law and Practice Contributed by: George Gapu, Fidelis Manyuchi and Tapiwa John Chivanga, Scanlen & Holderness
• that regulatory approval has or shall be obtained; and • material adverse change conditions. When it comes to public companies, regulators do restrict the use of offer conditions. One of the restric - tions is that a person who, alone or together with the person’s associate or associates, has acquired a con - trol block of shares of a public company must, on the date of acquisition, give notice thereof to shareholders in writing – and within 60 days of such notice must give further notice in writing to all of the remaining company’s shareholders offering to acquire the com - pany’s ordinary shares belonging to them at a price not less than the weighted average price at which he or she acquired the company’s shares comprising the control block during the six months preceding the date of acquisition of the control block, except when a shareholder meeting adopts a decision to waive the rights of shareholders to sell the shares belonging to them. In addition to the foregoing, an offer must also contain the dates on which and the prices at which the shares offered were: • originally issued by the company; and • acquired by the person making the offer, or by his or her principal, giving the reasons for any differ - ence between such prices and the prices at which the shares are being offered (Section 114 of the Companies and Other Business Entities Act). 6.5 Minimum Acceptance Conditions There is no usual minimum acceptance condition for tender offers in Zimbabwe. The minimum acceptance conditions depend on whether the acquirer intends to acquire a controlling stake in the target. According to the Companies Act, a person who exercises ultimate effective control over a legal person is a person who: • directly or indirectly holds more than 20% of the company’s shares; • directly or indirectly holds more than 20% of the company’s voting rights; • directly or indirectly holds the right to appoint or remove a majority of the company’s directors; or
• otherwise exercises or has the right to exercise significant influence or control. When it comes to public companies, “control block” means 35% or more of the total of the ordinary shares of a company and any preference shares that have the right to vote with ordinary shares. 6.6 Requirement to Obtain Financing A business combination can be conditional upon the bidder obtaining financing. It is quite rare for the target shareholders to agree to this condition. Most share - holders require proof of funding or bank guarantees to proceed with the transaction. 6.7 Types of Deal Security Measures A bidder can protect the deal by employing a combi - nation of the following deal security measures: • concluding a no-shop agreement, which stops the target from looking around for other buyers; • right of first refusal; • lock agreement – anything that ties the seller, to keep the transaction going; • breakup fees; • agreement with the biggest shareholder that it will sell to the bidder; • foothold acquisition – acquire something that is critical for the survival of the target business; and • concluding a memorandum of understanding. 6.8 Additional Governance Rights If a bidder does not seek 100% ownership of a tar - get, bidders often request board representation in the target entity. Constitutive documents may also be amended to accommodate the bidder’s governance rights. Other rights may be negotiated in the transac - tion agreements. 6.9 Voting by Proxy Shareholders can vote by proxy in Zimbabwe. 6.10 Squeeze-Out Mechanisms If within 120 days after the date of an offer made to other shareholders after a person alone, and/or with his/her associates, acquires a control block (35% of the public company) and the offer has been accepted by the holders of at least 90% of the target shares,
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