ZAMBIA Law and Practice Contributed by: Joseph Jalasi, Mailesi Undi, Chama Simbeye and Wana Chinyemba, Dentons Eric Silwamba, Jalasi & Linyama Legal Practitioners
would be financed locally. The domestic financing trend does not threaten tax stability immediately, but it tightens the fiscal belt. For investors, it signals a stable but disciplined tax environment where future changes are more likely to focus on enforcement, digitalisation, and efficiency rather than abrupt tax rate increases. The introduction of the Alternative Income Tax forms part of Zambia’s ongoing fiscal reform strategy to pro - mote fairness, compliance, and domestic resource mobilisation. For investors, this reform signals the government’s commitment to a more predictable and transparent tax framework. It encourages businesses to maintain proper financial records and reinforces Zambia’s drive toward sustainable revenue generation while maintaining an investor-friendly environment. Typically, a transaction for the acquisition of shares, a business or assets takes the form of a private con - tractual sale where a party directly acquires shares in an entity. Other types of transactions include: • a party’s acquisition of shares through the creation of new shares by way of allotment in an existing entity; or • an existing minority shareholder exercising a call option to acquire a majority share in an existing entity. 3. Mergers and Acquisitions 3.1 Transaction Structures A party may also acquire an existing entity’s assets and business and transfer them into a new company. The transaction choice is usually decided according to what will be easiest regarding regulations and tax efficiency. In some cases, the parties prefer to enter into heads of an agreement prior to the share and purchase agreement, allotment or having the asset sale agreement finally signed. Depending on the nature of the transaction (eg, an M&A agreement), a number of advisers in addition to legal advisers may be involved, including financial advisers, accountants, tax advisers and other spe - cialised experts, who may be required at the due dili - gence stage.
Prior to the commencement of negotiations, the par - ties will usually carry out the target entity’s legal, financial and tax due diligence. The due diligence takes the form of the vendor setting up a data room in which they deposit all the information required by the potential purchaser. The typical areas that due diligence covers are: corporate, tax liabilities, litiga - tion status, employment liabilities, review of an asset register, pensions, patents and the company’s existing contracts. The timeframe largely depends on the scale and com - plexity of the transaction and could range from six to ten months. The timeframe may also be shorter or longer, depending on the regulatory approvals required. On 26 December 2023, the Competition and Consum - er Protection (Amendment) Act No 21 of 2023 (the “Amendment Act”) was officially enacted, introducing significant changes to the Competition and Consumer Protection Commission Act No 24 of 2010 (the “Princi - pal Act”). A key highlight of these amendments is the long-awaited domestication of the COMESA Com - petition Regulations into Zambian law, addressing a long-standing issue, particularly in the area of merger control. This development marks a pivotal step for - ward in aligning Zambia’s competition framework with regional standards. 3.2 Regulation of Domestic M&A Transactions A foreign investor considering FDI in Zambia should be aware that it needs regulatory approval from the Competition and Consumer Protection Commis - sion (CCPC) with respect to M&A, either of shares or assets. Additionally, the payment of Property Transfer Tax (PTT) may be applicable, depending on whether the M&A is an acquisition of shares, a business or assets. Change of ownership of a licence in mines, banks and insurance companies involves additional statu - tory notification requirements. A change-of-control notification is also required regarding the transfer of environmental licences.
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