ZAMBIA Law and Practice Contributed by: Joseph Jalasi, Mailesi Undi, Chama Simbeye and Wana Chinyemba, Dentons Eric Silwamba, Jalasi & Linyama Legal Practitioners
4. Corporate Governance and Disclosure/Reporting 4.1 Corporate Governance Framework Part VII of the Companies Act for private and pub - lic companies stipulates corporate governance in Zambia. Its provisions set out requirements for the appointment of a company secretary (and what their responsibilities will be) and the appointment of direc - tors (as well as their powers, duties and limitations). The Companies Act also lists reporting requirements and particular records that should be kept at the com - pany’s registered office. There is a corporate governance code outlining guide - lines and principles of corporate governance for com - panies listed on the Lusaka Stock Exchange (LuSE). The LuSE Corporate Governance Code includes principles to which listed companies must adhere on either a “comply or explain” basis. More recently, the government made amendments to the Trust Restrictions Act, as read together with the (Land) (Perpetual Succession) (Amendment) Act No 11 of 2020, to introduce beneficial ownership or interest disclosure provisions. 4.2 Relationship Between Companies and Minority Investors Minority shareholders have a measure of protection under the Companies Act. Section 134 of the Com - panies Act expressly provides for remedies against minority shareholder oppression on a takeover. The Companies Act gives shareholders a right to bring an action against a director where there is negligence, breach of statutory duty or illegal action. Under Section 335 of the Companies Act, an action can be brought against the company for breach of a duty owed to the shareholder. These remedies also include interim reliefs, such as injunctions, to prevent a director from engaging in conduct that contravenes the directors’ duties under the Companies Act and the articles of association. The option of a derivative action is also present, subject to a court granting relief. The Com - panies Act also gives every shareholder the right to inspect the company’s books.
Furthermore, shareholders’ agreements can provide extra protection with regard to the rights of minority shareholders. Shareholders’ liability in private and public limited companies is limited to the amount unpaid on their shares. 4.3 Disclosure and Reporting Obligations The Companies Act provides that every company must prepare its audited statements, and the same should be submitted to the registrar of companies at the Patents and Companies Registration Agency (PACRA). The company’s annual return should accom - pany this. Failure by any company to submit its annual return and financial reports at the end of each financial year is an offence and is punishable by a fine if con - victed. The law extends criminal liability for failure to submit annual returns and financial reports to each officer of the company in default (in most cases, the directors). Companies registered as foreign companies must sub - mit a financial statement in relation to that company’s operations and assets in Zambia within three months of the end of the financial year. The Act requires that the financial accounts comply with the standards set out for financial accounts relating to companies incor - porated in Zambia. There are additional reporting requirements for pub - licly listed companies under the Securities Act No 41 of 2016 and the Lusaka Stock Exchange Rules.
5. Capital Markets 5.1 Capital Markets Overview
The capital market is still developing in Zambia. It is regulated by the Securities Exchange Commission (SEC), the decisions of which can be appealed to the Securities Exchange Tribunal. There is currently only one licensed stock exchange in Zambia licensed by the Securities Exchange Act. The LuSE has two types of listed companies. These are known as “quoted companies” and “listed companies”.
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