ZIMBABWE Law and Practice Contributed by: Nellie Tiyago and Rudo Magundani, Scanlen & Holderness
ZIDA Investment Licence Licensing is not compulsory unless the proposed business activity falls within a sector reserved exclu - sively for Zimbabwean nationals. Under the Zimbabwe Investment and Development Agency Act (Chapter 14:38), both foreign and domestic investments that are formally notified to ZIDA and granted an investment licence benefit from statutory protections, including safeguards against expropriation, equitable treatment and facilitation of fund transfers. Investments in SEZs – which are designated geographic areas for speci - fied activities, typically export-oriented – require prior approval from ZIDA and qualify for targeted fiscal and non-fiscal incentives. 4. Corporate Governance and Disclosure/Reporting 4.1 Corporate Governance Framework The primary sources of corporate governance in Zimbabwe are the Companies and Other Business Entities Act (COBEA; Chapter 24:31), the ZSE Listing Rules and the National Code on Corporate Govern - ance as incorporated in the Public Entities and Cor - porate Governance Act (Chapter 10:31). • COBEA: This Act governs the formation, manage - ment and dissolution of companies. It outlines directors’ duties, shareholder rights, financial disclosures and board structures. Every company must have a board of directors responsible for the overall management of the company, paying due regard to their fiduciary duties. Companies must disclose financial and non-financial informa - tion to members of the public. There is a duty for the directors of a company to have regard for the interests of employees, the community, the envi - ronment, customers and suppliers, and for the long-term consequences of any decision. • Public Entities and Corporate Governance Act (Chapter 10:31). This Act has incorporated the National Code of Corporate Governance of 2014 into its first schedule. The National Code provides principles-based guidance on board composition, ethics, risk management, stakeholder engagement and sustainability. The Code applies to both public- and private-sector entities, including state-owned
tures for both private and public companies. In these cases, there may be a mix of debt and equity. In selecting a structure, a foreign investor must con - sider the following. • An asset purchase involves the outright purchase of assets and excludes any associated debt. For the purchase of a substantial asset of an entity (that is, assets exceeding 50% of the total assets of an entity), an investor will be required to take on employees. • Under the Capital Gains Tax Act (Chapter 23:01), the sale of immovable property, shares or other specified assets may attract CGT, especially if the asset is substantial in value. • In Zimbabwe, one of the inherent risks associated with share purchases is the limited visibility regard - ing the full extent of an entity’s debt and contingent liabilities. • Where a partnership or joint venture is being con - sidered, incorporation of a special-purpose vehicle is encouraged. With the end in mind, it is less com - plicated to dissolve a special-purpose vehicle. • PPPs require separate sector specific approval, ZIDA approval and exchange control approval. 3.2 Regulation of Domestic M&A Transactions Competition and anti-trust laws are detailed in 6. Anti- Foreign investors intending to acquire securities, including shares and all forms of security, must obtain exchange control approval from the RBZ, as required under the Exchange Control Regulations. All foreign currency intended for use within Zimbabwe must be remitted to and held by an authorised dealer, typically a licensed local bank, and any remittance of funds outside the country must be approved by the RBZ. Furthermore, all agreements that involve cross- border payments – such as management contracts, loan agreements, technical service arrangements or royalty and franchise agreements – must also be sub - mitted for exchange control approval prior to execu - tion. trust/Competition . Exchange Control
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