ZIMBABWE Law and Practice Contributed by: Nellie Tiyago and Rudo Magundani, Scanlen & Holderness
enterprises. At present, express ratification of the principles is required. The National Code of Cor - porate Governance states that corporate power should not be concentrated in one person as this may result in corporate failure. Part iii of the code provides for the role and functions of the board of directors, wherein the directors should provide effective corporate and entrepreneurial leader - ship. The Code provides that minority sharehold - ers’ interests should be respected and that the shareholders, the board and the management of a company must promote and protect the interests of the company and its stakeholders. • The Securities and Exchange (ZSE Listings Requirements) Rules and Victoria Falls Stock Exchange Listing Rules include corporate gov - ernance provisions to be followed by listed companies, such as the requirements for board independence, audit committees and shareholder communication. Corporate and Other Legal Entities Commonly Used for Public and Private Companies COBEA outlines the various legal entities commonly used for public and private companies, namely: • private limited companies; • public limited companies; and • foreign companies. Key Implications for Foreign Investors Considering FDI From Select Corporate or Other Legal Entities The key consideration for a foreign investor should be the complexity or ease of disinvesting. They may choose to either invest directly or through a special- An investor may acquire equity in an existing company or establish a new company that is wholly owned by the investor. The liability of shareholders is limited, and shares may not be offered to the public even for the purpose of fundraising. Public company If a foreign investor establishes a public company or purchases shares of an existing public company through the stock exchange, capital may be raised purpose vehicle. Private company
from the public, and the liability of the shareholders will be limited to the extent of the shareholding. This type of company has more reporting requirements. Foreign company A foreign company is a company or other associa - tion of persons incorporated outside Zimbabwe that has established a place of business in Zimbabwe. The constitution documents of the parent company are registered in Zimbabwe in order to permit the com - pany to perform the functions that they are registered for in the country of origin. The first step requires the company to obtain a licence from the Minister of Justice, Legal and Parliamentary Affairs. The certificate may be issued conditionally or unconditionally. Once the certificate is issued, appli - cation for registration is filed with the Registrar of Companies. Throughout the history of Zimbabwe, any alteration of the constitution documents, directorship or address, or any other alteration of the parent company docu - ments, must be filed with the Registrar of Compa - nies in Zimbabwe. Administratively, the company is required to display its name and country of incorpo - ration at the place of business, on the seal and on any correspondences. The company is bound to the objectives that have been approved by the Minister in the certificate provided; the company is also bound to the objectives of the parent company. 4.2 Relationship Between Companies and Minority Investors Provisions in COBEA that specifically refer to the rela - tionship between the companies and shareholders provide for the following: • on the request of a shareholder or shareholders, or of a member or members, holding at least 5% of the ordinary shares of the company, the Registrar of Companies may assign one or more inspectors to investigate the affairs of the registered business entity and report thereon, as the Registrar may direct; • a minority shareholder may apply to the court for a protection order on the ground that the company’s affairs are being – or have been – conducted in a
769 CHAMBERS.COM
Powered by FlippingBook