ZIMBABWE Law and Practice Contributed by: Nellie Tiyago and Rudo Magundani, Scanlen & Holderness
a supplier and customer, or even just where control is transferred or acquired by any means – qualify as mergers under the Act. For a merger to be notifiable, it must result in controlling interest of the whole or part of the target firms’ business being vested in the acquiring firm. Notification is triggered by meeting the threshold, which is presently USD1.2 million. 6.2 Criteria for Review details how the threshold is met. 6.2 Criteria for Antitrust/Competition Review The threshold is met in two instances: • when the combined annual turnover, that is, the income derived from economic activity in Zim - babwe, of the acquiring firm and the target firm (including by any entity in the merging parties group of companies) is valued at or in excess of USD1.2 million; and • when the combined assets in Zimbabwe of the acquiring firm and the target firm are valued at or in excess of USD1.2 million – the annual turnover of a firm shall be calculated in accordance with inter - national accounting standards (IAS) based on the income statement for the previous financial year. No adjustment shall be made even where the amount represents a duplication arising from transactions between the parties. Where the acquiring party is a subsidiary company, the combined turnover of the group of companies in which the acquiring party is a subsidiary shall be included. Where the target party controls any other undertaking or business, the com - bined turnover of such undertaking or business shall be included. Where the computation is based on assets, the assets of a party to a proposed merger shall be calculated in accordance with IAS and international financial report - ing standards (IFRS), subject to the following: • the asset value shall be based on the gross value as recorded on the firm’s balance sheet at the end of the immediate previous financial year; • the asset value equals the total assets less any amount shown on that balance sheet for deprecia - tion or diminution;
• the combined assets are to include all assets on the balance sheets of the firms concerned, includ - ing any goodwill or intangible assets included in the balance sheets; • no deduction may be taken for liabilities or encum - brances; • the combined assets are to be calculated on the basis of the combined assets before giving effect to the merger and, accordingly, the combined assets shall not include any goodwill or intangible assets that would arise as a result of the merger; • the combined assets shall not be adjusted for any investments the acquiring firm might have in the target firm or amounts due by one firm to the other; and • assets in Zimbabwe include all assets arising from activities in Zimbabwe. 6.3 Remedies and Commitments The Competition Commission welcomes pre-noti - fication contact. In the ordinary course, these pre- notification contacts will take the form of an advisory opinion. In 2023, the Commission introduced a process that allows parties to a merger the option of getting clear - ance from the Commission with respect to whether or not they are required to file an application or obtain an advisory opinion. The clearance letter guides parties on which process to follow. No fee is payable for this request. 6.4 Antitrust/Competition Enforcement The Competition Commission has the authority to pre - vent an unauthorised person from entering into, carry - ing out or otherwise giving effect to an agreement or arrangement that is deemed a notifiable merger. This law is actively enforced, and if an investor continues with the investment the penalty may be termination of the transaction and a fine of up to 10% of the com - bined annual turnover or assets, whichever is higher.
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