Zimbabwe is likely to have a law that would abolish briefcase companies, and protect minority shareholding in companies, this follows after legislators have roundly supported the Companies and Other Entities Bill, presented in the house of assembly recently.
The Bill seeks to amend the current Companies Act, which was promulgated in the 1950s and has now been overtaken by technical advancements.
Contributing in parliament last week, legislator Job Sikhala said the Bill has many advantages and urged fellow lawmakers to support it. He said one of the key aspects of the Bill is that it provides for the respect of minority shareholders in companies and will deal with briefcase companies.
He said; “Generally, the majority shareholders, for example, Econet, if Strive Masiyiwa is the major shareholder, it means he is the first and last voice in the company.
“The minority shareholders who will be having 5% to 10% do not have voice in the running of that company.
“However, this Bill is now equalising the shareholders in a company. As long as you have got your investment in that company, your voice must also be heard in the determination on how that company is going to be run.”
Adding that this has in some instances seen cases of directors abusing company money, leading to some going under liquidation or closed down on the basis that major shareholders and directors abused company money to the detriment of minority shareholders.
“So this Bill will protect minority shareholders and the money of investors in a company,” he added.
Sikhala proceeded that the other issue the Bill is going to do is to curtail briefcase companies.
“The Zimbabwean economy and the old Company’s Act have created millionaires in this country who do not even own a teaspoon but only a briefcase.
“A briefcase that has all the office, files, details and directors; they bid for tenders, given huge contracts yet with no profiles and other requirements.
“So, this Bill is going to deal decisively with briefcase companies. The time for briefcase companies is going to be dead the moment we pass this Bill,” said Sikhala.
Zimbabwe is one of the few countries in the whole world that is still basing its registration of every important documentation in our country through paperback system.
Sikhala said if the Bill sails through the country will join the rest of the world in having the electronic system being the centre of the administration of the company registration a move that would blend well with the ‘Zimbabwe is open for business mantra. The ease of doing business is very key in that regard, in line with modern technologies.
Marondera Central MP Caston Matewu also supported the Bill saying it was long over due 39 years after independence. He said it is a welcome thing that people would be able to register their companies online, but necessary measures should be in place to guard against fraudulent elements.
“There are also security issues which come with on line registration. “For example, in South Africa, someone hacked the system and was able to take all the personal details of all the directors. A similar thing happened in the United Kingdom again, where some of the information was being sold to market companies. So, I think there has to be some clauses on confidentiality on the Bill,” he said.
He added that while Section 219 of the Bill talks about corporate governance, of note was the absence of a clause in the Bill that talks of corporate social responsibility to the communities which they operate from.
Honourable Masango Matambanadzo also supported the Bill saying by making registration of businesses easier, and in real-time be key on luring investors and improve the country’s economy.
He also admitted that the Bill was long overdue and took a swipe at his fomrt party ZANU-PF for having had been sleeping on duty until now.
“For the past 39 years that we have been in power, what were we doing?
“How were we ruling? It means that we were not ruling but we then came up with foundations and principles that we laid.”