Aspects of the Companies Bill

THE Companies and Other Entities Bill went through public consultations throughout the country in recent weeks. Many enlightening views were expressed by some participants at the hearings.


I will highlight some of the interesting questions, issues and concerns raised by ordinary participants that I encountered. This is the second of two parts that summarises some of the most important intended changes and discussion points. The majority of participants welcomed the intended changes, especially the long overdue computerisation of the Companies Office and the drive towards expediting company registrations.

The proposed Act, when passed, will change how companies are registered and how businesses operate in the country. The present Companies Act which was enacted in 1951 had lost relevance in parts. The intended computerisation of the Companies Office is long overdue and will result in enhanced efficiency, convenience and transparency.

It is hoped this will minimise the prevailing inefficiencies obtaining within the office and enable the faster and more efficient registration of companies. The country falls far short of international and regional standards regarding the time taken to register a company and set up business.

Indigenous languages

One of the proposals welcomed is the use and acceptance of official indigenous languages for the first time on company documents lodged in the Companies Office.
The Registrar will, however, retain powers to reject documents that do not conform to the set standards or if they are legally or textually defective. English translations will be required for documents in foreign languages.

The Registrar and staff from the companies office are immune from being sued for any acts of omission or commission conducted in good faith but which may negatively affect third parties.

Criminal penalties

One of the most contentious issues raised was the existence of criminal penalties imposed for violations to parts of the Act or registration procedure while the government agencies and departments are not subjected to the same criminal sanctions when they infringe the law and violate people’s rights.

Most of the disgruntlement was over criminal sanctions imposed for tax misdemeanours yet Zimra is not criminally liable if it breaks the law and abuses ordinary people.

People expressed that it is very difficult to near impossible to compel Zimra to refund them any monies owed. Aggrieved people can only sue government agencies in civil courts yet they themselves are arrested and subjected to criminal charges. The Bill does replace some criminal sanctions with civil sanctions for some violations.

Limited liability

The juristic capacity and independence of limited companies and Private Business Corporations (PBCs) was also discussed. Someone only wanted clarity if anything had changed and it was answered in the negative.

The participants were told about companies and PBC’s being separate legal entities and having their own corporate personality.

Upon registration and incorporation, they become body corporates and are endowed with the capacity of natural persons with full legal capacity to sue and be sued in their own names.

Someone wanted to know why they cannot sue directors of defunct companies, but it is common cause that company directors have limited personal liability and it continues even if the company has closed. However, there are circumstances they can be sued in their personal capacities such as if they exhibit gross negligence and commit acts of fraud.

Duties of directors

The Bill defines the corporate responsibilities of directors in more detail than the prevailing Act. By emphasising the responsibilities of directors the Bill seeks to promote good corporate governance.

It proposes that companies have at least two directors responsible for managing and directing the company’s operations. One of the directors be ordinarily resident in Zimbabwe and have a local physical address.

The Bill acknowledges sole directorships in Clause 204, so the proposal for at least two directors is somewhat contradictory. It is untenable for all of a company’s directors to be domiciled abroad. Foreign companies have to appoint at least one locally-based director with a local address.

Directors are directed to exercise independent judgment and act in good faith and in the best interests of companies. They can be charged with negligence and be personally liable for failing to act in the best interests of the company.

Their first duty is to the company before shareholders or other interests. They are prohibited from delegating their core management responsibilities to other persons.
Directors of public companies are prohibited from sitting on more than six boards of public companies. It is prohibited for directors to acquire company shares on different terms and conditions than other shareholders.

Directors cannot be given loans by a company to buy shares within that company. The price and conditions of acquisition of shares of the same value have to be similar for all shareholders regardless of position in the company.

Directors are prohibited from disposing of any part or whole company without the approval of the company at a general meeting. Full disclosure of the sale of company assets and shares is compelled.

Directors are also compelled to disclose their salaries and pensions in the accounts of a company in the company’s accounts or any other written statements before the general meeting.

Register of directors and secretaries clause 205

An interesting discussion points was the proposal that companies are compelled to keep a register of its directors and secretaries and its members and shareholders at its registered office.

Members of the public are allowed to inspect the records at the registered office. It should be possible to walk into any company head office or where officially registered and request to see the record of the membership including the full names and residential addresses of the directors. This is useful when seeking to establish share information and share distribution.

It is most useful when seeking to execute judgments where the judgment creditor seeks to attach and sell or acquire the debtor’s shares.

People often hide immovable property from creditors by registering it under company names. This only delays the process, but does not stop execution of judgments if creditors are diligent and resourceful enough. Judgment debtors shares can be attached and transferred and sold to satisfy judgments

Miriam Tose Majome is a lawyer and a teacher. She can be contacted on

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