MPs debate Bill that requires public firms to cede 51% equity

MPs debate Bill that requires public firms to cede 51% equity

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By Staff Reporter

ZIMBABWE'S Parliament is set to debate the controversial Indigenisation and Empowerment Bill that seeks to hand 51 percent shareholding in public companies to local people.

The exercise would be carried out once the government completes an indigenisation and empowerment assessment rating of every company, according to the Bill gazetted last Friday.

“Ultimately it is intended by this Bill to provide an enabling environment in which at least a 51% shareholding in the majority of businesses in all sectors of the economy is in the hands of indigenous people,” reads part of the proposed legislation.

After 30 days of the government’s directive to any firm that it must take on board local shareholders, those who would not have complied would lose their operating licences.

“If, within thirty days after the Minister (of Indigenisation) has written to the parties in terms of section 3(3)... the parties have not complied with any thing the Minister has required them to do under that provision, the Minister may, without further notice to the parties concerned, issue a written order to the licensing authority of the business in question, to decline to renew the licence, registration or other authority in question to operate the business concerned,” the Bills reads.

The Bill also provides that the government may exercise its discretion and prescribe a lesser percentage depending on the circumstances of each business on condition that there is a set time frame within which the 51% share or controlling interest must eventually be attained.

The legislation would see the creation of the National Investment Trust of Zimbabwe that would be constituted as a special account of the National Indigenisation and Economic Empowerment Fund.

“The fund will consist of moneys appropriated by Act of Parliament, levies, approve donations, loans and other financial assistance and any moneys that may vest in or accrue to the Fund,” the Bill says.

It says there must be mandatory indigenous shareholding thresholds of 51% in every business “that is being transferred, merged, restructured, unbundled or demerged and in any new investments of a prescribed value”, adding: "Such transactions must be referred to the Minister for approval, and any transaction that fails to meet the required minimum shareholding percentage will not be approved.”

Some of the firms dually listed on the Zimbabwe Stock Exchange and London Securities Exchange firms include Old Mutual, NMB bank and Hwange.

Multi-national firms that may be affected by the new policy include Barclays Bank, Bindura Nickel Corporation and mining giant Rio Zim.

The bill defines indigenous Zimbabweans as any person who, before independence in 1980 was "disadvantaged by unfair discrimination on the grounds of his or her race, and any descendant of such person, and includes any company, association, syndicate or partnership of which indigenous Zimbabweans form the majority of the members or hold the controlling interest."

The bill also states that no projected or proposed investment, shall be approved unless a controlling interest is reserved for indigenous Zimbabweans.

All government departments, statutory bodies will also be asked to procure 51% of their goods and services from businesses in which controlling interest is held by indigenous Zimbabweans.

Last year, many of Zimbabwe's platinum, diamond and other mineral mines warned that they would be forced to close if veteran President Robert Mugabe's government takes a majority stake in the companies.

The Chamber of Mines, representing 200 mining houses in Zimbabwe, said proposed amendments to the Minerals and Mines Act would effectively kill off investment needed to keep the mines open.
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