Govt to go after directors of non-compliant firms

Minister Zhuwao

Minister Zhuwao

Tinashe Makichi : Business Reporter

Government will go after assets of directors of foreign-owned companies in the event that a company ceases operation after failing to submit its indigenisation plans today. The move is aimed at assisting employees in the case that they lose their employment due to non-compliance of their companies. Foreign-owned firms including mines and banks were last year given a March deadline to submit plans on how they are going to comply with the indigenisation law which requires them to cede at least 51 percent shares to locals.

Youth, Indigenisation and Economic Empowerment Minister Patrick Zhuwao yesterday said he has so far sought legal help from three legal practitioners as he looks at building a strong case.

He said it is the fiduciary duty of company directors to comply with the law and any employee that will lose their job due to non-compliance of the company will be assisted by the Government to go after the directors in their individual and institutional capacity.

“I have sought legal help from three lawyers so far and I am seeking two others to make sure that I build a very strong case and I am going to support any employee rendered jobless by the irresponsibility of directors or managers who fails to comply with the law. We will make sure that those employees go after those directors in their institutional and individual capacity.

“If a company stops operating because management and directors have failed in their fiduciary responsibility, I will support those workers in going after those directors. So if you are director of a non-compliant company be rest assured that I will support workers that you will have rendered unemployed to come after you,” said Minister Zhuwao.

He said Government is unmoved by threats coming from some individuals and stressed that closure of non-compliant companies will open room for new players.

“Certain individuals are still trying to threaten Government but it will not work and everyone serious about running a business in Zimbabwe will comply with the law.

“Further to that I have received representations from worker organisations saying that they are concerned and I told them that it is the fiduciary responsibility of directors of such companies to make sure that they look after their stakeholders including shareholders.

“The legal advice I am getting is, it is the fiduciary responsibility of directors to make sure that laws in the country that they are operating in are complied with. So if they then wilfully disobey the law, workers have a right to go after them,” said Minister Zhuwao.

Mr Zhuwao said Cabinet has directed that on April 01, 2016, all line ministers invoke Section 5 of the Indigenisation and Economic Empowerment Act (Chapter 14:33) against all non-compliant businesses in their sectors.

He said the invoking of Section 5 of the Act is purely a technical process which shall come into effect by pure operation of the law.

Minister Zhuwao said the process will involve that the line minister shall issue an order to a licencing authority to cancel licences of non-compliant businesses.

The process will also involve that the line minister shall notify non-compliant businesses in writing of the intention to cancel licences and non-compliant businesses may also show just cause why the licence should not be cancelled.

He said the line minister will then direct non-compliant businesses to become complaint.

Minister Zhuwao said failure to do that will result in the line minister proceeding to notify third parties likely to be affected by cancellation of the licences and licencing authority shall without notice, cancel licences of businesses that remain non-compliant after 30 days of having been given the room to comply.

Cabinet has also directed that all line ministries must avail to the National Indigenisation and Economic Empowerment Board a full and comprehensive list of all companies that are licenced to operate within their sectors within a week from March 22, 2016 for the purpose of verifying their indigenous status.

 

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  • Eddy Davies Mukushwa

    Patrick slowdown young man. You are being overzealous. Systems as you shall realise are bigger than individuals. Your much acclaimed academic profile is evidently a high sounding nothing. Layman economics dictates the operation of the invisible hand in the economy. the economy is not run on threats and ultimatums.

  • Mzee

    Minister Zhuwao.. Please read the companies act and responsibilities of Directors. A company is a seperate individusl that can not married to anyone it takes care if irs iwn affairs. Threatening and shouting wont work.

  • b c

    These threats will do no one no good. What does it help to go after a director’s personal assets when the company is shut and employees have lost jobs? Which sensible investor out there would come in take the place of the closed company when it is clear that they can face similar moves? The government must desist from draconian and barbaric actions and instead adopt a stance that encourages and promotes investment from both locals and foreigners. The massive benefits of foreign firms operating locally need not be over emphasized. They employ many locals, contribute to the fiscus and GDP, and bring in technology and modern methods of running businesses that locals learn and benefit from. Focus should be on creating or maintaining a level playing field where no enterprise unfairly muscles out competition, ensuring there is beneficiation and value addition, corruption is decisively dealt with, losses due to smuggling both in and out are curtailed, and so on. In any case empowerment need not be premised on taking over anyone’s shareholding. It should instead be the creation of an enabling environment for locals who were previously marginalised to enter into and run businesses fairly. That is what will grow the economy.

  • sherman

    What a Joke, “WE WILL NOT CLOSE FIRMS IRRATIONALLY”. ZANU Hates the Whites, but did they ever think that they have the FUNDS to invest in Zimbabwe. We need Foreign Investment to bolster this Economy, and all we do is shoot ourselves in the foot. Instead of building better relationships with the Whites now that we are Independent, we thrive on stealing more and more from them, shutting down the possibilities of Foreign Investors, as the word SPREADS around the World how hard it is to do business in Zimbabwe……. THEY have the funds and WE need the funds for Investment here in Zimbabwe. In 35 years it has been proven, we do not have the creativity, engineering skills, production skills, and financial sources to build our country. The PROOF is 90 Percent Unemployment…….. All Zanu has, are the skills to steal and take what is left on the bone of some successful or marginally successful businesses……. Take, Take, Take is the name of the game, and the ones who lose out are the workers…… Unemployment is sure to surge over 90 Percent……

  • Patriot

    Minister you are confusing Directors with Owners. The law is requiring Owners to give away 51%.

    Directors are ALSO employees of the company and in most cases have no ownership stake to give away.

    How can a director call a Board Meeting and resolve to force the Owner to sell shares in the business ?

    This level of amateur announcement sends shivers down the spines of those who might want to participate in our economy.

  • yowe

    YOWE!!! Muzukuru wasekuru has lost his mind!!! This guy knows that companies will close because of his nonsense hahaha. This guy is committing Economic Treason he should be arrested for what he is doing. Mugabe is begging people to come and invest this idiot wants to “take” 51% of that investment. Surely if ever we had a public enemy it is this Zhuwao guy

  • uMkhonto

    Keep on dreaming and wasting time on useless acts.

    The Zimbabwe economic solution is to:

    1. Have 0% duty for importation of production equipment, and raw materials.

    2. Repeal the indeginisation law.

    3. Delete the indeginisation ministry. A quote from Doctor Do little: “A simple solution is to put that indeginization law into the shredder and don’t even leave copies”.

    4. Zimra must concetrate on their core work only. E.g., Zimra is currently even failing to timeously processing tax clearances.

    5. Zimra must improve the poor service delivery at the border.

    6. Don’t restrict companies from exporting. Don’t constrict them through your silly export permits.

    7. Cancel the multiple taxes, eg indeginisation taxes.

    8. Attract skilled foreigners into the country, just like South Africa, America (Albert Einstein).

    9. Allow 0% duty for importation of ICT products.

    10. Make internet cheap to the average man on the street.

    11. Encourage companies to have functioning websites that can be googled, and have orders processed online.

    12. Reduce the ridiculously high taxes.

    13. The government wage bill is not the problem, it’s ok where it is currently. The problem is the low revenue collection caused by the government’s failure to address the above points. Resolving the above points will attract more revenue for the government. With more revenues, the govt can build more schools, roads, water and sewer infrastructure.

    12. If the government is not prepared to address the above points, then the current liquidity challenges will persist. Please adopt the above points in your next govt cabinet meeting if you are serious about improving the well being of the people and the country Zimbabwe.

  • cde munhu

    Free advice to companies: place newspaper adverts tendering 51% of your shares to indigenous people at fair value. If there are takers there is no loss or prejudice, if there are no takers with enough capital to acquire the shares its not your problem, you will have done your part by complying through publicly tendering the shares to indigenous people as required by the law.