Govt to go after directors of non-compliant firms

Govt to go after directors of non-compliant firms | The Herald March 31, 2016

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.

COMMENTS

WORDPRESS: 8
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    I think the minister needs to reflect on his own phrase, “anyone serious about running a business in Zimbabwe,” and ask himself if any are left? My take on it, is that any serious businessman wants to make a profit for himself and his partners or shareholders. His goal is not to provide work for the masses, but rather, to be profitable, and if that provides a livelihood for his employees then that’s a great side benefit. When government makes it impossible to make a profit, and in fact threatens to steal the company’s assets for no compensation, then naturally the businessman will be looking for any opportunity to become more profitable (perhaps by reducing his workforce) or he will look for an opportunity to sell the business or close it to stop the hemmoraging of his assets. The minister also needs to reflect on whether there are any incentives left for current foreign business owners to remain in Zimbabwe, I see none, and whether there are any incentives for new businesses to enter the country, again zero incentive. Zimbabwe has proven over and over again that personal property is a fluid concept that changes regularly at the whim of the government. Until there is clarity of intent and respect for private property, the country will not achieve any serious growth or stability.

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    Joe Cool 6 years ago

    The minister is intentionally equivocative, one the one hand saying they will be automatically closed for lack of compliance and, on the other, that they can ‘explain’why they have been non-compliant for 5 years. It’s all part of the Zim. sideshow of talk, talk, talk, but nothing happens. Watch and see.

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    F..k him

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    Kabunga 6 years ago

    When is sanity going to prevail in Zimbabwe?

    What is going to happen next now that there’s nothing left to steal?

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    Kabunga 6 years ago

    What are they going to do next now that they have successfully stolen everything?

    Eat us?

    When will sanity prevail?

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    Piankhi 6 years ago

    All government has done is try to find a way to shake down businesses of Zimbabwe. Since they do not he the ability to create an environment of benefits for people to want to come and invest in Zimbabwe. They come out the cowards way. Minister Zhuwao, has not the ability nor the brains to be at this post. Show you were leadership of the country is thinking. Uneducated fools at high government post distroying the country with their greedy ambitions. The reason this indeginous process have not worked since its establishment. Is because its not right. Only stands to serve the politicans for them to pick the best companies they can raid and loot. And it will not work anymore. There are Ministers and MP’s that have gotten 51% in many investors companies and stolen them blind. Facts. They my try and hide these facts but they are real. I will be sending a complete list to media soon to show the truth. Even though they will delete this post. It will be posted in other publications.

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    I think to call these people “a Government” is misguided.
    They have no legitimacy at all, having been trounced on election day in 2013.
    They are a bunch of crooks who have then gone and impossed themselves on the Zimbabwean people and done nothing at all about governning the country, being too involved in looting and spreading violence.

    Nothing progressive is going to happen under ZANU, because, as has been mentioned,they are clueless.
    The sooner we wake up to that the better.

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    They are all April fools