'Amend Companies Act'

HARARE - Zimbabwe's out-dated Companies Act needs to be amended to bring it in line with international standards and best practices, industry and business leaders say.

The amendments would also improve the country’s business environment, they said.

The current Companies Act was enacted in 1953 in the then Rhodesia to cater for a few established large corporates.

The business leaders said updating the Act would also make it cater for the emerging small to medium enterprises (SMEs) and informal businesses, which currently constitute the bulk of companies in the country.

Eve Gadzikwa, chairperson of the Confederation of Zimbabwe Industries (CZI) Business, Ethics and Standards Committee told delegates at the Business Ethics Symposium yesterday that Zimbabwe’s industrial landscape has considerably changed hence the need to immediately amend the current Companies Act.

“There has been a drastic shift in the terrain and we are running on an outdated model. The business population has changed and the Act no longer serves the populace,” she said.

“There is need to update the Act to move with latest developments in the market and to make it easier for investors to structure business deals.”

Gadzikwa, who is also director general for Standard Association of Zimbabwe, said legislators have to take the task of revising the Act in their deliberations during the formulation of the National Code on Corporate Governance.

“The National Code on Corporate Governance is going to be reviewed soon, and we hope government is also deliberating on the outdated Companies Act so that it can meet demands and expectations,” she said.

Other industrialists say lack of provision for good corporate governance in companies’ legislation has made many businesses to fall prey to delinquent directors.

Global corporate governance trends have seen modern progressive institutions, countries and groups of countries introducing corporate governance structures to try and improve the way corporates behave, and to protect stakeholder interests.

Examples of African countries that have developed and implemented National Corporate Governance Codes include Malawi, Nigeria, Kenya and South Africa.

Johannes Mudzengerere, Institute of Directors Zimbabwe president, also said the moral compass has shifted.
“Unethical conduct in whatever form has a negative impact on the moral fibre of society and this has consequential effects on the national economy and businesses,” Mudzengerere said.

According Transparency International, Zimbabwe ranked 154 in world corruption index out of 182 countries.
“What is certain though is that the prevalence of corruption is now pervasive and urgent steps need to be taken to address them.

Corruption, among other factors, has a direct impact on the risk of doing business in a country, and if the risk is high then any borrowings whether off-shore or in-country will be at a premium rendering the economy uncompetitive,” said Mudzengerere who is also the managing director of petroleum group, Engen. - John Kachembere and Ndakaziva Majaka

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