New corporate governance code on cards

HARARE - Zimbabwe is this year expected to begin using a new corporate governance code targeted at restoring ethics and accountability.

The code — a brainchild of the Zimbabwe Leadership Forum and the Institute of Directors of Zimbabwe — will limit multiple directorships among other enforcements.

Some of the issues that would be dealt with in the new code include the term of office of a board chairperson, non-executive directors, and selection of companies’ board members.

It is also expected to provide guidelines on chief executives’ packages, as well as non-executive directors’ sitting on boards of listed firms.

“We have finalised a third draft of the code and we hope to launch it soon,” said National Corporate Governance Code project board chairperson Canaan Dube on the sidelines of a Business Council of Zimbabwe conference this week.

He said the new code will be launched soon, adding that the crafting, which has been on the cards for more than five years, involved a lot of high level policy consultations with government, the private sector and civil society.

“What people must understand is that the crafting of the code has been a process, not an event. We needed to do a thorough review of the needs of Zimbabwe and the uniqueness of the country’s business environment,” said Dube.

The finalisation of the code follows an economic crisis of the past decade that has been attributed to poor corporate governance which resulted in unlawful speculative investments, institutional collapse, parallel markets, as well as shortages of local and foreign currency.

When complete, the code will contain guiding principles on best practices and will prescribe how directors should handle investor’s funds.

It will also see how boards of directors should utilise resources efficiently on behalf of shareholders as custodians or trustees of funds, which do not belong to them.

One of the most important underlying factors behind the cause of the recent financial crisis and company scandals that broke out can be attributed to inadequacy of sound corporate governance principles.

“As of last week, we had finished the editing of six chapters and this week we expect to conclude the last three chapters,” said Dube, who is a senior partner at Dube, Manikai and Hwacha Legal Practitioners.

He said the code will then be validated before going for print.

“At the moment we are courting President Robert Mugabe to officially launch the code,” he said.

Globally, about seventy countries have crafted their own corporate governance codes, including Malawi, Kenya and Brazil. - Business Writer

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