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June 22, 2011
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This is a brief
guide to the detailed paper issued earlier on the Indigenisation
debate. Here see "Everything you ever wanted to know (and
then some) about Zimbabwe's Indigenisation and Economic Empowerment
Legislation but (quite rightly) were too afraid to ask. Second
Edition, May 2011"
The legal validity
of the Regulations is open to challenge on several grounds:
- The Act
(and thus the Regulations)
may be held to offend the Constitution
in several ways. They violate the freedom of association and (if
implementing provisions are put into place, as has purportedly
been done in the case of mining companies) violate protections
against the compulsory deprivation of property, as well as equality
clauses. The first two constitutional provisions do not provide
for any derogation from the rights protected on the grounds of
an "affirmative action programme", and while the last
does, it is doubtful that the scheme envisioned by the Minister
could be held to be such a programme.
- The appointment
of the maker of the Regulations (the Minister of Youth Development,
Indigenisation and Economic Empowerment, Saviour Kasukuwere) is
itself questionable. Zimbabwe's Constitution provides for
the appointment of 31 Ministers only. Kasukuwere is one of the
10 Ministers appointed beyond this quota. If his appointment is
held to be invalid then so too may be any Regulations made by
- The Act only
empowers the Minister to make Regulations governing indigenisation
in respect of businesses which are merging, de-merging, restructuring,
relinquishing a majority shareholding or similar transactions.
It does not grant the Minister the power to make wide ranging
regulations governing indigenisation for all non-indigenous business
enterprises in the manner in which the Minister has arrogated
sections of the Regulations are either ultra vires the Act, internally
contradictory or unintelligible, and thus legally unenforceable,
or any combination of these factors. Many of these problems arise
from the fact that the Regulations seek to compel companies to
do that over which they have no control; i.e. to dispose of shares
which they do not own. Shareholders, and not companies, own shares.
The legislative difficulties which arise are particularly acute
in the case of publicly listed companies. This problem is itself
symptomatic of the fact that the Minister has arrogated to himself
the right to make regulations for all non-indigenous businesses,
and not merely those undertaking specific transactions as provided
by the act.
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