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Indigenisation Regulations not suspended - Bill Watch 17/2010
Veritas
April 16, 2010

The House of Assembly has adjourned until Wednesday 30th June, The Senate has adjourned until Tuesday 15th June

Indigenisation Regulations not suspended

The Indigenisation Regulations [Statutory Instrument 21/2010] have not been suspended. They continue in force in the form in which they were gazetted on 29th January. One amendment is expected to be gazetted in the near future to accommodate the views of the Parliamentary Legal Committee [see below]. There are still ongoing consultations which may result in further amendments but until these are gazetted, and there is not sign of this yet, the present regulations hold good.

Amendment to meet Parliamentary Legal Committee objection

The Parliamentary Legal Committee [PLC] found section 3(a) of the Indigenisation Regulations violated the Constitution. [Section 3(a) of the regulations requires businesses above the prescribed threshold [asset value above $500 000] to “cede” a controlling interest of not less than 51% to indigenous Zimbabweans within 5 years.] The PLC concluded that the word “cede”, without any requirement of payment or the giving of value for a controlling interest ceded, infringes section 16 of the Constitution [which prohibits compulsory acquisition of property without proper compensation.] The PLC decision was discussed with Youth Development, Indigenisation and Empowerment Minister Kasukuwere, who gave the PLC a written undertaking to amend the regulations in order to make it clear that the cession of a controlling interest is a cession “for value at the option of the owner”, i.e., that a compulsory free handover is not required. A draft statutory instrument drawn up by the Minister giving effect to the agreed amendment was approved by the PLC, which then sent a non-adverse report on the regulations to the Speaker, conditional on the Minister’s honouring his undertaking to amend section 3(a). The report states that if the Minister does not amend section 3(a) as promised, the PLC will replace the non-adverse report with an adverse report. The Minister is expected to gazette the agreed amendment in the next few days.

Indigenisation Regulations still in force notwithstanding “Null and Void” announcement

Conflicting reports on what Cabinet decided about the Indigenisation Regulations at its meeting on Tuesday have caused much confusion. A statement was issued by the Prime Minister’s spokesman, and later confirmed by the Minister of State in the PM’s office, that following a Cabinet decision the regulations were “null and void”. This was roundly dismissed by the President and Minister Kasukuwere the following day. The President did say, however, that a Cabinet committee is looking at the regulations and that there would be some revisions after consultations.
The present legal status of the regulations is clear:

  • The regulations can only be suspended or amended or repealed by the responsible Minister, the Minister of Youth Development, Indigenisation and Empowerment, by the gazetting of an appropriate statutory instrument.
  • The regulations can only be declared null and void by a court of law.
  • A Cabinet decision that the regulations are null and void/suspended/will not be implemented has no direct, immediate legal effect, and the same applies to an announcement of a Cabinet decision, whether made by the Prime Minister’s spokesman or by the Prime Minister himself. Until the responsible Minister gives effect to the Cabinet decision by gazetting a statutory instrument, the regulations continue in force in their original form, and businesses must conduct themselves accordingly.
  • Implementation of section 4 of the regulations can certainly be slowed down by the Minister – by the simple expedient of delaying action in cases where businesses have failed to submit their IDG 01 forms and indigenisation implementation plans [see below].

Comment: Attempts to lay down the law by Ministerial or official announcement are to be deprecated. They are inconsistent with the rule of law and they almost invariably cause unnecessary confusion, as has happened in the present case.

15th April was last day for submission of forms and iIndigenisation plans

15th April was the last day of the forty-five day period within which businesses above the $500 000 asset value threshold had to submit their completed IDG 01 forms and “indigenisation implementation plans” [section 4 of the regulations], unless they had applied for and been granted an extension. [Section 4(4) of the regulations provides for the Minister to grant an extension of up to thirty days if a business has “good cause” for it.]

Failure to meet deadline not a criminal offence

Contrary to many press reports, failure to meet the 15th April deadline, or an applied for extended deadline which has been granted by the Minister to a particular business, is not an offence. There is no penal sanction for such failure. But the Minister has an administrative remedy [see next paragraph].

Minister’s powers if indigenisation implementation plan not submitted

If the deadline, or extended deadline, passes and a business has not submitted its IDG 01 form and indigenisation implementation plan, section 4(4) of the regulations allows the Minister to, in effect, order the business to do so. The Minister may do this by adopting either of the following procedures:

  • the Minister may have a copy of form IDG 01 served on the business in any of several specified ways, including personal delivery to the owner or a responsible person at its head office or by registered mail; or
  • if service on a business in any of the specified ways is “not possible for any reason”, the Minister may publish a notice in the Government Gazette notifying the business of “the requirement to collect and complete Form IDG 01”.

The effect of such an order is that the business concerned has thirty days from the date that the IDG 01 form is served on it, or from the date of the notice in the Government Gazette, within which to submit its completed form and indigenisation implementation plan. [Note: a thirty-day extension is possible in individual cases, on “good cause shown”, but has to be applied for.]

Failure to comply with minister’s order an offence: An offence will be committed if a business fails to submit its Form IDG 01 and indigenisation implementation plan after being required to do so by the Minister under this section 4(4) procedure. The owner of the business, or the directors of the company concerned, will be liable on conviction to a $2000 fine or 5 years in prison or both.

Room for slowing down implementation: The regulations do not state a time-limit within which the Minister must take steps under section 4(4) to compel the submission of forms and indigenisation implementation plans, so this phase of the exercise could be indefinitely delayed at the Minister’s discretion.

Legislation update

All Acts of 2009 have now been gazetted. [Note: the Audit Office Act, which was gazetted on 2nd April, is not yet in force; its date of commencement will be fixed by statutory instrument in due course.]
Bill in House of Assembly: Public Order and Security Amendment Bill. [Private Members Bill in second reading stage]
Statutory Instruments: Statutory Instrument 81/2010 fixes, very belatedly, employers’ assessment rates for 2010 for the purposes of the National Social Security Authority’s Accident Prevention and Workers’ Compensation Scheme.

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