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Indigenisation Regulations, extension of deadline to 30th June –
Bill Watch 20/2010
Veritas
May 19, 2010
The Senate has
adjourned until Tuesday 15th June, The House of Assembly has adjourned
until Wednesday 30th June
Indigenisation
Regulations: Extension of Deadline to 30th June Gazetted
SI 95/2010,
gazetted on 14th May, [electronic version available on request]
extends the deadline for businesses to submit their IDG 01 forms
and indigenisation implementation plans. The original deadline of
15th April was extended to 15th May by Ministerial announcement
and SI 95 extends it to 30th June. SI 95 also gives new businesses
75 days in which to submit form IDG 01 and indigenisation plans,
in place of the 60 days allowed by the original regulations. It
is only after the new deadline elapses, that the Minister of Youth
Development, Indigenisation and Empowerment [Minister Kasukuwere]
can take formal steps to compel non-compliant businesses to submit
their forms and plans by serving notice on them to do so. And, it
is only when there is non-compliance after notice has been served
that a business can be prosecuted [see Bill Watch 17 of 16th April
for more detail]. [Also available – updated electronic version
of complete Indigenisation Regulations incorporating SI 95.]
Still
No Other Amendments
The amendment
agreed between the Parliamentary Legal Committee [PLC] and Minister
Kasukuwere has still not been gazetted. This amendment would change
the word “cede” in section 3, which was widely perceived
as connoting takeover without compensation and which the PLC deemed
unconstitutional. Minister Kasukuwere has said the word “cede”
had been misconstrued and that what was intended was “a fair
transaction where full value is compensated for”. Unless this
amendment is made, however, the PLC will return an adverse report,
in which case, if both Houses support the PLC report, that section
of the regulations will be nullified.
Other amendments
that have been talked about, such as increasing the asset threshold
of companies to be indigenised, etc, have moved closer to gazetting,
with the news that they were being considered by the Cabinet Committee
on Legislation on 13th May. A recent statement by the Minister said
some amendments may be gazetted by the end of the month but these
are not yet at the printers.
When
is the Minister Empowered to Cancel Licences?
Minister Kasukuwere
has been reported as claiming that as well as prosecuting non-compliant
businesses, he also has the power to cancel trading and similar
licences held by businesses that do not submit their IDG 01 forms
and indigenisation plans when given notice to do so. In fact the
Minister has no such power. While there is a section of the Indigenisation
and Economic Empowerment Act [IEE Act] that deals with cancellation
of licences [section 5], it does not provide for cancellation of
a licence where a business fails to submit its form IDG 01 and indigenisation
plan. It allows the Minister to have licences cancelled only where
certain transactions – such as mergers or unbundlings of businesses,
or transfers of controlling interests – take place without
prior notification to the Minister.
Do ALL
Businesses Have to Submit Indigenisation Plans?
A Bill Watch
reader questioned the statement in Bill Watch 6/2010 that the obligation
to submit an indigenisation implementation plan applies only to
businesses with an asset value of more than US $500 000 that are
not already majority-owned by indigenous Zimbabweans. He points
out that section 4(2) of the Indigenisation Regulations requires
"every business” not already indigenised to submit an
indigenisation plan and does not specifically say that this refers
only to businesses with an asset value of more than US $500 000.
This is true, but section 4(2) also says that the plan must be submitted
“together with Form IDG 01”. Therefore it seems the
better interpretation is that only businesses above the US $500
000 threshold have to submit indigenisation plans, because:
- Only firms
with assets exceeding US $500 000 are specifically required to
submit Form IDG 01 [so the clear implication is that smaller firms
are not required to do so].
- Section
3 of the regulations states that their purpose is that "every
business of or above the prescribed value threshold" [this
is the $500 000 limit] must cede a controlling interest to indigenous
Zimbabweans. If that is the objective of the regulations, there
seems no point in requiring smaller businesses to submit indigenisation
plans to the Minister – because it is not, apparently, the
object of the regulations for their plans to be implemented.
National
Indigenisation and Economic Empowerment Board Proposals
Proposed
Indigenisation Levy
The chairman
of the National Indigenisation and Economic Empowerment Board [NIEE
Board], Mr David Chapfika, announced recently that consultations
among stakeholders about imposing an indigenisation levy on companies
had reached an advanced stage and that the levy would come “soon”.
The IEE Act allows for levies “on any private or public company
or any other business” [IEE Act, sections 17 and 18]. A levy
is imposed by the Minister by gazetting a statutory instrument but
certain preliminaries must precede the gazetting:
- the approval
of the Minister of Finance must be obtained; and
- the draft
statutory instrument must be laid before and approved by resolution
of Parliament [meaning both Houses of Parliament], something that
cannot be completed until after the House of Assembly resumes
sitting on 30th June.
The statutory
instrument imposing a levy must specify on what basis it is calculated,
who must pay it, how it will be collected, etc. Levy proceeds must
go into the National Indigenisation and Economic Empowerment Fund
[NIEE Fund], which is administered by the NIEE Board. The objects
of the NIEE Fund include providing financial assistance to indigenous
Zimbabweans for “the financing of share acquisitions, the
warehousing of shares under employee share ownership schemes or
trusts and management buy-ins and buy-outs” and for “business
start-ups, rehabilitation and expansion” [IEE Act, section
12].
Setting-up
of Sectoral Committees of NIEE Board
Mr Chapfika
has also announced the formation of 13 sector-specific committees
of the NIEE Board to be chaired by Board members. He invited sector
stakeholders to put forward names of persons to sit on the committees,
which will assist the Board in advising the Government on indigenisation.
The sectors are: mining; energy; agriculture; manufacturing; construction;
financial services; tourism and hospitality; education and sport
services; trading; arts, entertainment and culture services; telecommunications
and ICT. More committees may be formed if needed. These committees
will be able to suggest amendments to the regulations.
Legislation
Update
Bill
Gazetted
Zimbabwe National
Security Council Amendment Bill [gazetted Friday 14th May]. This
short Bill seeks to make the Ministers responsible for national
security and justice members of the NSC. [Electronic version available
on request.]
Bill Being Printed
for Presentation in Parliament
Criminal Law
(Protection of Power, Communication and Water Infrastructure) Amendment
Bill: Veritas will make a copy available once the Bill has been
gazetted.
Public
Order and Security [POSA] Amendment Bill
Mr Gonese’s
Private Member’s Bill awaits continuation of the Second Reading
debate when the House of Assembly resumes on 30th June.
Statutory Instruments
Gazetted 14th May
SI 95/2010 amends
the Indigenisation Regulations [see above].
SI 94/2010 amends
the recently-gazetted statutory instrument listing the numbers of
“special interest appointed councillors” to be appointed
to urban councils by the Minister of Local Government, Rural and
Urban Development. The effect is to change the number of appointed
councillors for the Chiredzi Town Council [from 2 to 3] and Marondera
Municipal Council [from 3 to 2]. [Electronic versions of both SIs
available on request.]
Veritas
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legal responsibility for information supplied
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