adminempowerment regulations by reducing fines for violators of the law which compels foreign firms to sell majority shareholding to locals.
The Parliamentary Legal Committee has previously voiced concern on the indigenisation and empowerment legislation, criticising certain provisions as “unconstitutional”.
Since the inception of the law, Government has made efforts to refine and clarify it to make it friendlier to investors.
According to a recent Government Gazette notice, the amendments relate to violation of provisions on notification on the extent of present or future compliance, approval of indigenisation plans and valuation of business where truth or accuracy is disputed.
“The Indigenisation and Economic Empowerment Regulations, 2010 published in Statutory Instrument 21 of 2010 . . . are amended in Section 4 (“Every business to notify extent of present or future compliance with indigenisation,” read the Government Gazette.
The latest amendments, to further refine the law, are known as the Indigenisation and Economic Empowerment (General) (Amendment) Regulations, 2011 (Number 4).
Veritas, a legal monitoring body, said the latest Statutory Instrument reduces the penalties for violators from US$2 000 to US$1 000 or US$700. The sentences of imprisonment are cut from five years to three months, four months or 12 months.
The Statutory Instrument also tries to correct the committee’s concern on the impossibility of sending a company to prison by saying that convicted companies, private business corporations, partnerships and associations would be liable only to a fine.
But it adds a new provision – that every director, partner or board member will be liable to a US$2 000 fine or three, four or 12 months’ imprisonment or both such punishments.
The Parliamentary Legal Committee criticised SI 34/2011 for the heavy penalties it sought to impose for businesses convicted of failing to submit indigenisation plans or substantially undervaluing net assets.
The committee had said the penalties of US$2 000 or up to five years imprisonment, or both, were disproportionate to the offences and were tantamount to inhuman or degrading punishment contrary to Section 15 of the Constitution of Zimbabwe.
It also criticised the provision for companies and other “artificial persons” to be given sentences of imprisonment when found guilty of breaching indigenisation laws.
The legislation is meant to ensure broad-based economic empowerment of indigenous people and facilitating their participation in mainstream economic activities.
In terms of the Indigenisation and Empowerment Regulations foreign-owned companies with a certain specific prescribed net asset value (depending on sector) are required to sell at least 51 percent shareholding to indigenous Zimbabweans.
The legislation required foreign-owned firms to submit indigenisation plans within 45 days of gazetting of SI 34/11 and to roll out the plans within six months.
Minister Kasukuwere recently told a Confederation of Zimbabwe Industries annual congress in Victoria Falls that 700 foreign-owned entities had submitted their plans.
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