Public entities Bill gives effect to ZimCode
IT WAS against this background that Quality Corporate Governance Centre (Pvt) Ltd, trading as Zimbabwe leadership forum (Zimlef), the Institute of Directors Zimbabwe (IoDZ) and the Standards Association of Zimbabwe (SAZ) agreed to work together to craft the Code.
Key persons on corporate governance were invited to assist in the process and several thematic committees were established to ensure that the code addresses all aspects of good corporate governance.
The Code complements and adds value to the Corporate Governance Framework for State Owned Enterprises and Parastatals which was launched in November 2010.
Following its official launch in April 2015, the ZimCode is now a living reality. It adopts the “apply or explain” approach which encourages business entities to apply the provisions of the Code and where they fail to do so, they should explain or give reasons for the failure.
The ZimCode has nine chapters (Application of the code and Derivative codes; Ownership and control; Boards of directors and directors; Governance of risk; Information management and disclosures; Corporate conflict prevention and resolution; Compliance and enforcement; Governance of stakeholders and Role of Government in corporate governance). Each chapter begins with a preamble which is followed by principles relevant to the governance element identified and then recommendations.
To date, quite a number of entities have implemented principles of the ZimCode throughout their organizations. The journey is not the same for everyone. Some talk about blood, sweat and tears, and some find it surprisingly smooth. Some have been more successful than others.
Considering that some public entities have not been complying with the ZimCode which has been directly or indirectly affecting their performance, the Government of Zimbabwe deemed it necessary to introduce the Public Entities Corporate Governance Bill (henceforth “the Bill”) to regulate the operations of all public entities.
The Bill is a deliberate effort by the Government to put in place appropriate legal and regulatory frameworks that are enforceable in order to promote good corporate governance. It gives effect to the ZimCode to the extent that it applies to public entities.
Part VI of the Bill deals with codes of good governance and under this part entities ‘will have to adhere to good corporate governance codes as set out in the First Schedule . . .’.
The First Schedule as highlighted in sections 31 (2) and 46 of the Bill is the National Code on Corporate Governance (ZimCode), therefore all its provisions will be applicable to companies that are public entities.
Any amendments to the ZimCode shall be binding on public entities as highlighted in section 46: 46(1) Subject to subsection (2), the minister may by statutory instrument amend;
(a) the First Schedule in order to reflect any changes made to the National Code of Corporate Governance Zimbabwe, and in so doing may, after consultation with line ministers, specify that any part of the Code (as amended or not) shall be binding on public entities or any class thereof as if enacted by way of regulations;
Once the Bill becomes law it effectively means that the principles outlined in the ZimCode that public entities used to choose to apply or not, will now be mandatory.
Providing explanations for failure to apply will not suffice because it will now be compulsory for all public entities to comply with all the principles outlined in the ZimCode. Just like any other law there will be consequences for not complying and violators will face possible jail terms among other penalties.
The crafting of a National Code on Corporate Governance (“ZimCode”) was a response to the numerous corporate governance scandals and unethical leadership that have affected the country for the past decades.
For more information on the ZimCode contact: secretariat@ nationalcodeoncg.co.zw