Companies Bill sent back for redrafting:
. . . Companies Bill sent back for redrafting
GOVERNMENT is redrafting the Companies Bill after it emerged the last version compiled by the World Bank — a technical partner in the project —- did not incorporate most stakeholder recommendations.
The Companies Act is one of 14 laws Government is revamping to make them user and investor friendly.
The current Companies Act provides for overlapping functions of shareholders and management, and has several loopholes that affect the smooth running of businesses.
To change it, consultations were held with the Institute of Chartered Accountants of Zimbabwe, the Instituted of Chartered Secretaries of Zimbabwe, the Bankers Association of Zimbabwe, SMEs, and the Employers’ Confederation of Zimbabwe among others.
Team leader of the technical working group on “Starting a business and protection of minority investors”, Deputy Chief Registrar of Companies Mr Willie Mushayi confirmed last week stakeholders had asked Government to relook the entire drafting process.
“You could tell from the stakeholders (during the stakeholder conference held in October 2016) that they were not happy with the drafting and also they felt that their submissions were not included by the consultant.
“So they requested Government to relook the whole exercise and as Government now, the Attorney General took it upon himself to put together a team that started relooking at the Companies Bill with a view of incorporating stakeholder input and also improving where the consultant had watered down some aspects, and that is being done,” said Mr Mushayi.
It is understood that Secretary for Justice Mrs Virginia Mabhiza is “now seized with the matter”.
After redrafting, the Bill will go to the Cabinet Committee on Legislation after which it could then be presented to Parliament.
The new Companies Act was expected to be gazetted in December but the target has been moved to the end of 2017.
According to the 2017 World Bank Ease of Doing Business Index, Zimbabwe is ranked 161 - down from 156 last year - out of 190 countries due to complications and high costs associated with starting a business, accessing credit, payment of taxes and enforcing contracts, among others.
It is these things that the new Companies Act will address.
Government is also pushing for refroms in other areas and there are 13 other Bills before Parliament in this regard.
The World Bank has noted progress in the area of “resolving insolvency”, which recently moved five points from 150 last year to 145 this year, because of Government’s ease of doing business reforms.
On changes to the Estates Administrators Act to ensure efficient dispute resolution, Mr Mushayi said: “The intention of this Bill is to ensure that commercial disputes don’t join the queue in the High Court but they go to specific courts where the resolution is quicker.
“Currently you are looking at not less than three years and up to 10 years before a resolution is obtained in the High Court, and that is too long for anybody who is in business (because) by that time you are either broke or you have moved out of business. So for purposes of ease of doing business, let’s reduce that time. Let cases go through the judges quickly and also the resolution come quickly.
“That is why we have the Judicial Services Commission (JSC) also in the process of setting up Commercial Courts.”
The Reserve Bank of Zimbabwe is pushing for establishment of a Commercial Court. Other Bills before Parliament cover Deeds Registry, Shop Licensing and Moveable Property Security Interest.
The new Deeds Registry Act will allow online submissions and online company-related searches.
Policymakers also say the envisaged Shop Licencing Act will waive the need for new businesses deemed to be operating in “correct zones” to advertise.
The burden of advertising had created a turnaround time of almost 50 to 60 days, but the waiver is expected to cut them to five days.
The Moveable Property Security Interest Bill, which will allow consumers to borrow against movable security, will provide relief for small businesses that presently cannot get bank loans because they lack acceptable collateral.
Financial institutions usually demand collateral in the form of fixed assets such as land and buildings.
The Regional Town and Planning Bill, to create a one-stop-shop for approving business plans, is still at the drafting stage.
“Bills have to go through the processes; public hearings, committee readings. The scheme cannot be compromised. Once we submit the Bills to Parliament, we lose control, they will be in the hands of the Speaker and his team.
“(Members of Parliament) are aware of course that when it comes to Bills for ease of doing business, ‘let’s get them through quickly’ because they are not controversial Bills and almost everyone is in agreement that we need to improve how we do business and the cost of doing business and again, make Zimbabwe an attractive destination for investment,” explained Mr Mushayi.
Since 2015, Government has heightened efforts to improve the business environment. The number of days taken to approve a company name by the Registrar of Companies has been slashed from seven days to “a matter of minutes”, and name search applications can now be done online. In addition, automation has enabled the National Social Security Authority to cut the number of days it takes to register a company for the purposes of manpower from 14 days to 14 minutes. Similar efficiencies have been registered at key institutions such as the Zimbabwe Revenue Authority and Zimbabwe Manpower Development Fund.
Local authorities are following suit: It now takes two days to get a shop licence from the City of Harare from the previous 60. But Government is not only putting emphasis on revamping the laws but changing the attitude of bureaucrats.
Government is also determined to eliminate corruption; and the Office of the President and Cabinet has established a monitoring team to supervise implementation and communication of doing business reforms.