Directors, who engage in fraudulent, reckless or grossly negligent conduct of business will be held accountable, while the concealment of beneficial ownership of shares through the use of nominees will be prohibited under the review of the Companies Act.
BY BUSINESS REPORTER
Under the Companies and Other Business Entities Bill, an electronic registry will be introduced for the incorporation and registration of domestic and foreign companies and private business corporations.
The surgery on the 67-year-old Companies Act is part of changes under the ease of doing business reforms to lure investors.
The Bill provides for the establishment of the Office for the Registration of Companies and Other Business Entities (Companies Office). The office, the Bill says, will become an accounting entity for the purpose of Public Finance Management Act.
Under the Bill, the registrar is empowered to investigate and inspect companies and other business entities to promote good corporate governance and inspire investor confidence.
Minority shareholders of companies will be empowered under clause 40 to request the registrar to initiate an investigation of the company or the private business company.
Clause 64 of the Bill prohibits the use of nominees except in certain specified circumstances. It said the Financial Action Taskforce has issued a recommendation to address the misuse of companies as vehicles for money laundering and terrorist financing by requiring that States establish the identity of each natural person, who exercises control of a company through one or more nominees.
The updating of the Companies Act will see the portfolio committee on Justice, Legal and Parliamentary Affairs conducting public hearings on the Bill beginning today until Monday.
The government has been undertaking reforms to improve the business climate. The government has also received assistance under the Business Environment Financial Sector Investment Policy technical assistance under the Zimbabwe Reconstruction Fund (Zimref) to support a raft of reforms to contribute to the ease of doing of business, build credit and capital markets infrastructure, and improve the investment climate. Zimref is a World Bank-administered trust fund to bring Zimbabwe on a firm footing.
The technical assistance has to date resulted in the streamlining of business processes within the lifecycle of enterprises from starting, operation and conflict resolution.
Several key areas are under comprehensive review, from business registration, licensing, access to credit, paying taxes, trading across borders as well as dealing with construction permits to remove impediments that previously increased the cost, time and bureaucratic burden of doing business in the country, Zimref said in a February update.
The technical assistance also helped the government to amend legislation key to restoring competitiveness such as the Deeds Registration Act, Movable Property Security Interest Act and the Ease of Settling Commercial and Other Disputes Act and reforms towards the reduction of the time it takes to register a business.