Investing in Zimbabwe

TYPES OF BUSINESS ENTERPRISES

In Zimbabwe companies are able to offer similar advantages to investors to those offered by corporate bodies throughout the business world. Generally a shareholders liability is restricted to the amount outstanding upon his shares while shareholding can be freely transferred without affecting the continuity of the business.

A foreign owned company in Zimbabwe has exactly the same rights as a locally owned company except for transactions that require exchange control approvals

TYPES OF ENTERPRISES

Public Company- the equivalent to a joint stock corporation in other countries and able to offer shares to the general public with no limit to the number of shareholders participating. Legally required to have annual audited accounts and annual financial statements lodged with the Registrar of Companies;  Private Company- this is the equivalent to private limited liability company in other countries and may not invite the general public to subscribe to shares. Restricted to a maximum number of shareholders and not required to submit financial statements to the Registrar;

The following forms of business enterprises are restricted to Zimbabwean residents only:

• Sole Proprietorship
  A business undertaken by one person in his/her own right with no legal formalities required to affect formation and with unlimited liability.
• Private Business Corporation
  Comprised of small-scale entrepreneurs not more than twenty in number inpartnership with others or through the medium of the company.
• Partnership
  Regulated by the principles of Roman Dutch Law comprised of individuals or companies, usually restricted to a maximum of twenty with each partner liable for all debts and obligations incurred.
• Cooperative Society
  Normally restricted to agriculturally based business or manufacturing and regulated through an act of parliament.

Establishing a New Business

COMPANY REGISTRATION

Procedures for establishing a new business in Zimbabwe are similar to those requirements throughout the world with Applications having to be submitted to the Chief registrar of Companies for a name search tobe undertaken. This will take up two weeks and is carried out onlyin Harare.

Name approval is then granted by the Registrar with a reservationperiod of 60 days initially. 

Within 30 days the company’s Memorandum and articles of Associationmust be submitted. Submissions may be lodged either in Harare or Bulawayo.

Within one month the applicant must notify the Registrar of theappointment of company directors and secretaries.

Investors may elect to buy a dormant or shelf company from Consulting and/ or accounting firms. For companies with a foreignShareholding applications can then be submitted to the ZimbabweInvestment Centre on a dormant company and a change of namemay be carried out at a later date.

All forms required for these procedures are obtainable from stationerystores throughout the country.

FOREIGN INVESTMENT IN ZIMBABWE

Zimbabwe welcomes foreign investment and offers immense opportunities in various sectors. The economy has been liberalised and deregulated.

The ongoing trade liberalisation programme has eliminated import licensing restrictions with the exception of a very limited range of non-commercially traded goods, making foreign currency readily available through the banking system and the auction system.

Legal protection for investors is provided through:Zimbabwe’s constitution which guarantees the right to private property and prohibits expropriation of private property with adequate compensation. Various multilateral and bilateral protection agreements and treaties.

The Zimbabwe investment Act of 1992 and the export Processing Zones Act of 1996 both of which provide for protection from compulsory acquisition of property or interest of a licensed investor to whom an investment license has been issued in terms of either Act.

FOREIGN INVESTMENT IN VARIOUS SECTORS

Foreign shareholding in various sectors is provided for as follows:

• Up to 100% foreign ownership.
  This is allowed in the following priority sectors:
  Manufacturing
  Mining, quarrying and mineral exploration
  Development of hotels for tourism.
 
• Up to 70% Foreign Shareholding.
  This is permitted in specialised services such as management consultancy and construction, etc.
 
• A maximum of 35% Foreign Ownership.
  This is allowed in selected sectors where foreign investors wishing to participate can only do so in joint venture partnership with Zimbabwe firms or individuals.