Zimbabwe’ embraces the Beneficial Ownership register in its new Companies and Other Business Entities Act


By Joyce Nyamukunda Machiri-Publish What You Pay-Zimbabwe Coordinator

Zimbabwe has managed to come up with the new Companies and other Business Entities Act. The Act requires companies to keep and maintain a register of beneficial owners of the company and to file such information with the Registrar of Companies. This is a baby step which has brought slight hope to the Publish What You Pay (PWYP) Zimbabwe on transparency and accountability in the mining sector. PWYP Zimbabwe is advocating for reforms and implementation of initiatives, laws and policies that promote transparency and accountability in the mining sector which are aligned with international best practices. With effect from January 1,2020, the beneficial ownership registry is now a requirement under the new Extractives Transparency Initiative (EITI) standard.

Given this important development, the Zimbabwe Environmental Law Association (ZELA), which coordinates PWYP Zimbabwe coalition organized a Multistakeholder meeting on mining fiscal transparency and beneficial ownership disclosure. This was an opportunity for civil society actors and communities to engage with the Registrar of Companies on the new register. Participants comprised of the legislators drawn from the Parliamentary Portfolio Committees on Mines and Mining Development, Portfolio Committee on Budget Finance and Economic Development, Civil Society Organizations (CSOs), Community Based Organizations (CBOs), mining communities, representatives from the Office of the Auditor General (OAG), Zimbabwe Revenue Authority (ZIMRA), media representatives, and Civil Society players. 

To kick start the conversation, a firecracker was delivered by International Senior Lawyers Project (ISLP)’s Bridget Mafusire. Bridget highlighted that the Extractive industry is now marred by corruption and therefore it is important for information such as ownership to be disclosed and made easily accessible. The disclosure requirements if adhered to can go a long way in promoting transparency and accountability.

The Deputy Chief Registrar of Companies, Mr Willie Mushayi also managed to unpack the terms and conditions for beneficial ownership register to the participants.  The Registrar explained the necessity of having beneficial ownership registry in the new Companies and Other Business Entities Act. According to Mr Mushayi, this is a move to deter illegal activities, money laundering, tax evasion, illicit financial flaws and corruption. He also explained that the registry must be read together with the Money laundering Act while the need to comply with Financial Action Task Force (FATF) is one of the drivers that triggered the reform process of the Companies and Other Business Entities Act.

 A beneficial owner is defined as an individual who directly or indirectly holds more than twenty percent of the company’s shares or directly or indirectly holds more than twenty percent of the company’s voting rights. The new Act further provides that not more than twenty percent shares in a company may be held by a nominee on behalf of a beneficial owner. Once the Act has become effective, all existing companies are required to re-register with the Registrar of Companies within a period of 12 months. The re-registration exercise is an administrative process aimed at establishing a new and updated register of companies as well as to remove inactive companies from the same. The Deputy Chief Registrar encouraged civil society and mining communities to file complaints if any so as to compel his office to investigate corporate malpractices.

On a sad note, the registrar dropped a bombshell by highlighting that the register is not a public register. It remains confidential unless required to be disclosed through a court order, although law enforcement agencies like the police, financial intelligence unit can access the register. This poses a challenge as it undermines public transparency and accountability. If the beneficial ownership registry was made public, civil society organizations, mining communities and others would make use of it to scrutinize information and take action to hold to account individuals who hide behind faceless companies and sometimes fuel corruption and plunder national resources.

PWYP Zimbabwe coordinator, Joyce Nyamukunda-Machiri, in response noted that, availability and access to the registry is critical for the public and communities to fully understand who owns the mines in their communities for accountability purposes. This was emphasized by Farai Mutondoro who expressed the following sentiments. “The state itself has a paranoia to disclose. The issue of transparency should not only be looked at in mining sector but be replicated in other sectors such as agriculture.

In response to the issues that were raised by the participants, the Registrar said that, the reform process has been going on for four years and public consultations were poorly attended, CSOs never gave input during formulation stages and now people cry foul when the law has been finalized. Following procedures to ensure that the process becomes inclusive and participatory stalled progress as there was poor participation. He encouraged citizens to give their input during formulation of laws adding that such platforms remain critical whose opportunities must not be missed.

Minerals are valuable resources in monetary terms, however without beneficial ownership disclosure this becomes a fate. A country such as Zimbabwe which is trying to fight corruption and restore public trust needs standards like these now more than ever, said Mukasiri Sibanda.

The reform of the Companies Act is a step towards the realignment of laws and policies as embedded in the constitution. The beneficial ownership register is a positive move key to fighting corruption whose enforcement and implementation must be undertaken in the earliest possible time.

 Parliament has an oversight role to play and this register is a tool that will enable them to exercise their role. Honorable Svuure from the PPC on Mines and Mining Development spoke about how people evade accountability while highlighting that as a Committee they would want to know the owners or beneficiaries of mining companies, so they hold them accountable of any violations including environmental degradation in their areas of operation.

Beneficial ownership register, is an important part of the jig saw puzzle for solving the persistent transparency deficits. Is it a game changer for Zimbabwe? Read more from the blog that was developed by Ana-Sophie Hobi. https://mukasirisibanda.wordpress.com/2020/02/28/is-the-new-beneficial-ownership-register-a-transparency-game-changer-for-zimbabwe/. However, there is more that needs to be done on transparency and accountability reforms in the mining sector. This includes issues on contract and revenue transparency. Standards must be in alignment with international standards such as the EITI. The amendments must also be given teeth to ensure compliance.

 Early this year, PWYP Zimbabwe noted with regret that the government of Zimbabwe is not keen to join the Extractive Transparency Industries Initiative (EITI). https://www.pwyp.org/pwyp-news/eiti-necessary-for-transparency-and-accountability-reforms-in-zimbabwe-mineral-resource-governance/.   This is based on the newspaper article that was published in the Independent on the 31st of January 2020. EITI is a standard by which information on the oil, gas and mining industry is published. The EITI has a requirement from 2016 that, by 2020, all EITI countries have to ensure that companies that apply for or hold a participating interest in an oil, gas or mining license or contract in their country disclose their beneficial owners. Could it be Zimbabwe is interested in promoting transparency and accountability in its own ways, not through implementation of the EITI initiative?

About Publish What You Pay

Publish What You Pay (PWYP) is the worldwide campaign for an open and accountable extractive industry. We are the only global movement working to ensure that revenues from oil, gas and mining are used to drive development. With more than 700-member organisations and 45 national coalitions, our strength lies in our ability to coordinate action nationally and globally, maximizing our collective impact, so everyone benefits from their natural resources – today and tomorrow.

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