FUCULTY OF COMMERCE

NAME: NYASHA FREDDY

SURNAME: MUDAPAKATI
REGITRATION NUMBER: B1953680
DEGREE PROGRAM: BACHELOR OF ACCOUNTANCY HONOURS DEGREE
COURSE: COMPANY LAW BS 109
LECTURER: MR 0. F NGWENDE, MR R. MASINIRE & MISS R. CHIRUME
ASSIGNMENT 2

QUESTION
2. EXPLAIN IN DETAIL THE MAJOR FEATURES THAT WERE INTRODUCED BY
NEW ACT [30 MARKS]
The 1951 company act became obsolete on 13 February 2020, bringing into existence a long
waited new and revealed Companies and other business entities act. A number of changes
between the new and the old are as shown by the essay.

The new act changes how companies are registered and how business operates in the country.
On limited liability, not much has changed as the old act was maintained, that is companies
and PBCs remain separate legal entities and having their own corporate personality. When
incorporated they become body corporate and are endowed with the capacity of natural
persons with full legal capacity to sue and be sued in their own name.

The new act advocates to improve the ease of doing business through simplified decentralised
and quick company formation and registration. Unlike the old act where the registration of
companies was centralised and would take time to get the approval form a company. New act
move towards to aid in the enforcement of business contracts and resolve insolvency issues.

The new company act mandates all existing companies to re-register with the registrar of
companies within 12 months from when the new act became effective. This procedure was
meant by no means to change any company rights and obligations. It was put in place to filter
inactive companies from active companies and give the registrar a view of the updated list of
companies.

With the rising cases of fraud in companies the new act saves to stop this corruption and
shady dealings. In the old act were by some companies did not use computers they could
easily get rid of evidence of corruption, so with new act fraud in minimised as all company
offices have to be computerised.

The new act recognises the Zimbabwe’s 16 languages as official languages that can be used
in companies be it in meeting minutes and reports. This is to remove the colonial rule of
English the only language recognised. Now in new act English and the other 16 languages
can be used.

Company act of 2020 now includes private business corporations as those PBCs are usually
formed by those that do not have the capacity to start a company but has the zeal to operate
business especially young people. It is currently established in terms of private business
corporation act chapter 24:11.

The new act recognises beneficial ownership register, this is the requirement to identify and
record those individuals who ultimately own and control the company. Those beneficial
owners are those that hold more than twenty percent of company shares or directly or
indirectly holds more than twenty percent of company voting rights.

New act also introduces significant change to a directors duty of disclosure and requires
directors to disclose their personal financial interest. The new act abolishes par value as a
concept in share capital, from the effective date of the new act company act, shares will no
longer have a par or nominal value and pre-existing companies may not authorise any new
par value shares or shares having nominal value. Although par was abolished in pre-existing
companies shareholders continue to have same rights associated with them, and there shares
continues to have par and nominal value.

New companies act introduced a new form of statutory merger which is designed to ease the
implementation of business combinations, it provides that two or more public companies or
any combination of at least one public company and at least one private company may
undertake a merger. In new act companies proposing to amalgamate or merger must enter
into a written agreement setting out the terms and means of affecting the merger, this includes
the manner in which shares of merging company are dealt with.

The new Act sets out the purpose and manner of the investigation and inspection of
companies and other business entities. This is meant to promote good corporate governance
and inspire investor confidence. The Registrar of Companies has been accorded the same
investigative powers as commissioners under the Commissioners of Inquiry Act. The
Registrar of Companies is empowered to initiate investigations and enquiries into the
operations of companies and private business corporations the documents that are required to
be filed according to the law. The registrar is enjoined to initiate investigations into
companies or PBCs. The registrar is empowered to undertake investigations and enquiries at
the initiative of a special company resolution or by order of a court requesting such
investigation to take place.
REFERENCES

1. BUSE Company law notes by Mr Ngwende.

2. Mj consultant retrieved at https://mjconsultant.co.zw on 25 April 2020.