BIZ Bulletin

BIZ Bulletin
April 2010(1)

Reproduced with the kind permission of Business Information Zimbabwe

Prepared 9th April 2010

Wednesday 14th April is first ‘deadline’ to submit Indigenisation form

This is a follow-up to our March bulletins on this matter. For reasons of space, we shall not here repeat material previously covered. Feel free to forward this bulletin to anyone you think may find it helpful. (As a general rule, we ask that you don’t forward any bulletins without first asking us, as this is a service sustained by your six-monthly subscriptions, not a free one. However, we are making an exception to this rule in the matter of indigenization because of the intense interest in the topic and the conflicting official statements as we approach the ‘deadline’.)



The big question is what action to take regarding the form IDG 01 (a scanned copy of which we sent to you on 8th March, for your information). This decision has been made more complicated by the mixed signals emanating from the Minister and the Prime Minister on revision of SI 21 of 2010.



Until and unless changes to the SI are gazetted, it remains in place in its original, poorly-drafted form.



This means that in terms of section 4(1) ‘every business in Zimbabwe with an asset value of or above US$500 000’ must submit form IDG 01 to the Minister of Youth Development, Indigenisation & Empowerment ‘within 45 days of the fixed date’ (which was 1st March 2010, so the 45days end next Wednesday 14th April).



As an aside, ‘every business’ would include those owned by the minister himself, presumably, and the RBZ governor – in fact, any government/party official from lowest to highest.



However, as we read SI 21of 2010, no penalties apply if you do not submit Form IDG 01 within 45 days of the 1st March 2010.



Penalties – liability for a fine not exceeding level 12 (currently $2 000) and/or imprisonment for a period not exceeding 5 years – are only raised in the SI (in section 4(4), actually) in connection with the following scenario – ‘if, in the opinion of the Minister, a business that should have submitted a Form IDG 01… has not complied after a period of 45 days… the Minister may serve on the business a copy of Form IDG 01’ in various ways (physical delivery, registered mail and, if these modes are ‘not possible for any reason’ by ‘a notice in the Gazette, notifying the business of the requirement to collect and complete Form IDG 01’.



Thereafter, ‘if such business fails to return Form IDG 01, duly completed, to the Minister within thirty days from the date of the service of the form or of publication… of a notice in the Gazette… the owner of the business or, in the case of a company, the director or every director of the company shall be guilty of an offence and liable…’ (to the afore-mentioned fine and/or imprisonment – after your day in court, obviously, not merely at the whim of the Minister).



So what should you do about the deadline of 14th April?



If you have not yet submitted the form, certainly one completely legal option, as we interpret the law is to just wait and see if (1) the SI is amended and/or (2) the Minister follows up by serving a form on your business.



We think the former is likely to occur before the latter.



Below we reproduce section 4 of the SI, so that you can double-check our interpretation should you wish to do so (always a good idea). Although the SI contains many references to the penalties of a level 12 fine/imprisonment for non-compliance with specific sections, this does not occur in section 4(1) in regard to the 45-day deadline – and we see no general penalties provision in the SI that might have provided for this.





EXTRACT – section 4 of Statutory Instrument 21 of 2010

(appropriately underlined to focus attention on salient points)

“Every business to notify extent of present or future compliance with indigenization”



4 (1) Within forty-five days from the fixed date, every business in Zimbabwe with an asset value of or above five hundred thousand United States dollars (US $500 000) shall¬ –



(a) in the case of business existing on the fixed date (whether or not fifty-one per centum of its shares or a controlling interest is held by indigenous Zimbabweans), submit to the Minister through the appropriate person Form IDG 01, duly completed; or

(b) in the case of business commenced after the fixed date (whether or not fifty-one per centum of its shares or a controlling interest is held by indigenous Zimbabwe¬ans), submit to the Minister through the appropriate person Form IDG 01, duly completed, within sixty days from the date of commencement of the business.



(2) Every business in which indigenous Zimbabweans do not hold fifty-one per centum of the shares or a controlling interest shall –



(a) in the case of business existing on the fixed date, submit together with Form IDG 01, duly completed, an indigenisation implementation plan in accordance with any guidelines provided by Form IDG 01, within forty-¬five days from the fixed date; or



(b) in the case of business commenced after the fixed date, submit together with Form IDG 01, duly completed, an indigenisation implementation plan in accordance with any guidelines provided by Form IDG 01, within forty-five days from the date of commencement of the business.



(3) Copies of Form IDG 01 may be obtained by or on behalf of any appropriate person from any office of the Ministry of Indigenisation and Economic Empowerment or the Fund during normal working hours:

Provided that an appropriate person may, for the purpose of subsection (1) or (2), submit a form that is substantially in accordance with Form IDG 01.



(4) If, in the opinion of the Minister, a business that should have submitted a Form IDG 01 in accordance with subsection (1) or (2) has not complied after a period of forty-five days from the fixed date or forty-five days from the date of commencement of the business, as the case may be, the Minister may serve on the business a copy of Form IDG 01 in any of the ways specified by subsection (5), and if such business fails to return Form IDG 01, duly completed, to the Minister within thirty days from the date of the service of the form or of publication by or on behalf of the Minister of a notice in the Gazette in terms of subsection (5)(f), the owner of the business or, in the case of a company, the director or every director of the company shall be guilty of an offence and liable to a fine not exceeding level twelve or imprisonment for a period not exceeding five years or to both such fine and such imprisonment.





(5) Service of Form IDG 01 on a business may be effected in any of the following ways¬ –



(a) by delivering it to the owner of the business personally or to his or her duly authorised agent; or



(b) by delivering it to a responsible person at the head office or principal place of business; or



(c) by sending it by registered mail to the head office or principal place of the business concerned; or



(d) in the case where the business to be served is a body corporate, by delivering it to – ¬

(i) a responsible person at the body corporate’s registered office or place of business; or

(ii) a director or the secretary or public officer of the body corporate;



(e) in the case where the business to be served is a partner¬ship, by delivering it to – ¬

(i) a responsible person at the partnership's office or place of business; or

(ii) any of the partners;



(f) in the case where service in accordance with any of the foregoing modes is not possible for any reason, by publication by or on behalf of the Minister of a notice in the Gazette, notifying the business of the requirement to collect and complete Form IDG 01 in terms of subsection (I) or (2), and subsection (3).



(6) A business referred to in subsection (2) or (4) may, in writing, request for an extension of time within which to submit its indigenisation implementation plan, and the Minister may, on good cause shown by the company, permit it a further period not exceeding thirty days within which to do so.



(7) If the owner of a business or, in the case of a business that is a company, the director or directors of the company, make any statement or declaration or furnish any information in or in connection with Form IDG 01 or an indigenisation implementation plan submitted by such business in terms of subsection (2) or (4)¬ –

(a) knowing that such statement, declaration or information is false in any material particular; or

(b) without having reasonable grounds for believing that such statement, declaration or information is true;

the owner of the business or the director or every director, as the case may be, shall be guilty of an offence and liable to a fine not exceeding level twelve or imprisonment for a period not exceeding five years or to both such fine and such imprisonment.”



(End of extract from SI 21 of 2010)



Notes

Under the Interpretation section of the SI, ‘appropriate person’ is defined by reference to section 8(1) but we think this should read 10(1) – i.e. company secretary, senior partner/partner, nominated person for unregistered association/trust, person in whose name a PBC is incorporated, sole trader.



Gazette means the weekly Government Gazette (price $2), available (in Harare) from Printflow P/L, Ground Floor Arcade, Cecil House, Jason Moyo Avenue, between Fourth and Third Streets (i.e. it does not refer to the Financial Gazette, just in case you were confused). For contact details in other cities, please look in the Telephone Directory.





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