Zimbabwe plans a swift transfer of ownership of foreign companies to locals, forcing foreigners to sell 51% of their shares to locals within 60 days of publication of a set of new empowerment regulations.
According to a confidential draft obtained by the M&G on Thursday, the government will target foreign companies valued at $500 000 and above. The campanies will be forced to transfer ownership to black ‘indigenous†investors almost immediately after publication of the regulations.
The draft reveals Zimbabwe plans a rapid transfer, and not the gradual approach foreign investors wanted. The regulations will be a fresh knock to investors already spooked by the worsening fragility of the country’s coalition government.
All foreign businesses that, within 60 days of the regulations being made public, ‘fail to enter into a transaction that results in fifty-one per centum or a controlling interest, as the case maybe, being held by indigenous Zimbabweans,†would have to submit to the empowerment minister a report on how they intend to transfer ownership.
Ownership must pass to the new majority shareholders within a month of an agreement being reached, or the minister would enforce mergers.
A senior government official said the regulations would be published ‘within weeksâ€.
Foreign investors in Zimbabwe had sought a measured approach to empowerment, saying forcing them to hurriedly sell majority interests to locals would end the country’s efforts to recover from ruin.
The formation of the unity government had brought hope Zimbabwe would temper its tough empowerment laws. President Robert Mugabe has suggested at meetings with major foreign investors that there would be no land-grab style takeovers of foreign companies.
There is no indication in the regulations as to how targeted companies will be valued. This may make it easy for politically-connected businessmen to force themselves on foreign assets.