HARARE - The Indigenisation regulations have not been suspended and are still in force in the form in which they were gazetted on January 29.Bill Watch said the regulations can only be suspended or amended or repealed by the responsible Minister and only the courts could declare them null and void.
A Cabinet decision that the regulations are null and void/suspended/will not be implemented has no direct, immediate legal effect and the same applies to an announcement of a Cabinet decision, whether made by the Prime Ministers spokesman or by the Prime Minister himself, said Bill Watch.
Until the responsible Minister gives effect to the Cabinet decision by gazetting a statutory instrument, the regulations continue in force in their original form, and businesses must conduct themselves accordingly.
Conflicting reports on what Cabinet decided about the Indigenisation Regulations at its meeting on Tuesday have caused much confusion.A statement was issued by the Prime Ministers spokesman, and later confirmed by the Minister of State in the PMs office, that following a Cabinet decision the regulations were null and void. This was roundly dismissed by the President and Kasukuwere the following day. The President did say, however, that a Cabinet committee is looking at the regulations and that there would be some revisions after consultations.
The deadline for all foreign owned businesses to comply was on
April 15. There were press reports that 100 companies had complied.
Bill Watch said failure to meet deadline was not a criminal offence, contrary to press reports. There is no penal sanction for such failure. But the Minister has an administrative remedy.
If the deadline or extended deadline passes and a business has not submitted its proposal the Minister can order the business to do so. An offence will be committed if a business fails to submit its indigenisation implementation plan after being required to do so by the Minister. The owner of the business, or the directors of the company concerned, will be liable on conviction to a US$2000 fine or 5 years in prison or both.
The regulations do not state a time-limit within which the Minister must take steps so this phase of the exercise could be indefinitely delayed at the Ministers discretion.
Bill Watch noted that only one amendment was expected to be gazetted in the near future to accommodate the views of the Parliamentary Legal Committee (PLC).
There are still on-going consultations which may result in further amendments but until these are gazetted and there is not sign of this yet the present regulations hold good.
The PLC found section 3(a) of the Indigenisation regulations violated the constitution. Under the regulations, foreign-owned businesses should give up 51 percent of their shares or asset value worth US$ 500000 to indigenous Zimbabweans.
The PLC concluded that the word cede, without any requirement of payment or the giving of value for a controlling interest ceded, infringes section 16 of the Constitution which prohibits compulsory acquisition of property without compensation, noted Bill Watch.
The PLC decision was discussed with Youth Development, Indigenisation and Empowerment Minister Saviour Kasukuwere. The minister gave a written undertaking to amend the regulation in order to make it clear that the cession of a controlling interest is a cession for value at the option of the owner. This means that a compulsory free handover is not required.
A draft instrument drawn up by the Minister giving effect to the agreed amendment was approved by the PLC, which then sent a non-adverse report on the regulations to the Speaker. If the Minister does not honour his undertaking as promised, the PLC will replace the non-adverse report with an adverse report. The Minister is supposed to gazette this amendment in a few days.
Post published in: Opinions