The Chartered Secretary
Official magazine of the Institute of Chartered Secretaries and Administrators in Zimbabwe
Registered at the G.P.O as a Newspaper
Issue 1/2015
Institute
joins PAFA
and adopts
three-year
Strategic
Plan
Inside this issue
» Mayor appeals to businesses and
residents to assist City
» Management requires complete,
accurate and timely information
» Government should review
Judicial Management
» Investigations continue into
fraudulent ownership of UK property
Contents
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» Bye-laws
From the Chief Executive’s Desk
2
Institute joins PAFA and adopts three-year
Strategic Plan
Institute News
3
Mayor appeals to businesses and residents
to assist City
4
Institute donates groceries, stationery and
television to Khayelihle Children’s Village
Board Evaluation
5
Board must be evaluated to justify
re-appointments
3
5
Corporate Governance
6
Management decisions require complete,
accurate and timely information
7
Corporate Governance rhetoric must be
turned into reality
Judicial Management
8
Government should review Judicial
Management
Ethics
10
11
13
13
Ethics provide foundation for good
corporate governance
10
Profile
PSC Senior Paymaster appreciates role
ICSA played in his career
International
Companies House error costs £9m after
ruining a business
Investigations continue into fraudulent
ownership of UK property
11
Student Supplement
14
Establishing a Holding Company
The Chartered Secretary
1
From the Chief Executive’s Desk
Institute joins PAFA and adopts
three-year Strategic Plan
in the country (as far as business is
concerned) and retention of the Institute’s
market share.
Structures and activities to achieve
these key goals were put in place in
the plan. This year is the first year of
implementation of the plan.
It is the Institute’s hope that it will be
able to derive the desired benefits from the
implementation of the new Strategic Plan.
T
2
he 4th quarter of 2014 provided
the Institute with a springboard
for the future. Significant
outcomes during the period
included the hosting of the second edition
of the Excellence in Corporate Governance
Awards in November.
The awards were bigger than the
inaugural awards held in November 2013.
The Institute intends to build on these
awards and make them even better in
future.
Other notable activities or outcomes
during that period were the registration of
the Institute as a Pan African Federation of
Accountants member, the completion of the
Institute’s 2015 to 2017 Strategic Plan and
the accreditation of the Institute’s IBAS
course. These outcomes are significant
as they will provide the platform for the
Institute’s future.
will use our membership of PAFA to make
appropriate contributions to the accounting
profession.
Pan African Federation of Accountants
For some years now the Institute has
been pursuing membership of critical
accounting federations. To this end
the Institute applied for membership
and was accepted as a member of the
Pan African Federation of Accountants
(PAFA).
Membership of PAFA is part of our
building blocks to enhance the ICSAZ
brand in the accounting field. PAFA
membership means that ICSAZ is now
recognised as an accounting body, not only
in Zimbabwe but in Africa as well. We
Strategic Plan
In 2014 the Institute was involved in
the process of establishing a Strategic Plan
for the next three years. In this regard, the
Institute produced a Strategic Plan to take
it to 2017. The outcome of the Strategic
Planning Process was a modification of
the Vision, Mission and Core Values of the
Institute.
The new Strategic Plan focuses on the
key goals of revenue diversification, cost
containment, e-business or technology,
improving the education and training
process, influencing the course of events
The Chartered Secretary
Farai Musamba
IBAS
Part of the Strategic Plan’s focus has
been to enhance the Institute’s presence
at the technician level of the accounting
profession. This dovetails with the
Institute’s IBAS qualification.
As readers may be aware, the
Institute runs the Institute of Business
and Accounting Studies (IBAS), which
provides a course that is junior to the
ICSAZ qualification.
In order to fill the void in the market for
accredited Accounting Technician courses
in Zimbabwe, the Institute embarked on the
upgrading of the IBAS course.
It worked with the Ministry of Higher
and Tertiary Education, Science and
Technology Development to upgrade the
course, resulting in its accreditation by the
Ministry. It is our hope that the Institute
will make a meaningful contribution to the
country and profession through this course.
Farai Musamba
Chief Executive and Secretary
Institute News
H
Mayor appeals to businesses and
residents to assist City
arare’s Mayor, Councillor
Bernard Manyenyeni, has
urged businesses and residents
to play their part in helping the
City Council overcome its service delivery
challenges.
Speaking at an Institute of Chartered
Secretaries and Administrators in Zimbabwe
luncheon at Cresta Oasis Hotel in Harare, Cllr
Manyenyeni said resident participation was
critical in service delivery
“Ask yourself what you can do to assist
your city and not what Harare can do for you.
Together we can achieve satisfactory service
delivery,” he said.
Acknowledging that the City Council was
having difficulty in providing adequate services,
he pointed out that one of the major ways in
which businesses and residents could contribute
to better service delivery by the Council was by
paying their rates and water bills.
“The cornerstone of successful municipal
service delivery is having rates compliant
residents. If you pay you are more likely to
enjoy the services in perpetuity,” he said.
However, he also called on businesses
to partner the Council or make donations to
it in respect of some of the services that the
Council provides.
“My appeal to you is to give back to
the community that propelled you to dizzy
heights. The city is facing challenges in refuse
collection because it does not have adequate
resources such as refuse compactors, skip bin
trucks and enough bins to line our streets.
“This is an area where business can come
in full force and assist the local authority. Once
that area is resourced we can be guaranteed
that the quality of life in Harare will improve
and, of course, public confidence in the
Council will also improve,” he said.
He pointed out that some of the people
who criticised the Council for inadequate
refuse
removal
services
themselves
contributed to the problem by littering the
streets once they reach the city centre.
“I challenge you to take notice of the
Councillor Bernard
Manyenyeni
environment in the Central Business District
at around eight in the morning and then two
hours later. There happens a drastic change as
soon as people get into town. People tend to
randomly throw away garbage. These are the
same people who complain, the very moment
they throw away their garbage,” he said.
At the moment each ward of the city has
a dedicated refuse compactor that services
it, the Mayor said. However, the trucks were
susceptible to breakdowns, which resulted in
Council failing to collect rubbish on schedule.
“Ideally we would want a situation where
every ward has at least two refuse compactors.
At Council we have now agreed that refuse
trucks and all other ward-based service delivery
items should stay at the district offices and be
managed by the district officer.
“This, we hope, will enhance
accountability and subsequently service
delivery,” he added.
Cllr Manyenyeni said Council was aware
that the roads in Harare are in poor shape.
“We are looking for partners or investors
to come and assist us redo the city’s 5 500
kilometres of road. The road network is
the nerve centre of the development of any
society, Harare included.
“Once our road network is up to standard,
we are most likely going to attract quality
investors and tourists.
“Our major constraint, which is not
unique to us only, is the lack of adequate
infrastructural funding. Our sincerest appeal
is that Government should see sense in our
argument that motor vehicle licences for
vehicles registered in Harare should be paid
to Council for the maintenance of the city’s
roads,” he said.
He said the Council would like to collect
its own funds and repair its own roads. Stop
gap measures were not helpful.
“Pothole patching in the long run
becomes a waste of resources. We are
currently repairing city roads using our own
resources amounting to US$2.6 million
and support from Zinara (Zimbabwe
National Roads Authority) amounting to
US$1.5 million,” he said.
He said the Council had made great strides
with regards to water provision, utilising
a US$144 million Chinese loan facility.
However, he said, even at full capacity of 614
million litres a day, the water plant will not
be able to adequately service Harare and its
surrounding towns with potable water.
To overcome this, he said, Council was
proposing the construction of Mazowe,
Musami and Kunzvi dams and the Muda
Dam to supply water to Chitungwiza.
He said some parts of Harare that had not
received water for up to 10 years were now
accessing it, although for less than seven days
a week.
Health service delivery was the one
area that the Mayor was able to report on
completely positively. He claimed that health
service delivery at Council health facilities
was second to none.
“Council operates health facilities in
almost every suburb in the city. While services
may differ per facility, our health care covers
family health, primary care, ante-natal and
post-natal care, opportunistic diseases and
dental services.
“We are establishing health committees at
all health centres as a way of entrusting health
delivery to the recipient communities. We want
to page 4
The Chartered Secretary
3
Institute News
Institute donates groceries, stationery and
television to Khayelihle Children’s Village
he Institute of Chartered Secretaries and Administrators
in Zimbabwe handed over to Khayelihle Children’s
Village groceries, stationery and a television purchased
with the proceeds from the ICSAZ Annual Charity Golf
Tournament and the Institute’s Annual Conference raffle.
The groceries included rice, flour, cooking oil, salt, soap,
detergents, floor polish and toothpaste. The stationery included
exercise and counter books, book covers, sellotape, pens and
pencils.
The donation was handed over to the children’s village in
October last year by Institute President Richard Summers, who
was accompanied by ICSAZ Vice-President Simbarashe Dziva,
Chief Executive and Secretary Farai Musamba and Bulawayo
Branch Committee Member Fradreck Mutongi.
Khayelihle Children’s Village is located on a 270 acre farm in
Matabeleland North province. The home was established in March
1992 by a group of people from Bulawayo who were determined
to address the acute plight of orphaned, abandoned and destitute
children in Zimbabwe.
It was registered as a non-profit making organisation by the
Department of Social Welfare in 1994.
The children’s village currently has 94 children and young
people living there. Its Board of Directors hopes that the village
will, in time, care for up to 250 children.
One of the children is a baby. Four of them are in pre-school,
49 in primary school and 37 in high school. Three of the young
people being looked after are at university.
The village also established a pre-school at the farm which
currently has an enrolment of 17 children.
In addition, the village has two Community Orphan Care
Programmes (COCP), which assist 150 children with food,
clothing and educational expenses. These children are in the
T
Mr Dziva (left) and Mr Summers (second from
right) with some of the children and staff at
Khayelihle Children’s Village after handing over
the donation
care of their siblings, grandparents, other caregivers or single
parents who can no longer be gainfully employed for health
reasons.
The village runs a dairy project to raise funds to support those
who live in it. Other fund raising projects include cattle rearing and
a vegetable garden. The village also grows maize and groundnuts
for sale.
The village hopes to eventually achieve self-sufficiency with
more commercial and subsistence agricultural projects.
Other beneficiaries of the ICSAZ Annual Charity Golf
tournament funds include Kutenda Children’s Home in
Mashonaland Central, Chingele Children’s Home in Chiredzi,
St Francis Children’s Home in Bulawayo, Marondera Child
Care Society in Bulawayo, Matthew Rusike Children’s
Home in Epworth, Chinyaradzo Children’s Home in Harare,
Chitenderano Children’s Home in Rusape and Kadoma School
for the Blind.
Mayor appeals to businesses and residents to assist City
from page 3
the residents to take charge of their health
needs through active participation,” he said.
Cllr Manyenyeni said Council had tried
to reduce congestion in the city centre by
commissioning the Coventry Road Holding
Bay for commuter omnibuses. More such
holding bays would be established.
However, it was not only commuter
omnibuses that caused congestion. Apart
from the one way system, other measures
were required, he said.
The provision of more housing
depended on the availability of land and
4
The Chartered Secretary
the Council’s ability to service it.
“We have engaged the Government
to provide us with more land and expand
our boundaries so that we can give people
houses. Currently there is little land to give.
“Council is itself unable to service land
and we have resorted to giving available
land to cooperatives who then service it
on their own. We have also entered into
partnerships with the private sector to
provide housing for the people,” he said.
The Mayor reiterated his call upon
residents to play their part in helping the
Council provide them with the services
they need.
“Resident participation is critical in
service delivery provision. Most residents
don’t want to participate but are quick to
criticise. Your participation in the initial
identification of infrastructural projects,
project development and council operations
is important.
“Harare is working towards achieving
a World Class City Status by 2025. That
achievement will only be successful with
your full and undivided attention,” he said.
Board Evaluation
F
Board must be evaluated to
justify re-appointments
By Pious Manamike
ocus on the performance of
board members and individual
directors has increased, making
it necessary to re-evaluate board
members.
Evaluating board members is necessary
to measure and justify their re-appointment
as individual directors and as the entire board.
Worldwide there are records of high
profile cases of scandals emanating from
poor corporate governance. Shareholders
are still concerned about in whose hands
they entrust their companies.
A constant evaluation of the board is
recommended, with the 2009 King III code
stating that the evaluation of the board, its
committees and individual directors should
be performed every year.
The 1992 Cadbury Report (UK) first
recommended conducting an annual
assessment of the board’s performance
as a best practice. Conducting a board
assessment is one of the guidelines in the
modern UK Code. Further, since 2003 the
New York Stock Exchange has required
all listed companies to conduct an annual
assessment of the performance of the board
and its committees.
Some of the techniques that could
be used to evaluate the performance of a
board are surveys, confidential interviews
and focus groups, where sub-groups of
board members participate to discuss key
elements of the effectiveness of the board.
The confidential interviews could
be conducted by the Board Chairman,
Chairman of the Nominations Committee
or the Company Secretary. Alternatively,
different techniques could be used to
complement each other.
Once the research has been done, it is
important to analyse the findings to help
determine the strengths of the board and
areas of improvement. It is also important
to talk about it and create an action plan.
High performing boards have members
Pious Manamike
with the right portfolio of skills, experience
and gender diversity. They are engaged and
there is a positive contribution from all
members.
Some of the characteristics of an
effective board include time management,
leadership skills, key processes, board
dynamics and effective committees.
A board with good time management
focuses on the most important issues. It
balances presentation and discussion on
agenda items and engages at an oversight
level.
With leadership skills, an effective
board has different perspectives of all
issues. It keeps meetings focused and is
decisive on key issues. The board and
individual directors lead from the front and
are exemplary.
A board with key processes as a trait
means it is involved in overall strategy
formulation, prepares a succession plan
for the Chief Executive Officer (CEO),
performs a board and directors evaluation,
performs an evaluation of the CEO and is
actively involved in risk management.
Board dynamics play an important
role in how effective a board is. The
dynamics of an effective board would be
characterised by respect for different views
and perspectives, an ability to reach a
consensus and make decisions and positive
energy and engagement.
An effective board has effective
committees that interface with the board.
The committees are well resourced in
terms of skills and good leadership.
Chief Executive Officer engagement
is important for an effective board. The
board ensures that there is constructive
engagement with and critique of the
CEO. It plays a supportive role in its
interactions with the CEO and resolves
tough challenging issues. It motivates and
rewards outstanding performance.
There are several types of boards,
which could be characterised as the passive
board, certifying board, operating board,
engaged board and intervening board.
A passive board functions at the
discretion of the CEO, who typically is
domineering. It ratifies management’s
actions and has limited accountability.
The certifying board certifies to
shareholders that the CEO is doing what
the board expects and emphasises its
independence.
The operating board makes key
decisions and management implements
them. This board is common in new
businesses.
The engaged board partners with
the CEO to advise and support the CEO
and management on key decisions. This
board plays a crucial role in guiding and
supporting the CEO and judging the CEO.
Board meetings with this type of board are
characterised by two-way communication.
An intervening board typically becomes
active in a crisis. It becomes actively
involved in discussion of key issues and has
frequent and intense board meetings.
This article is based on a presentation
by Pious Manamike at an ICSAZ Company
Secretaries Workshop. He is the Group
Company Secretary for COTTCO and a
past president of ICSAZ.
The Chartered Secretary
5
Corporate Governance
Management decisions require complete,
accurate and timely information
G
By Richard Summers
overnance activities ensure that
critical management information
reaching the executive team is
sufficiently complete, accurate
and timely to enable appropriate management
decisions to be made.
They provide the control mechanisms
to ensure that strategies, directions and
instructions from management are carried
out systematically and effectively.
Risk management is the set of processes
through which management identifies,
analyses and, where necessary, responds
appropriately to risks that might adversely
affect realisation of the organisation’s
business objectives.
The response to risks typically depends
on their perceived gravity. It involves
controlling, avoiding, accepting or
transferring them to a third party.
Compliance
management
means
conforming to stated requirements. At an
organisational level, it is achieved through
management processes that identify the
applicable requirements, defined, for
example, in laws, regulations, contracts,
strategies and policies.
These processes assess the state of
compliance and the risks and potential costs
of non-compliance against the projected
expense of achieving compliance, as a
result prioritising, funding and initiating
any corrective actions deemed necessary.
Governance, risk management and
compliance management is a discipline
that aims to synchronise information
and activity across governance, risk
management and compliance in order to
create efficiency, enable more effective
information sharing and reporting and
avoid wasteful overlaps.
In an environment where the global
economic recession, demise of major
financial institutions and changing business
landscape has led to stricter regulations in
major industries and countries around the
6
The Chartered Secretary
Richard Summers
world, regulatory compliance has become
an all-important buzzword that can make or
break an organisation and its directors.
In achieving effective compliance
management within an organisation,
the integrated roles of key management
functions, mainly compliance, risk and
internal audit, must be understood and
enabled.
It is the responsibility of the
compliance officer to stimulate and train
the board and management on legislation
pertinent to the organisation. The core
responsibilities of this function span
the compilation and maintenance of a
legislative register for the organisation.
New requirements arising from new
legislation or amendments to existing
laws should be identified, analysed and
communicated to both management and
the board.
The officer should lead and coordinate
investigations into alleged unsatisfactory
conduct or misconduct of employees
or consultants and third parties such
as suppliers and, where appropriate,
recommend disciplinary or corrective
action, if this is deemed necessary.
The officer should also deal with, lead
and coordinate investigations into issues
of conflict of interest by non-executive
directors, management and staff, cases
of alleged corruption and complaints
received with regard to the organisation’s
operational methods.
He or she should consider ways to
measure compliance risk and use such
measurements to enhance compliance risk
assessment.
In addition, the compliance officer
should assess the appropriateness and
consistency of the organisation’s regulatory
framework (statutory documents, policies,
strategies, guidelines, rules, regulations
and procedures in force) related to
compliance issues, promptly following up
any identified deficiencies in the policies
and procedures and, where necessary,
formulating proposals for amendments.
He or she must ascertain compliance with
the provisions of the organisation’s code of
conduct and review and propose amendments
to the organisation’s code of conduct and
other policies and procedures, as necessary, to
reflect ethical standards in all areas.
The officer must ensure that the
compliance function is carried out under a
risk-based annual compliance programme
that sets out its planned activities, subject to
oversight by the head of compliance to ensure
appropriate coverage and co-ordination
among risk management functions.
He or she must report on a regular basis
to the audit committee. The reports should
refer to the compliance risk assessment and
testing which has taken place during the
reporting period, any identified breaches
and/or deficiencies, the corrective action
taken and any compliance matters that
should be brought to the committee’s
attention for information or action purposes.
They should also contain information about
compliance training.
to page 7
Corporate Governance
Corporate Governance rhetoric
must be turned into reality
By Slava Grace Chella
ffective board governance is not about either systems,
structures, processes, theories, practices, culture or
behaviours. It is about all of them. It is about turning
corporate governance rhetoric into reality.
Corporate governance is growing as one of the more important
aspects of business conduct and development.
The concept helps explain proper business management and
governance practices and offers recommendations on the best path
towards success within any company’s business culture.
If we are going to get a handle on stopping misconduct, we
need to look more closely at what creates the environment that
encourages bad behaviour in the first place.
Boards ought to think hard about whether the culture practised
within the company is the same as that which they espouse,
particularly under pressure.
Good corporate governance makes bribes harder to give and
harder to conceal. It also contributes to the broader climate of
transparency and fair dealing.
Weak corporate governance has been linked to the inability
of countries to attract investment, financial collapses, persistent
corruption, privatisation failures, weak property rights and many
other development challenges countries around the world face.
Bad corporate governance causes loss of ethics, which results in
loss of reputation. Lack of internal trust leads to weak compliance,
the bending and eventual breaking and flouting of rules, misuse of
company assets, abuse of company powers, victimisation of wellmeaning people, loss of strategic direction and loss of capable leaders.
This normally leads to external mistrust, loss of business,
loss of funding support, loss of profit, runs on the company and
eventually total collapse.
Positive impacts of corporate governance include bringing
stability to markets through strengthening competitiveness, both
among companies and economies, and strengthening institutions.
E
Slava Chella
Good corporate governance improves risk mitigation, promotes
investment, lowers cost of capital and weakens corruption, while
strengthening lending.
Corporate governance also promotes reform of state-owned
enterprises and successful privatisation, while at the same time
building transparent relationships between businesses and the state.
Corporate governance has been used as a tool to combat poverty.
Companies are beginning to look at corporate governance as
something that can give them a competitive edge.
The challenge remains, however, in channelling this increased
attention into reforms that actually improve governance practices.
Good corporate governance standards are now established
and well-recognised as an ideal to which companies aspire. The
challenge lies in implementation, in turning rhetoric into reality.
Slava Grace Chella is a Fellow and a past president of the Institute
of Chartered Secretaries and Administrators. This article is based
on a presentation that she made to an Institute workshop in March
2015.
Management decisions require complete, accurate and timely information
from page 6
The compliance risk management
officer should be utilised for on-going
monitoring and report-back to both
management and the board and should
identify and report any non-compliance
issues.
The compliance function should have
a formal status within the organisation to
give it the appropriate standing, authority
and independence. This may be set out in
the organisation’s compliance policy or in
any other formal document. The document
must be communicated to all staff so that
they are aware of their obligations and
responsibilities.
Risk management in the context of
compliance should support the compliance
office with the risk rating of the relevant
legislation, once such legislation becomes
operational in the business.
This article was adapted from a presentation
by ICSAZ President Richard Summers to a
Company Secretaries workshop.
The Chartered Secretary
7
Judicial Management
Government should review
By Crispen Mwete
udicial Management is a temporary
court-supervised rescue plan for
companies that are in distress but
show signs of coming back to life if
they are given a chance.
Judicial Management proceedings are
governed by the Companies Act (Chapter
24:03). Where the Companies Act is
silent, it is proper for the courts to use the
Insolvency Act in some areas.
The main objective of Judicial
Management is to give companies which
are in crisis a chance to rehabilitate
themselves and be restored to
profitability.
The courts take many factors into
consideration before granting an order
for Judicial Management. It is normal,
therefore, for courts to start by granting
a provisional order to give those
opposing Judicial Management a chance
to be heard first before a final order is
granted.
There are two rehabilitative procedures
for companies in crisis, namely Judicial
Management or a Scheme of Arrangement.
The alternative to these procedures is
Liquidation.
Schemes of Arrangement are wide
ranging and include many forms of
compromise or give and take agreements
between debtors and creditors. They
assist companies to come up with an
overall plan to deal with creditors at the
same time.
They overcome the difficulty of
obtaining individual consent of every
creditor or shareholder to a compromise or
arrangement of their debts or rights against
the company.
Parties to a Judicial Management
are members, directors, creditors and
employees. Application for a Judicial
Management court order may be made
by the company, its directors or its
creditors.
J
8
The Chartered Secretary
A Judicial Manager may be
appointed where this is likely to
achieve the survival of a company
that is unable to pay its debts or the
survival of part of its operations
and the approval of a compromise or
arrangement between the company and
its creditors or a more advantageous
realisation of the company’s assets
than could be effected by winding up
the company.
The Provisional Judicial Manager
is nominated by the applicant but is
subject to the approval of the Master
of the High Court. Power of appointing
a Provisional Judicial Manager is
vested in the Master of the High Court.
However, the tradition has been that
the applicant’s nomination is accepted
subject to the confirmation by the first
creditors meeting.
In Zimbabwe, for a person to qualify for
appointment, he or she should be a member
of the Council of Estate Administrators in
Zimbabwe. However, non-members have
also been appointed.
Creditors may, at the first meeting,
oppose the nomination and nominate a
person of their choice or ask for the Judicial
Management to be managed by the person
nominated by the applicant and their new
nomination.
Upon the Judicial Management order
being granted, the board of directors
becomes “functus officio”. The existing
directors of the company are divested of
their powers and authority as directors and
these powers are transferred to the Judicial
Manager.
A statement of affairs should
be submitted by the board of
directors, signed in the presence of
a commissioner of oaths, within 21
days of the granting of the Judicial
Management order.
The Judicial Manager is expected to
“The Government
needs to play a
serious role in
issues of Judicial
Management or
scrap it. It is now
almost a game of
buying time as
funding becomes a
serious challenge
for any company
under Judicial
Management.”
secure the value of the assets in his
charge by a bond and to obtain a letter
of appointment from the Master of the
High Court.
The Judicial Manager is also expected
to present a statement of proposal and a
report within 60 days of appointment at a
Judicial Management
creditors meeting or where the date has been
extended to the date given by the court.
At each meeting, creditors must have
first lodged proof of debt claim forms at
least 48 hours before the meeting, which the
Master will go through at the meeting and
approve or disapprove if they do not meet the
requirements.
The requirements include:
• an affidavit for the proof of an open
account etc. (Companies Act Chapter
24:03 Section 232 and Winding Up
Regulation Rule 18);
• supporting documents for the
amount being claimed – statements,
invoice, receipt or some other form
of document as proof of claim; and
• power of attorney for companies and
organisations or individuals who may
not be able to attend the meeting but
send a representative to attend it on
their behalf.
A creditor must first lodge a proof of debt
to be able to vote. A secured creditor is not
allowed to vote unless he or she surrenders
the security or unless part of the debt is
unsecured.
At the meeting, the business plan or
proposal may be modified as creditors
see fit before it is approved, as long as
the Judicial Manager agrees with the
modifications.
The Judicial Manager also has the
duty to manage the company’s affairs in
accordance with the approved proposal or
business plan. The proposal may sometimes
need the court’s approval in writing in the
form of an order.
The Judicial Manager must always take
into consideration the local knowledge of
the business and directors in dealing with
them.
In Zimbabwe, the Judicial Management
order remains in force for as long as the
potential to turn around the company is
present and the chance to pay back creditors
exists. Some other countries will allow 180
days, subject to a fresh application for an
extension of the order to be granted by the
courts.
In Bulawayo, some companies have been
under Judicial Management for more than
10 years, which in my view is stretching it
too far and grossly unfair to creditors. There
should be a provision in the legal system for
a cut-off point.
The court (Master of the High Court) has
power to adjourn creditors meetings to allow
amendments to the proposal and to make
interim provisions.
In the process of considering proposals,
the court may grant relief to any member
from “unfair prejudice”. For minorities, 15%
and below, the courts will apply relief in
terms of the Companies Act where they will
get a “buy out scheme”.
With our current economic problems,
Judicial Management is an industry on
its own and should have government
attention if our economy is to be turned
around.
Too much reference to the court
sometimes renders the Master of the High
Court and the Judicial Manager useless and
unable to function effectively.
The directors, in the majority of cases in
Zimbabwe, are also members of the company
and can choose which jacket to put on and
use the power that they have to the detriment
of the Judicial Manager.
Where
directors
have
signed
personal guarantees on some loans, the
creditors will go for the director once a
Judicial Management is granted to the
company, thus making it difficult for the
directors to function, especially in terms
of raising working capital. They will be
busy trying to pay personal debts as it
were.
Banks do not take kindly to companies
under Judicial Management asking for
help. Creditors and finance houses do not
differentiate between the old board and the
Judicial Manager.
In some cases, the Judicial Manager is
sometimes asked to get the board to sign
documents. This is okay if the Judicial
Manager was appointed by them but, if it
is the creditors who nominated the Judicial
Manager, they will generally be hostile and
will not help.
The Government needs to play a serious
role in issues of Judicial Management
or scrap it. It is now almost a game of
buying time as funding becomes a serious
challenge for any company under Judicial
Management.
Government should set up a structure to
look at Judicial Management in the hope of
coming up with a solution.
This article is based upon a presentation
by Crispen Mwete, Partner with Softgate
Management, to a Company Secretarial
Workshop.
The Chartered Secretary
9
Ethics
Ethics provides foundation for
good corporate governance
By Bradwell Mhonderwa
he country’s corporate community
has, since the turn of the century,
been through an arduous period
characterised by scandals ranging
from abuse of depositors’ funds by senior
bank executives and shareholders to the
salarygate scandals in parastatals and local
authorities.
There have been rampant cases of rent
seeking and endless reports of corruption in
the public services sector.
Attempts to improve corporate governance
processes have tended to focus mainly on
improving governance structures, without
giving due attention to the ethics of such
Bradwell
governance processes.
Ethics is the foundation upon which good
corporate governance can be built and through which it can be
realised, a position the King III report articulates eloquently.
While corporate governance is basically about rules and
procedures, ethical standards speak to the value system of the
corporate governance paradigms, thus forming the building blocks
of a firm’s ethical culture.
An ethical foundation is decisive for corporate governance
because it helps to build enduring corporate governance processes
that thrive even in the most difficult of circumstances. It ensures
ethical rectitude even when times become tough.
Strong ethics intrinsically police the behaviour of every
member of the firm, from company directors in the boardroom and
senior executives to employees at shop floor level. Corporate ethics
provide a platform for staff members to raise the red flag when they
observe misconduct being perpetrated within the firm.
A good and practicable code of ethics should be a key
element of a sound business strategy. Company leaders need to
go beyond merely mentioning ethics in a corporate governance
policy document. They need to ask themselves some tough
questions.
Do we model ethical behaviour in the workplace? Do we have
clear company structures to manage ethics in the workplace? Did
we assign a senior person to be responsible for the ethics function
within the organisation?
Do we have a hotline to help employees report observed
malpractices and seek help on ethical matters? Have we embedded
ethics in our reward management systems? Do we monitor and
evaluate the company’s code of ethics? Do we audit implementation
of our code of ethics, in the same way as we audit other management
systems within the firm?
T
10
The Chartered Secretary
These are some of the tough questions
that senior managers and directors need to
ask themselves.
It is not possible to lay down corporate
governance rules to address every
possible breakdown in moral leadership.
Imposing more governance rules without
creating a strong ethical culture will not
increase responsible behaviour either.
It is when leaders embrace sound
corporate ethics standards that governance
processes become more meaningful and
behaviour changing.
Good corporate governance is driven
by sound ethical performance. Lasting
Mhonderwa
governance imperatives become a reality
only when leaders exhibit a genuine
commitment towards growing an ethical culture right across the
firm.
When leaders embrace ethics as the basis for good corporate
governance, they become good communicators of responsibility
and professionalism to their staff.
Personal modelling of ethical behaviour and exhibiting
accountability and transparency in one’s dealings with the business
of the organisation are visible elements that will make the leader
more appealing to staff.
Globally, ethical leadership has become a key competency for
impactful boards. The Ethical Leadership Quotient (EQL) of an
organisation is the new notable indicator for the firm’s bottom line
success and sustainability.
The high standards of ethical behaviour that leaders must exhibit
are not simply a matter of good morals that are a result of one’s
good upbringing. Ethical leadership goes beyond a good upbringing
to involve the acquisition of ethical skills through ethical leadership
training and development.
It means exemplifying ethical behaviour and making sure the
firm has ethics management infrastructure and measurable ethics
objectives.
It is ethical leadership that makes all the difference, not simply
having a corporate governance charter in place. The best-written set
of corporate governance principles are bound to fail if ethics is not
embedded and taken seriously.
Company leaders must build corporate governance charters and
processes but these must be grounded on a strong ethical foundation.
Bradwell Mhonderwa is the founder and Managing Director of
Business Ethics Centre.
Profile
PSC Senior Paymaster appreciates
role ICSA played in his career
s Senior Paymaster at the
Public Service Commission,
Brighton
Chiuzingo
is
responsible for the payment
of salaries to Zimbabwe’s civil servants.
He began his career in November 1986
as a Payroll Clerk at the Salary Services
Bureau, which is an Agency of the Public
Service Commission.
The bureau administers the payment
of civil service salaries but it is the PSC
which employs all civil servants and has
ultimate responsibility for ensuring they
are paid and that income tax, pension
contributions, medical aid subscriptions
and other deductible payments are
collected from their earnings.
Mr Chiuzingo was advanced to
Senior Payroll Clerk in 1990 and to
Payroll Administrator in 1993. In 2000
he was appointed Principal Accountant.
His move from the Salary
Services Bureau to the Public Service
Commission, where he was appointed
Chief Accountant, came in August 2005,
the same year in which he obtained his
Institute of Chartered Secretaries and
Administrators (ICSA) qualification.
In 2007 he was appointed the
Commission’s
General
Manager
responsible for finance, personnel and
administration. In November 2010 he was
appointed Paymaster. Four years later he
was appointed to his current position of
Senior Paymaster.
It was his ICSA qualification which
opened up to him, the possibilities of
advancing his career to higher levels
within the Public Service Commission.
“I had always wanted to become a
practising Public Accountant. I always
had a passion for financial management.
I had completed the Southern African
Association of Accountants Higher
National Diploma and the Institute
A
Brighton Chiuzingo
of Administration and Commerce
Accounting Diploma, attaining full
membership for both, but at the time
neither of these diplomas was as yet
recognised by the Public Accountants
and Auditors Board (PAAB) – yet
the Institute of Chartered Secretaries
and Administrators, with its ICSA
qualification, was already a constituent
member. I wanted to become a practising
public accountant so I decided to study
for ICSA,” he said.
“When I joined the Salary Services
Board, it was a financial institution.
Even when I rose through the ranks it
was all within the finance sector. When
I did a survey within the public sector
I realised that the ICSA qualification
was one of those qualifications that
Government considered to be relevant
for the rise to the level of finance
director. It was one of the qualifications
that were highly regarded as a
professional qualification within the
country,” he said.
Once he obtained his ICSA qualification,
doors opened up to him, he says.
“Armed with that I was now complete
on the finance side. My qualification was
like a stepping stone.
I decided to move from SSB to PSC head
office, where I could use my professional
qualification. Promotion at PSC head office
was on the basis of good performance,
experience and what qualifications one
had,” he said.
“Having done the ICSA qualification
and experienced what one goes through
on the ICSA course, I would say that
for someone to be complete in financial
management that is the course to go for,”
he added.
After qualifying, he applied for
membership of the Institute of Chartered
Secretaries and Administrators in
Zimbabwe (ICSAZ). He was awarded
Associate Membership in 2007 and was
able to register with PAAB. In 2010 he
was made a Fellow of the Institute.
Considering himself complete on the
finance side, after qualifying as a Chartered
Secretary, Mr Chiuzingo decided to enrol
with the University of Zimbabwe for a
postgraduate Diploma in Management for
executives.
He went on to study for an
Accounting degree and a Master of
Business Administration (MBA) degree
with the University of Zimbabwe,
which he said was made easy because
he had already covered most of the
subject matter while studying for his
ICSA qualification.
“For me, to study for the MBA appeared
somewhat easy because most of the courses
I had already come across when I was doing
my ICSA,” he said.
Mr Chiuzingo intends to pursue a PhD
degree before the end of the year.
“As I go higher I am realising that
competition is slowly getting stiff and I
need to move a step further,” he said.
However, he still believes that it was
to page 12
The Chartered Secretary
11
Profile
PSC Senior Paymaster appreciates role ICSA played in his career
from page 11
the ICSA qualification that helped him
most.
“Looking back at colleagues I went
to school with, I would like to think
I am professionally better positioned
than most of those I have been able to
get in touch with,” he said, adding that
“The ICSA course is structured in
such a way that it addresses the current
economic situation. It is somewhat
practical. It puts you in a position to
be able to apply the programme to the
real work situation. It is a practical
programme that equips you with skills
that enable you to deliver.
It is not theoretical,” he
said.
Turning to the issue
of corporate governance,
CROWE HORWATH WELSA INTERNATIONAL CHARTERED ACCOUNTANTS
which the Institute of
Member of Crowe Horwath International
Chartered Secretaries and
Administrators
places
great emphasis on, Mr
Chiuzingo said the PSC
as a whole advocates
transparency, integrity and
accountability.
“As a Government
pay point, we want to
pay someone who has
genuinely
rendered
services to the Government
WHO WE ARE
of Zimbabwe and ensure
Vision
Ÿ Professionalism;
he or she is paid the right
Ÿ Excellence;
To be the preferred provider of professional
amount of money at the
Ÿ Commitment;
accounting, auditing, taxation and related
Ÿ Creativity and innovativeness;
right time,” he said.
services in Zimbabwe, Africa and the Globe.
Ÿ Confidentiality;
Ÿ Objectivity; and
He said history would
Mission
Ÿ Teamwork.
show that ever since
To serve our market with integrity,
Core business
independence, civil servants
professionalism, independence, excellence and
become one of the top eight firms in Zimbabwe
Our core business is to provide quality service in
had generally been paid on
within the next five years from 2012.
auditing, accounting, corporate finance, taxation,
their expected pay days.
company secretarial and corporate recovery
Corporate values
services to our clients. This is achieved by recruiting,
Mr Chiuzingo is an active
training, retaining and mobilizing the best people for
CROWE HORWATH WELSA INTERNTATIONAL
our market.
member of the Institute. He
CHARTERED ACCOUNTANTS believes in providing
assists in mentoring some
personal attention to clients as pivotal to
CONTACT DETAILS:
CROWE HORWATH WELSA
understanding their unique business challenges.
students undertaking the
CHARTERED ACCOUNTANTS
That way, the Firm is able to give better advice
1964 Katsande Way
ICSA programme. He does
and client-specific solutions, making it a
New Marlborough
preferred business partner in the marketplace.
the same for some MBA
P.O.Box E140, Harare, Zimbabwe
In order to achieve this, the Firm cultivates a
Tel: 04 – 300135/8 or 04 - 2933540 - 3
culture of unity of purpose, inspiring and
students at Midlands State
Cell: 0772 294 913/0779 504 341
investing in its people so that they realize their full
Email address: info@welsainternational.com
University.
potential and achieve personal growth.
Website: www.welsainternational.com
In his spare time, he
Our corporate values can be summed up as
follows:
enjoys going to the gym
Ÿ Integrity;
and watching soccer. He
is married and has three
The unique alternative to the big four
AUDIT | TAX | ADVISORY
children.
12
The Chartered Secretary
this was due chiefly to his decision to
study for the ICSA qualification.
“I have done it and I encourage
the youngsters to take that route
too. It will equip them with various
skills that are critical for someone to
perform well in real working life.
International
Companies House error costs
£9m after ruining a business
A
spelling error in recording a company’s winding up
order has cost a United Kingdom Government agency
around £9 000 000 after the agency was sued for
ruining a business.
Companies House was sued for recording that Taylor & Sons,
based in Cardiff, Wales, was in liquidation. It was found guilty of
negligence by the High Court.
The actual company being wound up was Taylor & Son based in
Manchester. However, the government agency inserted an erroneous
‘s’ at the end of the company name when registering the company
as in liquidation.
The High Court found that Companies House had been
negligent. It owed a duty of care to each company on the register
and could be held liable for mistakes it makes relating to those
companies, the court ruled.
However, the court added that the government agency was
only liable for mistakes made in-house. It was not responsible for
verifying third party information it receives.
Following the distribution of its newsletter, creditors and
suppliers began to pull out of deals with and financing of the
Cardiff-based company, leading to the collapse of the 124-year-old
engineering firm. Two months after the error was made, Taylor &
Sons was in administration.
Despite Companies House rectifying the mistake within three
days, it failed to notify its distribution list, which includes suppliers,
credit agencies and investors, that it had made an error. As a result,
news of Taylor & Sons’ supposed liquidation continued to circulate.
Speaking to Governance + Compliance, Matthew Walker,
an associate in the dispute regulation department at Burges
Salmon LLP, said this was an important decision as it establishes
the principle, which many probably suspected was the case, that
Companies House can in the right circumstances be liable for errors
on the Register of Companies.
“The mistake that led to Taylor & Sons’ administration appears,
thankfully, to have been a rare oversight. Nonetheless the Court’s
decision ensures that such mistakes will not go uncompensated.”
Source: www.icsa.org.uk
Investigations continue into fraudulent
ownership of UK property
A
report from Transparency International exposing the
use of corrupt capital to purchase United Kingdom
property has captured the attention of the media.
Researchers examined data from Metropolitan Police
investigations along with Land Registry records of corporate
holdings.
Transactions investigated in the UK since 2014 total £180
million but United Nations figures on money laundering practices
suggest that detection rates could be as low as 1 percent. This
problem is magnified in London because overseas investors often
purchase luxury flats and houses.
The average price of property under investigation by the
Metropolitan Police’s Proceeds of Corruption Unit (POCU) is £1.5
million.
The use of trusts and companies help conceal the identity
of the beneficial owner. This involves the use of complex or
‘layered’ ownership structures or offshore companies; nominees
to hold property; and complex loans structures and credit
finance.
All the overseas companies currently under investigation for
grand corruption are registered in offshore financial jurisdictions,
rather than major markets.
Director of Operations at POCU, Detective Chief Inspector Jon
Benton, said the lack of access to beneficial ownership information
about offshore companies that hold property in the UK is a major
barrier to their investigations.
A key feature of the UK Government’s transparency and trust
consultation is to make public a central registry of information
on the ultimate beneficial owners of a company. However there
is currently no provision to extend this requirement for offshore
companies investing in UK property.
Peter Swabey, Policy and Research Director at ICSA, commented
that the new UK Government requirements for companies to hold
a register of ‘Persons with Significant Control’ is an enormous step
forward in terms of corporate transparency. However, he said people
must not be complacent and the more that can be done to increase
the visibility of ownership, particularly of overseas companies, the
more difficult it will be for criminals to prosper.
Source: www.icsa.org.uk
The Chartered Secretary
13
Student Supplement
Examination question highlights procedures
C
orporate Secretaryship is a subject that requires a practical
approach. It is the subject that gives Chartered Secretaries
their identity.
The practical treatment of a notice of an Extraordinary General
Meeting (EGM) and the advantages and disadvantages of cumulative
redeemable preference shares over debentures was the subject of a
recent examination in the Corporate Secretaryship examination.
Question
a) Prepare the notice of the Extraordinary General Meeting (EGM)
of Finance Bank shareholders stating clearly the resolutions
that need to be passed thereat.
b) The share capital of Finance Bank is made up of ordinary shares
and preference shares which are cumulative and redeemable.
What are the advantages and disadvantages of the cumulative,
redeemable preference shares over debentures?
The question was based on the following case study.
1. Restructuring of Finance Bank by establishment of a
holding company, Corporate Holdings Limited, that will
own Finance Bank as a wholly owned subsidiary.
Finance Bank is a public company incorporated in Zimbabwe
as a commercial bank under the Banking Act (Chapter 24:20).
The bank holds a commercial banking licence and is listed on the
Zimbabwe Stock Exchange (ZSE) as a company with no investments
or shareholding in any subsidiary or associate company.
The Bank offers a full comprehensive range of banking services,
including inter alia Personal Banking Facilities, Corporate and
Institutional Banking, Treasury and Investment Banking Services.
The major revenue drivers for Finance Bank include a
significant deposit base, availability of key skills, an excellent
reputation and world class service delivery.
Revenues for the retail banking and corporate banking divisions
are mainly driven by interest income from lending activities.
Balance sheet size strongly influences the performance of
the Treasury and International Banking divisions. Treasury and
Investment Banking divisions attain leverage from their ability
to structure lucrative deals, hence requiring creative skills and
generation of new business.
Changes in the local financial environment and also in
the capacity and scope of the Bank’s internal operations have
prompted the directors to review the current corporate structure of
Finance Bank. The directors have consequently recommended the
establishment of a new corporate structure, which is similar to that
used by banking groups both locally and externally.
The directors believe it is desirable to restructure the listed
entity from Finance Bank to a holding company, Corporate Holding
14
The Chartered Secretary
Limited (CHL). This will have the effect of separating the functions
and capabilities of the holding company from the banking operations.
Finance Bank would benefit from the opportunities that
CHL would have in the wider financial sector. Hence, either
independently or through CHL, the Group will be able to offer a
diversified product range.
The proposal to restructure Finance Bank will be effected through
the swap by CHL of the entire issued ordinary share capital of
Finance Bank in exchange for the issue to Finance Bank shareholders
of ordinary shares in CHL, which on implementation, will result in
Finance Bank becoming a wholly owned subsidiary of CHL.
Immediately after the implementation of the proposal, the
shareholders of CHL will be made up of former shareholders of
Finance Bank.
The proposal will allow Finance Bank to concentrate on its main
business of commercial banking. CHL will grow into a holding
company of a large group of companies in the financial services sector.
However, it should be noted that CHL’s core business will
remain the banking subsidiary, Finance Bank. Emphasis will be
placed on building on this strength through enhancing service
delivery to customers.
Delisting of Finance Bank from ZSE
Subject to fulfilment of the conditions precedent applicable to the
proposal, an application will be made to the ZSE for the termination
of the listing of the Finance Bank shares on the ZSE, which
termination is expected to take place at a date to be determined by
the directors and published in the Press.
To facilitate the listing of CHL, a prelisting statement, for
which the directors of CHL will be responsible, will be prepared
and sent to shareholders of Finance Bank together with the circular
detailing the transaction.
Share capital
The authorised share capital of Finance Bank is $35 000 000 (thirty
five million dollars) divided into 3 000 000 000 (three billion)
ordinary shares of $0.01 (one cent) each and 500 000 000 (five
hundred million) redeemable cumulative preference shares of
$0.01 (one cent) each.
The issued share capital of Finance Bank is $20 000 000
(twenty million dollars) divided into 2 000 000 000 (two billion)
ordinary shares of $0.01 (one cents) each. All the issued shares in
the capital of Finance Bank are of one class, ranking pari passu in
all respects and are listed on the ZSE. CHL is not a shareholder of
Finance Bank.
Information relating to CHL
CHL is a financial services group which was formed and
incorporated in 2009 as the first stage of creating a diversified
for establishing a holding company
group. Its authorised share capital is $80 000 000 (eighty million
dollars) divided into 8 000 000 000 (eight billion) ordinary shares
of $0.01 (one cent) each. The issued share capital of CHL is $40
(forty dollars) divided into 4 000 (four thousand) shares of $0.01
(one cent) each. The shares are held equally by two directors who are
the subscribers to the Memorandum of Association of CHL.
Pursuant to the proposed transaction, 250 000 000 (two hundred
and fifty million) CHL shares were placed under the control of the
Directors of CHL to be utilised by the directors of CHL specifically
for the future acquisitions by CHL.
The Directors approved the appointment of the following to
guide CHL in its start-up phase: S. Shava, M. Marios, J. Ngwenya,
F. Muzanenhamo, N.B. Moyo and L. Cains.
2.Acquisition of the entire issued share capital of Bees
Insurance Company Limited by CHL in exchange for the
issue to Bees Insurance Company shareholders of 250 000 000
(two hundred and fifty million) ordinary shares in CHL.
Pursuant to its strategy of becoming a fully diversified financial
services group, CHL, the holding company, intends to acquire the
entire issued share capital of Bees Insurance Company.
Bees Insurance Company was incorporated in June 1994 and
started trading on 1 January 1995. Bees Insurance Company is a
company involved in the underwriting of short-term insurance
business, although it is licensed to underwrite long-term (life)
business. The company was established with the objective of
providing insurance services to both local and external markets.
In terms of international business, the company currently operates
mostly within Africa excluding South Africa.
CHL has proposed to acquire the entire issued share capital of
the insurance company. The acquisition of Bees Insurance Company
will be in the form of a scheme of arrangement which requires the
approval of a majority in number, representing not less than threefourths in value of the votes exercisable by the insurance company
shareholders present and voting in person or by proxy at an
Extraordinary General Meeting (EGM).
In the event that the acquisition of the insurance company is
approved by the shareholders, the company will be delisted from the
ZSE and become a wholly owned subsidiary of CHL.
Share capital
The authorised share capital of Bees Insurance Company is $5 000 000
(five million dollars) divided into 500 000 000 (five hundred million)
ordinary shares of $0.01 (one cent) each.
The issued share capital of Bees Insurance Company is $2 500 000
(two million five hundred thousand dollars) divided into 250 000 000
(two hundred and fifty million) ordinary shares of $0.01 (one cents)
each. All the issued shares in the capital of Bees Insurance are of one
class, ranking pari passu in all respects and are listed on the ZSE. CHL
is not a shareholder of Bees Insurance Company.
Other Information
The shareholders of CHL will ultimately be made up of the former
shareholders of Finance Bank and of Bees Insurance Company. CHL
is expected to become a leader in the financial services sector with
the capacity to be a key player in the Zimbabwean financial services
market and in the region. It will derive strength from a network of
strong shareholders with converging interests and rigorous financial
skills.
CHL, as a group, will be able to offer a diversified product range
from banking through to insurance services.
The proposed transactions will also enable the Group to venture
into other activities which would not be possible under the Banking
Act such as Bancassurance. In addition, the insurance arm will
benefit from the group balance sheet, which will enable it to increase
capacity to underwrite more business.
Above all this, there is an expectation of an improved profitability
and better return to the shareholder.
Suggested Solutions
FINANCE BANK
NOTICE OF AN EXTRAORDINARY GENERAL MEETING
a) Notice is hereby given that an Extraordinary General Meeting
(EGM) of Finance Bank will be held in the Boardroom, Finance
House, 45 Broad Street, Harare, on Wednesday 11 August 2002
at 0900 hours for the purpose of considering and, if deemed fit,
passing, with or without modification, the following ordinary
resolutions:
1. THAT the proposed restructuring of Finance Bank’s
shareholding, as detailed in the Circular to Shareholders
dated 8th July 2002, which is to be effected through the
simultaneous acquisition by Corporate Holdings Limited of
all the issued ordinary shares in Finance Bank in exchange
for the issue to Finance Bank shareholders of ordinary
shares in Corporate Holdings Limited on the basis of one
new ordinary share of a nominal value of $0.01 in Corporate
Holdings Limited for each one ordinary share of a nominal
value of $0.01 in Finance Bank, be and is hereby approved.
2. THAT, subject to the passing of Resolution 1, on effecting
the Proposed Restructuring and on being effective, Finance
Bank be de-listed from the Zimbabwe Stock Exchange.
to page 16
The Chartered Secretary
15
Student Supplement
Establishing a holding company
from page 15
3. THAT the Directors of Finance Bank be and are hereby authorised to do all such things
that they consider necessary or desirable to give effect to or pursuant to or in connection
with the proposed restructuring.
By Order of The Board
F Danda
Company Secretary
Date
2nd Floor
Finance House
45 Broad Street
HARARE
Note:
In terms of Section 129 of the Companies Act (Charter 24:03), a member entitled to vote at the
EGM is entitled to appoint one or more proxies to attend and vote and speak in his stead. A proxy
need not be a member of the company.
Proxy forms should be completed and returned so as to reach the registered office of the company
in Harare not less that 48 (forty eight) hours before the time fixed for holding the meeting.
ADVERTISING:
M. Jojo
ICSAZ
Email: ics@icsaz.co.zw
Tel: 086 4412596-9
b) Advantage and Disadvantages of Redeemable Preference Shares over Debentures
Disadvantages
A capital redemption reserve fund must be created and maintained when preference shares are
to be redeemed out of profits. The profits are thus permanently capitalised. Since the return on
redeemable shares is dependent upon the company making profits, it is not as secure as the return
on debentures, which must be paid whether the company makes profits or not. A higher rate of
dividend must be offered in redeemable preference shares than the rate of interest payable on
debentures in similar circumstances. Provision must usually be made for redemption at a premium
in order to attract the class of investors who wish to invest for a medium term and to obtain a
steady return with the advantage of preferred capital.
Advantage
Redeemable preference shares have the great advantage over debentures that there is no shadow
of foreclosure hovering over the company. In lean times,the company will be in a better position
to weather a downturn in the economy or any adversity.
Email: cis@icsaz.co.zw
Website: http://www.icsaz.co.zw
CHIEF EXECUTIVE AND SECRETARY:
Farai Musamba (Dr)
PRESIDENT:
Richard Summers
VICE PRESIDENTS:
Lovemore Kadenge
Simbarashe Dziva
33,000
Governance institute
of Australia
Safron House
6 - 10 Kirby Street
London EC1N 8TS
Tel: (44207) 612 7006
info@icsa.co.uk
www.icsa.org.uk
info@governanceinstitute.com.au
www.governanceinstitute.com.au
Chartered Secretaries
Southern Africa
PO Box 3146
Houghton
2041
South Africa
Tel: (011) 551 4000
Fax: (011) 551 4028
www.chartsec.co.za
16
The Chartered Secretary
Pious Manamike, George Mahembe
Paradza Paradza (Dr)
Charles Nhemachena
Loice Kunyongana (Ms)
Ferida Matambo (Mrs)
Letitia Nyama (Mrs)
BRANCH CHAIRMEN
Harare: Albert Nxongo
Bulawayo: Sithembile Ncube (Mrs)
Midlands: Godfrey Nyika
Mutare: Shepherd Chinaka
Masvingo: Joseph Bemani (Dr)