In terms of section 72 of the Companies and Other Business Entities Act [which we shall refer to as “the Act” in this bulletin], all companies are required to keep a register of beneficial owners – who, as we shall explain in more detail below, are the individuals who control the companies or who hold a substantial number of shares. The Government – specifically the Ministry of Finance and Economic Planning and the Financial Intelligence Unit of the Reserve Bank – has published a notice drawing attention to this requirement and giving companies until the end of this month to comply with it.
In this bulletin, we shall set out the notice, then analyse it and explain why it is important, in the interests of good governance, that companies should disclose their beneficial owners.
The notice reads as follows:
“LEGAL REQUIREMENT FOR ALL COMPANIES TO MAINTAIN INFORMATION ON BENEFICIAL OWNERS
In conformity with international standards on Anti-Money Laundering and Combating Financing of Terrorism, in 2019 the country passed the Companies and Other Business Entities Act which, under section 72 thereof, requires all companies to—
(a) gather and maintain at the company’s registered office information on the company’s ultimate beneficial owners, i.e. the natural persons/individuals who own or control the company; and
(b) File such information with the Companies Registry and ensure that the information is kept up-to-date as and when there are changes.
The Companies Registry is currently undergoing a computerization exercise that will enable all new and existing companies to register or re-register online and in the process submitting the required beneficial ownership information in compliance with the new law as well as with international standards.
Pending the completion of the Companies Registry computerization exercise, all companies are required under the law to ensure that [they] maintain a Beneficial Ownership Register which should contain accurate and up-to-date information on the identity, identification number, and address of each of the beneficial owners. This will entail maintaining information on each natural person/individual that ultimately owns/controls 10% or more of the company’s shares, whether directly or indirectly through proxies or other corporate vehicles or trusts.
This register of beneficial ownership information should be maintained in Zimbabwe and be available if and when required by competent authorities. All companies are expected to be in compliance with this requirement by 31 July 2021, after which date the Companies Registry inspectorate teams will conduct on-spot compliance inspections and impose penalties on non-compliant companies.
Once the computerization process is completed, the Registrar of Companies will issue a public notice requiring all new companies to register and all existing companies to re-register online, and, in the process, submit beneficial ownership information among other registration [or] re-registration requirements.
International standards on Anti-Money Laundering and Combating Financing of Terrorism place emphasis on the importance for countries to maintain information on the beneficial ownership of companies, as part of measures to ensure transparency of legal persons and legal arrangements and to guard against their use for money laundering, terrorism financing, tax evasion and other illicit purposes.