Company re-registration: Understanding the process and requirements.

RUTENDO MANHIMANZI

The enactment of the Companies and Other Business Entities Act [Chapter 24:31] COBE brought in new requirements regarding yearly re-registration of companies.

This is in line with the international standards on good corporate governance. This promotes accountability, transparency and responsibility among other principles. In this regard, all companies registered in Zimbabwe before April 2024 are required to reregister in compliance with the new regulations. Section 303 (9) of the Companies and Other Business Entities Act [Chapter 24:31] provides that,  “a company or private business corporation referred to in subsection (8) must within a period of twelve months from the effective date re-register under this Act by submitting the form in the Tenth Schedule as may be appropriate, together with the fee and other documentation as may be required in terms of that form.

A company or private business corporation must re-register under its existing name, without prejudice to its right after re-registration to change its name under section 26”.All companies in existence, including Private Limited Companies (PLCs), Cooperative Companies, Companies Limited by Guarantee, and Private Business Corporations (PBCs), are required to comply with the new provisions to re-register.

This process serves several vital purposes:Updating the companies register: yearly renewal or re-registration helps establish a new, updated public register of companies and private business corporations, ensuring that all active businesses are accurately recorded which facilitates transparency, accountability, and informed decision-making.

Yearly renewal allows governments to verify a company’s information, such as directors, shareholders, and addresses. Removal of defunct entities: ultimately, all non-operating or nonfunctional business entities will be struck off from the register. Yearly renewal deters the creation and maintenance of shell companies, which can be used for illicit activities, such as money laundering and tax evasion.

Legal compliance: Re-registering ensures that your business is in tandem with the current legal framework, avoiding potential legal consequences. Renewal ensures that companies comply with changing regulatory requirements, which can include but not limited to tax laws, labour laws, and environmental regulations.

Protection of business identity: failure to re-registration, can result in anyone claiming ownership of your company name and registering it as their own, leading to possible identity and brand legal battles.

Enhanced credibility: Complying with the latest regulations enhances your company’s credibility with clients, partners, and investors. Renewal encourages companies to review and update their governance structures, ensuring they remain fit for purpose and aligned with changing regulatory requirements.

Yearly renewal provides governments with valuable data on companies, which can be used to inform policy decisions, monitor economic trends, and identify potential risks.

Improved Regulatory Oversight: Renewal enables governments to monitor companies’ compliance with regulatory requirements.

Avoid Penalties and Fines: Timely renewal avoids penalties and fines associated with non-compliance and ensures companies remain legally recognized entities.

Another critical element of maintaining compliance is the timely submission of annual returns and the declaration of the annual general meeting (AGM).

These documents also confirm the functional state and details of the company. Failure to file these documents can attract penalties and also result the company being struck off the Companies Register, in terms of the provisions of the law (COBE). It can also lead to the rejection of any amendments or updates to your company details by the Companies Registry.

What are annual returns and when is the annual return due?

In Zimbabwe, an annual return is a mandatory statutory return in terms of Section 165 of the COBE that Private Limited Companies must file with the Companies Registry at least once a year to verify and confirm that the information held on the public register is accurate and up to date.

The company Directors or Secretary of a registered company must file an Annual Return with the Companies Registry within 21 days of the anniversary of the company or the last annual return filing. Put simply, an annual return must be filed with the Companies Registry once every 12 months.

Do I receive any document after name change?

Company change of name is done in terms of section 26 of the COBE. Public companies must file a special resolution for change of name with the Registrar whereas private limited companies must obtain a written approval from the Registrar. Once approved it must be published in the government gazette and local newspapers.

You will receive a certificate of name change.

How many directors does a Company have?

In terms of COBE, a private company with more than one but less than ten shareholders is obliged to have two or more directors, whilst a private company with ten or more shareholders is obliged to have at least three directors, and whereas a public company is obliged to have at least seven and no more than fifteen directors.

Directors are legally responsible for the day to day running of the company and ensure that the best interests of the company are served.

Are company directors also shareholders?

Directors do not necessarily have to be shareholders. Instead, they are responsible for the day to day running of the company and get their mandate from the shareholders. However, it is common practice for new companies to have directors that are shareholders.

Conclusion

Re-registering your company in Zimbabwe is not just a legal obligation but a noble practice to ensure your business’s continuity and credibility.

By complying with the provisions of the law, you safeguard your business’s legal status and open access to new opportunities and growth.

 Rutendo Manhimanzi is a registered Legal Practitioner and practices under the law firm Ruzvidzo Legal Counsel. She can be reached on +263 773 589 263 or email rmanhimanzi@yahoo.com