Opinion

Practical changes to the Companies and Other Business Entities Act

FUNGAI CHIMWAMUROMBE AND PLAXEDES TAVIRAI

The new Companies and Other Business Entities Act [Chapter 24:31] (hereinafter referred to COBE) came into effect on February 13 2020, repealing and replacing the Companies Act [Chapter 24:03], (hereinafter referred to as the old companies act). The changes to the old Companies Act brought various changes and amongst them is a change in the documents that are to be submitted upon company registration and any other documents relating to companies.

1.      Re- registration of registered entities under the repealed Companies Act [Chapter24:03]

In terms of section 303(9) of COBE, companies and private business corporations registered under the repealed Companies Act [Chapter 24:03] were required to re-register in terms of COBE within twelve months of the effective date which was the 13th of February 2020. The objective of this provision is to compile a new register in terms of COBE and to remove defunct registered entities from the register. 

However, it should be noted that the practicalities of this exercise have not been addressed, such that the re-registration exercise has not taken place yet. Indeed whilst fees for other processes were gazetted in terms of the Companies and Other Business Entities (Fees) Regulations 2020, there was no provision for the re-registration of companies and private business corporations. 

Registered business entities should live to the requirements of re-registration and that the incumbent risk of non-compliance would result in such entities being struck off from the companies register.   

2.      Directorship

The list of directorship and secretaries under the old Companies Act was submitted to the Registrar of companies using the CR14 form. Under the new act which is the Companies and Other Business Entities Act, directorship and secretarial posts are now submitted in CR6 format. In terms of the fees regulations, a notice of change of directors and secretaries on the CR6 is prescribed at ZWL$200-00.

3.      Share capital

Upon registration of a company under the repealed Companies Act, the shares of the company were issued at a fixed value and share capital/ nominal capital used to be presented in form CR2. 

However, the new Act brought among other changes such as the issuance of shares at non-par value rather than shares with a fixed value together with provisions for the valuation of non-par value shares. Share capital, unlike in the old act where it was presented in form CR2, is now shown in form CR22. 

A statement by a company in respect of the amount or rate to apply to be paid for shares in a company by way of commission is prescribed in terms of the COBE (Fees) Regulations as ZWL$200-00.

4.      Increase in share capital or authorised share nominal capital

Where a company      has consolidated and divided its share capital into shares of larger amount than its existing shares, or converted any shares into stock, reconverted      stock    into shares, subdivided its shares or any of them, redeemed any redeemable preference shares, it shall within one month after so doing, give notice thereof to the Registrar, specifying, the shares consolidated, divided, converted, subdivided, redeemed or cancelled or the stock reconverted.  

This notice of the increase was submitted in form CR5 but however under the new Act the notice of increases in share capital is now submitted to the Registrar in form CR10. Under the COBE (Fees) Regulations 2020, there is no prescribed for the notice of increase in share capital.         

5.      Notice of conversion, consolidation and split of share capital

Notice to Registrar of consolidation of share capital, conversion of            shares into stock, or if the company has consolidated and divided its share capital into shares of larger amount      than     its existing       shares, or converted any shares into stock, or  reconverted stock into shares, or  redeemed  any redeemable preference shares, cancelled any shares, otherwise than in connection with a reduction of share capital within one month after so doing, it shall give notice thereof to the Registrar specifying, as the case may be, the shares consolidated, divided, converted, subdivided, redeemed or cancelled or the stock reconverted. 

Under the old Companies Act, this notice of conversion, consolidation and split of share would be submitted to the Registrar in form CR4. However under the Companies and Other Business Entities Act, the notice for consolidation, conversion and split of share capital is now submitted in form CR9. The COBE (Fees) Regulation 2020 has set the fee for the notice conversion, consolidation and split of share capital at ZWL$ 200-00.

6.      Return of allotment

Whenever a company makes any allotment of its   shares, it is required to lodge with     the Registrar within one month,  the return of the allotments, stating the number and nominal amount of the shares comprised in the allotment, the names and addresses of         the allots and the amount, if any, paid or due and payable on each share.  

Return of allotments would be filed with the Registrar in form CR2 under the old Companies Act. The returns of allotments under the new Companies Act, the return of allotment are filed with the Registrar in form CR11. The COBE (Fees) Regulations have set the fee for the notice under the new form CR11 as ZWL$ 200-00.

7.      Name search

Where a company intends to be registered, the law requires that they make an application to the Registrar to check the availability of the name. Under the old Companies Act, this application would be submitted to the Registrar in form CR21. The form has since changed with the coming of the new act into place and application for search of the availability of the name is now submitted under form CR2. A name search will cost ZWL80-00 in terms of the gazetted COBE  (Fees) Regulations 2020.

8.      Statement by directors for strike off and voluntary winding up.

In the event where a company chooses to strike off (removal from the companies register by the Registrar) the form which was used (CR16) was supposed to be signed by all directors. 

The new Companies and other business entities Act provides that where a company wish to be struck off or where it has exercised its right of voluntary winding up, that application should be submitted in form CR14 which is to be signed by all directors. The aforementioned notice will attract a fee of ZWL 200-00 in terms of the COBE (Fees) Regulations 2020.  

9.      Special resolutions 

Under the old companies act, all special resolutions passed by the company at the general meeting would be submitted to the Registrar of companies for registration. In the old Companies Act, the special resolution was to be submitted in form CR11 together with the contents of the special resolution. 

Under the Companies and other Business entities Act, it is still a mandatory requirement to submit special resolutions passed by the company but the form has changed. Special resolutions are to be submitted in form CR8. The filing of a special resolution with the Registrar of Companies will attract a fee of ZWL 200-00. 

10.  Notice of situation and postal address of a company’s registered office or of a foreign company’s principal place of business and of any change thereto.

Notice of situation and postal address of a company’s registered office or of a foreign company’s principal place of business and of any change thereto used to be submitted to the Registrar of companies in form CR6.  

Under the new Act, the notice is now submitted to the Registrar using form CR5. The notice of situation and postal address of a company’s registered office will attract a charge of ZWL 200-00, being the fee prescribed in the COBE (Fees) Regulations 2020.

11.  Conversion from a PBC to a company

When a Private Business Corporation intends to convert to a company, under the old Companies Act, they would make an application for conversion to the Registrar in from CR22. Under the new Act, that same application is now done in form CR15. An application for the conversion of a PBC to a private company will incur a cost of ZWL 200-00 as prescribed under COBE (Fees) Regulations 2020. 

Fungai Chimwamurombe is a registered legal practitioner and Senior Partner at Chimwamurombe Legal Practice and can be contacted for feedback at fungai@zenaslegalpractice.com  and WhatsApp 0772 997 889. Plaxedes Tavirai is a legal intern at Chimwamurombe Legal Practice and can be contacted on plaxedes@zenaslegalpractice.com

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