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Public Entities Corporate Governance Bill, H.B 5, 2017,

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H.B. 5, 2017.]

 

 


 

 

Public EntitiEs corporatE GovErnancE

 

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PUBLIC ENTITIES CORPORATE GOVERNANCE BILL, 2017

 

Memorandum

This Bill will provide for the corporate governance of public entities, that is to say statutory bodies (parastatals), certain constitutional Commissions, and commercial entities that are owned or controlled by the Government.

In this context, “corporate governance” means the rules, practices and processes by which an organisation is directed and controlled. Corporate governance essentially involves achieving a fair balance between the interests of the various stakeholders in an organisation, including its shareholders, management, customers, suppliers, financiers and the general community. Corporate governance encompasses most aspects of the organisation’s management, from action plans and internal controls to performance measurement and corporate disclosure. It is not directly concerned with the quality of an organisation’s services, but it has an indirect effect on them because the more efficient an organisation’s management is, the more likely it is that the organisation will deliver good services. Hence this Bill, by improving the internal management structures of parastatals and other public entities, should lead to an improvement in their performance.

The Bill will apply only to public entities, not to organisations in the private sector. The management of private companies, which are usually small organisations, is the concern of their shareholders. Public companies, which are listed on exchanges such as the Zimbabwe Stock Exchange, are governed by exchange listing rules and by codes of corporate governance laid down by the Securities and Exchange Commission of Zimbabwe. Any changes to the current rules of corporate governance applicable to companies (other than government-owned companies) will be done by amendments to the Companies Act and the Securities and Exchange Act, not through this Bill.

In summary, the Bill will do the following:

 

                          It will underline the responsibility of line Ministries (those Ministries whose Minister is responsible for any public entity) to more effectively monitor, supervise and oversee the management operations of public entities to ensure strict compliance by them with the provisions of this Bill, without, however, infringing on the autonomy of public entities.

                          It outlines the role and functions of the Corporate Governance Unit within the Office of the President and Cabinet (OPC) as a centralised advisory, oversight and support system for line Ministries with regard to the implementation of this Bill.

                          It will introduce some consistency in the conditions of service of members of boards of public entities. In particular, it will require members to enter into performance contracts with the Government and will allow their salaries and allowances to be limited.

                          Similarly, it will regulate the conditions of service of chief executive officers and other senior staff members of public entities and will allow their remuneration to be limited.

                          It will give effect to the National Code on Corporate Governance Zimbabwe (Zimcode) to the extent that it applies to public entities.

In more detail, the provisions of the Bill are as follows:


 

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Part I (Preliminary)

This Part deals with preliminary matters.

Clause 1 sets out the Bill’s short title and will provide for the Bill to come  into

operation on a date to be notified by the President in the Gazette.

Clause 2 defines terms that are used in the Bill. The term “public entity” is defined widely to include organisations of all kinds that are owned or controlled by the Government: constitutional Commissions, parastatals, companies and firms. The word “Minister” is defined to mean the Vice-President or Minister to whom the President may assign the Bill; the term “line Minister” means the Minister invested by the President or an enabling instrument with the responsibility for administering a public entity.

Clause 3 will exclude government Ministries and departments from the application of the Bill. Subject to that, the Bill will override anything to the contrary in any other Act or legal instrument that establishes or regulates public entities.

Clause 4 will make it clear that the Bill will not affect the independence of constitutional Commissions, nor the way in which their members can be appointed and dismissed.

 

Part II (Corporate Governance Unit)

This Part recognises the continued existence within the Office of the President and Cabinet of the Corporate Governance Unit, which was established prior to this Bill in accordance with the law relating to the Civil Service. This Part also sets out its functions.

In terms of clause 5 the Unit will be a semi-autonomous department of the Office of the President and Cabinet and will be headed by a civil servant of Permanent Secretary grade, supported by a Civil Service Commission approved staff structure filled by civil servants.

The Unit’s functions are set out in clause 6 and will include the establishment and maintenance of a database of potential board members; the collection and storage of corporate governance related information for all public entities; the coordination and oversight of board induction programmes to be implemented by all public entities; and general oversight, in collaboration and consultation with line ministries, of compliance with the provisions of this Bill.

Clause 7 will make the head of the Unit responsible for managing the Unit and its staff.

The head of the Unit, with the approval of the head of the Ministry responsible for this Bill, will be able to engage experts as consultants (clause 8).

Clause 9 will give the Minister – i.e. the Minister or Vice-President to whom the President assigns administration of the Bill – power to give policy directives to the head of the Unit.

Under clause 10 the Unit will have to submit annual reports to the Minister, who will lay them before the National Assembly. The reports will have to mention cases where this Bill has been breached and the breaches have not been rectified.

 

Part III (Appointment, tenure and conditions of service of boards of public entities)

Clause 11 will regulate appointments members to boards of public entities. Under the clause:

                          Members will not be allowed to serve for more than two four-year terms, a total of eight years in all.


 

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                          In the compilation of lists of proposed board members for all public entities to be submitted by the line Minister for approval by the President, line Ministries will be able to benefit from (but not be limited to) the database of potential board members established and maintained by the Unit.

             Persons will have to be appropriately qualified and experienced before they can be appointed to a board, and board members will have to have an appropriate diversity of skills.

                          There will have to be equal numbers of men and women on all boards, and Zimbabwe’s regions will also have to be equitably represented on them.

                          No one will be allowed to serve on more than two boards at a time (though if a person is on the board of a public entity and also on the board of its subsidiary, that will count as membership of only one board).

                          Persons in the full-time employment of the State will be eligible for appointment to a board so long as they do not form a majority on the board. Permanent Secretaries will not however be eligible for appointment.

             Vacancies on a board will have to be filled within 90 days.

 

Responsible line Ministers will have to ensure that the Unit is notified of all board appointments and that lists showing the names of all board members for all the public entities falling within their portfolios are available for public inspection at their Ministries. In addition, the Unit will ensure that the appointments are notified in the Gazette.

Under clause 12, the Minister responsible for this Bill will be able to formulate standard sitting allowances, provisions for out-of-pocket expenses and other payments or benefits compatible with service as a non-executive board member.

Under clause 13, line Ministers will be required to observe the principles of transparency with respect to fixing the remuneration of executive board members set out in the Third Schedule; also, the Minister will be able to formulate model conditions of service for executive board members of public entities, and line Ministers will generally have to follow those model conditions when fixing conditions of service for executive members of boards under their control.

Clause 14 will empower the Minister and the Minister of Finance, in consultation with line Ministers, to fix maximum amounts payable to board members of public entities. No board members will be allowed to receive more than those maximum amounts.

Clause 15 will permit resignations of board members to be probed by the head of the line Ministry, in order to find out if the resignations were prompted by any defects in the corporate governance of the public entities concerned.

Clause 16 will give board members of public entities some security of tenure by prohibiting their dismissal for anything other than misconduct, disqualification, failure to comply with their conditions of service or their governance or performance contracts, or if they fail to attend three consecutive board meetings. Disputes over whether a particular dismissal is justified will be referred to the Cabinet (subclause (4)).

Part IV (Appointment and conditions of service of senior staff of public entities)

This Part deals with the appointment and conditions of service of chief executive

officers and other senior staff of public entities.

Under clause 17, chief executive officers will be appointed for maximum terms of five years, renewable once only, and their tenure will be reviewed annually by their boards to ensure satisfactory performance. They will be appointed after a    selection


 

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process involving public advertisements, interviews and approval by the line Minister with the consent of the President.

Clause 18 deals with the appointment of senior staff members of public entities, other than chief executive officers. When appointing them their boards will have to maintain an equal representation of men and women and a fair regional balance. The head of the line Ministry concerned will keep the Unit informed of the names of all appointees, together with their qualifications and the criteria on which they were appointed.

In terms of clause 19, boards of public entities will be required to observe the principles of transparency with respect to fixing the remuneration of chief executive officers and other senior staff members set out in the Third Schedule; also, the conditions of service of chief executive officers and other senior staff members of public entities will have to be fixed at full meetings of the entities’ boards, and will have to specify any terminal benefits the officers will be entitled to. The Minister will have power to formulate model conditions of service for such officers, and boards will generally have to follow those model conditions when fixing conditions of service for their staff.

Clause 20 will empower the Minister, with the approval of the Minister of Finance, and after consulting line Ministers, to fix maximum amounts payable to chief executive officers and other senior staff members of public entities. No such staff members will be allowed to receive more than those maximum amounts.

Clause 21 will restrict the terminal benefits paid to senior staff of public entities on their resignation or retirement: only such benefits as have been approved by the responsible Minister and the Minister of Finance will be payable.

Part V (Strategic plans and performance contracts)

Clause 22 will oblige boards of public entities to draw up strategic plans setting objectives and priorities for the public entities within their portfolios and stating how their entities will achieve them. The clause sets out how the strategic plans are to be drawn up and what must be included in them. Plans will have to be laid before the National Assembly. Public entities will have to allow the public to inspect their plans, which will be kept available for inspection at their offices.

Clause 23 will require boards of public entities to enter into performance contracts with their chief executive officers and senior members of their staff. Copies of such performance contracts will be lodged with the relevant line Ministry and with the Unit, together with annual performance assessments conducted by the board concerned. Senior staff members will not be allowed to assume office until they have signed performance contracts.

Clause 24 will require boards of public entities to annually review their current strategic plans and current performance contracts with their senior staff members, and to report the results of its review to the line Minister.

Clause 25 will oblige line Ministers to enter into performance contracts with the board members of the public entities within their portfolios.

Part VI (Codes of good governance)

Under this Part, the boards of all public entities will have to adhere to the Good Corporate Governance Code set out in the First Schedule, and to such of the principles of good governance set out in the Second Schedule as are applicable to the public entity concerned. Also, boards must prepare board charters, and chief executive officers codes of ethics for the entity, in accordance with the principles set forth in clause 27. Approval of board charters and codes of ethics shall rest with the line Minister (clause 28). Amendments of board charters and codes of ethics will be made according to the same procedure as applied to their formulation (clause 29).


 

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Public entities will have to keep their board charters and codes of ethics available

for inspection by the public at their offices (clause 30).

The monitoring of compliance with Good Corporate Governance Code, board charters and codes of ethics is provided for in clause 31.

Clause 32 will make it clear that public entities which are listed companies must comply with any codes applicable to the companies under the Securities and Exchange Act or any listing rules to the extent that these mandate more stringent standards than those provided for under Part VI.

Part VII (Conduct of business by boards of public entities)

This Part sets out duties of boards of public entities in regard to the holding of meetings and the auditing of accounts.

Clause 33 will require boards to meet at least once every three months and to convene an annual meeting of stakeholders once a year to be known as the “annual general meeting”. They will also have to meet their line Ministers at least twice a year. If the membership of a board falls below a quorum the board will be allowed to meet for up to 90 days pending the appointment of new members, but any decisions reached by the board during that time will be subject to ratification when a quorum has been formed (subclause (2)).

Clause 34 will require members of boards and senior staff of public entities to declare conflicts of interest and prohibit them from taking part in their entities’ business where there is such a conflict. Failure to do so will result in the member or senior staff member ceasing to hold office as such.

Clause 35 will require boards to keep proper minutes of their meetings, recording the decisions taken at the meetings. The minutes will have to be signed by the chairperson of the meeting or of the next meeting and sent to the responsible line Ministry and the Unit.

Under clause 36, every public entity will have to have its accounts audited annually by the Auditor-General or a registered public auditor appointed on the recommendation of the board’s audit committee. The auditor will have to submit the audit report to the line Minister and the Minister responsible for this Act as well as the board.

Part VIII (General)

This Part deals with miscellaneous matters.

Members of boards and of senior will have to declare their assets upon their appointment and upon ceasing to be members of the board or of the senior staff, and also at other times if so required (clause 37). Failure to do so will result in the member ceasing to hold office as such.

Clause 38 sets forth the basic responsibilities of State appointees to boards of public commercial entities, joint venture entities and subsidiaries of either of the foregoing.

Clauses 39 and 40 provide for the development of implementing manuals to guide line Ministries on the implementation of this Bill, and for the corporate governance rating of public entities.

Clause 41 will give line Ministers the power to conduct special investigations into public entities within their purview. The powers of investigators appointed by the line Ministry, and the way in which their investigations are conducted, are set forth in clause 42.

Clause 43 will oblige heads of line Ministries to notify the head of the Unit of the formation, dissolution and material change in the ownership of any public entity constituted by an enabling instrument that is not an Act of Parliament.


 

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Clause 44 will allow the Minister to exempt any public entity from any provision of the Bill, where the exemption is justified because of the small size of the entity or any unusual difficulty it may encounter in complying with the provision. There will have to be compelling reasons, however, before any such exemption can be granted.

Clause 45 will give the Minister power to make regulations that may be needed to give effect to the Bill, and under clause 45 he or she will be able to amend the Schedules to the Bill, though any such amendment will have to be advertised in the Gazette and approved by the National Assembly.

Clause 46 provides for the expeditious change of the Schedules to this Bill by means of a statutory instrument made by the Minister, which statutory instrument, however, must be approved by resolution of the National Assembly.

Clause 47 deals with savings and transitional provisions. In particular:

             Within two months after the Bill comes into force (“the commencement date”) all public entities will have to provide the Unit with particulars of their boards and senior staff, and of their salaries and conditions of service.

             If the contracts of existing board members and members of staff of public entities are renewed, the renewals will have to comply with the Bill.

             People who are chief executive officers of public entities on the commence- ment date will be permitted to continue in office until they have served for the maximum period allowed under the Bill (i.e. for five years renewable once). If they have already served that period they will cease to hold office six months after the commencement date.

             Within six months after the commencement date, boards will have to draw up strategic plans, enter into performance contracts with their senior staff and prepare codes of good governance in accordance with the Bill.

             Responsible Ministers will have six months after the commencement date within which to enter into performance contracts with board members of public entities within their portfolios.

 

First Schedule (National Code on Corporate Governance)

This Schedule sets out the provisions of Zimcode, which will be applicable to companies that are public entities.

 

Second Schedule (Principles of good corporate governance)

This Schedule sets out generally accepted principles of good corporate governance, to be incorporated into governance contracts and codes of good governance.

 

Third Schedule (Surcharge)

This Schedule provides for the fair and expeditious recovery of excess remuneration, allowances or benefits paid in violation of the maximum amounts for the same fixed under this Bill.

 

 

 

 

 

 

 

 

 

 

 


 

PUBLIC ENTITIES CORPORATE GOVERNANCE BILL, 2017

 


 

 

 

 

 

Section


ARRANGEMENT OF SECTIONS PART I

Preliminary


1.    Short title and date of commencement.

2.    Interpretation.

3.    Application of Act.

4.  Act not to affect composition or independence of constitutional Commissions.

PART II

Corporate GovernanCe Unit

5.    Corporate Governance Unit.

6.    Functions of Unit.

7.    Functions of head of Unit.

8.    Head of Unit may engage consultants.

9.  Minister may give Unit policy directions.

10.    Annual reports of Unit.

PART III

appointment, Tenure and Conditions of ServiCe of Boards of PubliC Entities

11.    Appointment of boards of public entities.

12.    Remuneration of non-executive members of public entities

13.    Conditions of service of executive members of public entities.

14.  Restriction on remuneration of board members of public entities.

15.    Resignation of board members of public entities.

16.    Dismissal of board members of public entities.

 

PART IV

appointment  and  Conditions  of  ServiCe of  Senior Staff  of  PubliC Entities

17.  Appointment of chief executive officers of public entities.

18.  Appointment of senior staff of public entities.

19.  Conditions of service of senior staff of public entities.

20.  Restriction on remuneration of senior staff of public entities.

21.  Restriction on terminal benefits payable to executive members and senior  staff

of public entities.

PART V

strategiC Plans and PerformanCe ContraCts

22.    Strategic plans of public entities.

23.    Performance contracts with senior staff of public entities.

24.       Review and monitoring of compliance with strategic plans and performance

contracts.

25.    Performance contracts with board members of public entities.


 

PART VI

board Charters, Codes of EthiCs and National Code of Corporate GovernanCe

Section

26.    Public entities to honour Good Corporate Governance Code and prepare board charters and codes of ethics.

27.    Principles and contents of board charters and codes of ethics.

28.    Approval of board charters and codes of ethics.

29.  Amendment of board charters and codes of ethics.

30.    Board charters and codes of ethics to be available for inspection.

31.    Monitoring of compliance with Good Corporate Governance Code, board charters and codes of ethics.

32.    Application of other codes of corporate governance to public entities.

 

PART VII

ConduCt  of  Business  by Boards  of  PubliC Entities

33.    Meetings of boards of public entities.

34.  Conflicts of interest on part of board members and staff of public entities.

35.    Minutes of meetings of boards of public entities.

36.    Audit of accounts of public entities.

 

PART VIII

 

general

37.    Declaration of assets by board members and senior staff of public entities.

38.    Responsibilities of State appointees to boards of certain public entities

39.    Implementing manuals.

40.    Corporate governance rating of public entities

41.    Special investigations.

42.    Powers of special investigators.

43.    Notification of establishment and dissolution of public entities

44.    Exemptions.

45.    Regulations.

46.    Amendment of Schedules.

47.    Savings and transitional provisions.

FIRST SCHEDULE: National Code on Corporate Governance Zimbabwe. SECOND SCHEDULE: Principles of Good Corporate Governance for Entities

Other Than Companies.

THIRD SCHEDULE: Surcharges.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BILL

 

To provide for the governance of public entities in compliance with Chapter 9 of the Constitution; to provide a uniform mechanism for regulating the conditions of service of members of public entities and their senior

5              employees; and to provide for matters connected with or incidental to the foregoing.

WHEREAS section 194 of the Constitution provides as follows, in regard to

public entities:

(1)  Public administration in all tiers of government, including institutions

10 and agencies of the State, and government-controlled entities and other public enterprises, must be governed by the democratic values and principles enshrined in this Constitution, including the following principles—

(a)                  a high standard of professional ethics must be promoted and maintained;

                    (b)    efficient and economical use of resources must be promoted;

15                        (c)     public administration must be development-oriented;

(d)                  services must be provided impartially, fairly, equitably and without bias;

(e)                   people’s needs must be responded to within a reasonable time, and the public must be encouraged to participate in policy-making;

(f)                     public administration must be accountable to Parliament and to the people;

20                        (g)     institutions and agencies of government at all levels must co-operate with each other;

(h)                  transparency must be fostered by providing the public with timely, accessible and accurate information;

H.B. 5, 2017.]

 

Printed by the Government Printer, Harare


 

(i)                     good human-resource management and career-development practices, to maximise human potential, must be cultivated;

(j)                     public administration must be broadly representative of the diverse communities of Zimbabwe;

(k)                   employment, training and advancement practices must be based on merit,       5

ability, objectivity, fairness, equality of men and women and the inclusion of persons with disabilities;

and the State must take measures, including legislative measures, to promote these values and principles.

(2) Appointments to offices in all tiers of government, including government    10 institutions and agencies and government-controlled entities and other public enterprises, must be made primarily on the basis of merit.

AND WHEREAS section 195(1) of the Constitution makes the following provision

for State-controlled commercial entities:

(1) Companies and other commercial entities owned or wholly controlled     15 by the State must, in addition to complying with the principles set out in section   194(1), conduct their operations so as to maintain commercial viability and abide

by generally accepted standards of good corporate governance.

AND WHEREAS section 197 of the Constitution permits an Act of Parliament to limit the terms of office of chief executive officers or heads of government-controlled                                     20 entities and public enterprises;

AND WHEREAS section 198 of the Constitution requires an Act of Parliament to provide measures for the enforcement of the above provisions, including measures specifying the standards of good corporate governance to be observed by government-

controlled entities and other commercial entities owned or wholly controlled   by the   25

State, and measures for the disciplining of persons who contravene those standards;

AND WHEREAS section 316 of the Constitution requires an Act of Parliament to provide for the competent and effective operation of statutory bodies and, in particular, to ensure that their chief executive officers serve for limited periods whose renewal is

dependent on the efficient performance of their duties:                                                             30

NOW, THEREFORE, be it enacted by the Parliament and the President of

Zimbabwe as follows:–

PART I

Preliminary

1    Short title and date of commencement                                                                              35

(1)  This Act may be cited as the Public Entities Corporate Governance Act [Chapter 10:31].

(2) This Act shall come into operation on a date to be fixed by the  President

by statutory instrument.

 

2    Interpretation                                                                                                                               35

(1)      In this Act—

“annual general meeting”, in relation to a public entity, means an annual meeting of the stakeholders of the entity referred to in section 33(3);

“associate”, in relation to a person, has the meaning given to it by subsections

(5), (6) and (7);                                                                                                              40


 

“board”, in relation to a public entity, means the members of the governing body of the entity, by whatever name called, holding positions comparable to those of the directors of a company;

“board charter” is the document which, in addition to outlining the mission and

5                         values of the public entity for which a board is responsible, sets forth how board members will discharge their duties and the standards of conduct to which they will be held in that capacity;

“board member representing minority interests”, in relation to a company or other entity which is government-controlled but in which one or   more

10                         other persons have interests, means a member of the entity’s board representing those other persons;

“chief executive officer”, in relation to a public entity, means the person who, either alone or jointly with one or more other persons, is responsible under the direct authority of the entity’s board for the conduct of the   entity’s

15                         activities;

“code of ethics”, in relation to a public entity, is the document outlining the mission and values of the public entity, how employees of the entity are supposed to discharge their duties and resolve problems consistently with the entity’s values, and the standards of conduct to which employees will

20                         be held towards each other and the public in their capacity as employees; “constitutional Commission” means a  Commission established by    the

Constitution;

“enabling instrument”, with reference to any public entity, means the instrument (whether or not embodied in a single document) that establishes the entity

25                         and governs its functions, powers and procedure, and with reference to—

(a)  a constitutional Commission, includes the Constitution and any enactment governing the Commission’s functions and procedure;

(b)  a statutory body other than a constitutional Commission, means the enactment by or under which that body is established;

30                          (c)   a company, means the memorandum and articles of association or other foundational document establishing the company that is filed with the Companies Registry in accordance with Companies Act [Chapter 24:03];

(d)      an entity established under an agreement for a partnership or joint

35                                  venture between the State and any other person, that is declared in terms of subsection (2) to be a public entity, means the agreement establishing that entity;

(e)      an entity declared in terms of subsection (2) to be a public entity other than an one described in the foregoing paragraphs, means the

40                                   operative, constitutive or foundational document of that entity; “executive member”, in relation to the board of a public entity, refers either to

a member of the board who is employed by the entity in a managerial or

technical capacity;

“fixed date” means the date fixed in terms of section 1(2) as the date of

45                         commencement of this Act;

“Good Corporate Governance Code” means the National Code on Corporate Governance set forth in the First Schedule;

“head of the line Ministry” means the Secretary of the line Ministry; “head of the Unit ” means the head of the Unit referred to in section 5(2);

“independent member”, in relation to the board of a public entity, means a board member who does not have a pecuniary or material relationship with the entity or an associated person of the entity;


 

“line Minister”, in relation to—

(a)                 a constitutional Commission, means the Minister or Vice- President responsible for the administration of the Act setting out the Commission’s functions and additionally, or alternatively,  its

procedures;                                                                                                              5

(b)                 a statutory body, means the Minister or Vice-President responsible for the administration of the Act governing the establishment of the body;

(c)   a public entity other than a constitutional Commission or a statutory body—             10

(i)        means the Minister or Vice-President who on behalf of the State holds the shares in or otherwise exercises control over the entity; or

(ii)      where a public officer other than a Minister or Vice-President

holds on behalf of the State the shares in or otherwise exercises    15

control over the entity, means the Minister or Vice-President responsible for the administration of the enabling instrument under which the public officer exercises his or her functions;

“Minister” means the Minister or Vice-President to whom the President may,

from time to time, assign the administration of this Act;                                  20

“near relative”, in relation to a member of a board of a public entity or senior staff member of a public entity, means the member’s spouse, child, parent, brother or sister;

“non-executive member”, in relation to the board of a public entity, means  a

member of the board who does not hold a salaried office in   the entity,    25

whether or not he or she is an independent member;

“performance contract” means a performance contract entered into in terms of Part V with a board member of a public entity or with a senior staff member of such an entity;

“public commercial entity” means a company or other commercial entity which   30

is owned or controlled by the State or by a person on behalf of the State;

“public entity” means an entity whose operations or activities are substantially controlled by the State or by a person on behalf of the State, whether  through ownership of a majority of shares in the entity or otherwise, and includes—                                                                                    35

(a)      a statutory body; and

(b)      a public commercial entity; and

(c)      an entity established under an agreement for a partnership or joint venture between the State and any other person, that is declared in terms of subsection (2) to be a public entity; and    40

(d)      any subsidiary of an entity referred to in paragraph (a), (b) or (c); “regulatory entity” means a public entity established to regulate or supervise

a particular area of activity in the public interest;

“Secretary” means the Secretary of the Ministry, or head of the Department or

Office, as the case may be, for which the Minister is responsible;                  45

“senior staff member”, in relation to a public entity, means the entity’s chief executive officer and such other members of its staff as may be prescribed or as may be specified by the Unit by written notice to the entity concerned;

“statutory body” means—

(a)      a constitutional Commission; or                                                                     50

 

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(b)      a—

(i)   body corporate established directly by or under an Act for

special purposes specified in that Act; or

(ii)  board, committee or similar entity which is established directly

5                                                 by an Act for special purposes specified in that Act;

whose members consist wholly or mainly of persons appointed  by the President, a Vice-President, a Minister, a Deputy Minister, another statutory body or by a constitutional Commission;

“strategic plan” means a strategic plan of a public entity drawn up in terms of

10                             section 22;

“Unit” means the Corporate Governance Unit referred to in section 5(1).

(2)     The Minister may, at the request of or in consultation with the line Minister concerned, by notice in the Gazette, specify any entity established under an agreement for a partnership or joint venture between the State and any other person to be a public

15     entity for the purpose of this Act.

(3) Where a senior staff member of a public entity is not appointed by the board of the entity, any reference in this Act to the board in regard to the staff member’s appointment, discharge or conditions of service shall be construed as a reference to the person or body that appoints the staff member.

20                   (4) Where this Act requires any document to be kept available for inspection

at—

(a)   the office of a line Ministry, a public entity or any other entity, the document shall be kept at the entity’s head office and any provincial office and at any of the entity’s other offices where members of the public might

25                             reasonably expect to find the document;

(b)   the office of the Unit, the document may be kept at that office or at any other office or place notified by the Minister by notice in the Gazette;

and the document shall also be kept available in electronic form for inspection by members of the public on the website of the entity or the Unit or on such other website

30     as may be prescribed.

(5)   Where a person, other than an employee, acts in accordance with the direc- tions, requests, suggestions or wishes of another person, whether or not the persons are in a business relationship and whether or not those directions, requests, suggestions or wishes are communicated to the first-mentioned person, both persons shall be treated

35     as associates of each other for the purposes of this Act.

(6)    Without limiting the generality of subsection (5), the following shall   be

treated as a person’s associate—

(a) a near relative of the person, unless neither person acts in accordance with the directions, requests, suggestions or wishes of the other;

40                   (b)   a partner of the person, unless neither person acts in accordance with the directions, requests, suggestions or wishes of the other;

(c)  a partnership in which the person is a partner, if the person, either alone or together with one or more associates, controls fifty per centum or more of the rights to the partnership’s income or capital;

45                   (d)   the trustee of a trust under which the person, or an associate of the person,

benefits or may benefit;

(e)       a company which is controlled by the person, either alone or together with one or more associates;


 

(f)        where the person is a partnership, a partner in the partnership who, either alone or together with one or more associates, controls fifty per centum or more of the rights to the partnership’s income or capital;

(g)   where the person is the trustee of a trust, any other person who benefits

or may benefit under the trust;                                                                                    5

(h)       where the person is a company—

(i)      a person who, either alone or together with one or more associates, controls the company; or

(ii)     another company which is controlled by a person referred to in sub- paragraph (i), either alone or together with one or more associates.                                         10

(7) For the purposes of subsection (6), a person shall be deemed to control   a company if the person, either alone or together with one or more associates or nominees—

(a)    controls the majority of the voting rights attaching to all classes of shares

in the company, whether directly or through one or more interposed     15

companies, partnerships or trusts; or

(b)   has any direct or indirect influence that, if exercised, results in him or her

or his or her associates or nominees factually controlling the company.

 

3         Application of Act

(1)          Subject to  subsection (2), this Act  shall apply to     public entities         20

notwithstanding anything to the contrary in their enabling instruments.

(2)     This Act shall not apply to Ministries and departments of the government.

 

4         Act not to affect composition or independence of constitutional Commissions

This Act shall not be construed so as to—                                                                             25

(a)                 affect the composition of any constitutional Commission or the appointment of members to or the dismissal of members from such a Commission;  or

(b)                compromise the independence conferred by the Constitution on any constitutional Commission or other body.                                                                                                                      30

 

PART II

Corporate GovernanCe Unit

 

5         Corporate Governance Unit

(1)      The Corporate Governance Unit that was established in accordance  with

the law relating to the Civil Service as a department within the Office of the President  35

and Cabinet shall continue in existence subject to this Act.

(2)      The Unit shall be headed by a person of the grade of Permanent Secretary and shall consist of such other members of staff as may be necessary for the performance of its functions, whose offices shall be public offices and form part of the Civil Service.

 

6         Functions of Unit                                                                                                                       40

(1)      The functions of the Unit shall be—

(a)  to provide an advisory and centralised support mechanism for line Ministries to ensure strict compliance by all public entities with the applicable provisions of this Act; and


 

(b)  to advise line Ministries with regard to the regular evaluation of the performance of public entities and their boards and employees; and

(c)  to advise line Ministries with regard to the drawing up of performance contracts.

5                                 (i)  between the line Ministries and the boards of all public entities under their purview; and

(ii)   between boards of all public entities and their chief executive officers

and other senior members of management;

and

10                     (d)    to oversee the discharge by line Ministries of their responsibility to monitor compliance by boards and senior management with the performance contracts referred to in paragraph (c); and

(e)                 to establish and maintain up to date a comprehensive directory or database accessible to all line Ministers and boards that will enable them to identify

15                               suitably qualified candidates for appointment to boards of public entities;

(f)                  to advise on the provision by line Ministries of programmes for the professional development of board members and senior management of all public entities under their purview, including board induction programmes and corporate governance training for board members, chief  executive

20                               officers and other senior members of management.

(2)      In the exercise of its functions, the Unit may differentiate between public entities according to whether they are—

(a)       regulatory entities; or

(b)       commercial entities; or

25                     (c)    non-commercial entities; or

or on any other basis determined by the Unit.

 

7    Functions of head of Unit

(1)  Subject to this Act and any directions given to him or her by the Minister through the Secretary, the head of the Unit shall be responsible for directing, managing

30      and controlling the activities of the Unit and its staff, and ensuring that the Unit carries

out, efficiently and effectively, its functions under this Act.

(2) With the approval of the Secretary, the head of the Unit may delegate to any member of the Unit’s staff any function conferred or imposed on him or her by this Act.

 

35         8    Head of the Unit may engage consultants

With the approval of the Secretary, the head of the Unit may engage or retain the services of such professionals, consultants and experts as may be necessary for the proper and effective exercise of the Unit’s functions.

 

9    Minister may give Unit policy directions

40                The Minister may, through the Office of the Chief Secretary to the President and Cabinet, give the head of the Unit such general directions relating to the policy the Unit is to observe in the exercise of its functions under this Act as the Minister considers to be necessary in the national interest.


 

10      Annual reports of Unit

(1)  The head of the Unit shall, not later than the 1st October in each year,     submit to the Minister, through the Office of the Chief Secretary to the President and Cabinet, a report on the Unit’s activities during the previous calendar year, and the    report may, after is submitted to the Minister and with the leave of the Minister, also                                                                                                          5 be kept available in electronic form for inspection by members of the public on the website of the Unit.

(2)  If in the course of a year the Unit has become aware of a contravention of this Act (and in particular of any principle of good corporate governance   embodied

in the First and Second Schedules), or of a governance or performance  contract, and   10 the contravention has not been rectified by the date of completion and delivery of the Unit’s annual report, the head of the Unit shall note the contravention in the report (conversely, if the contravention is rectified before such date the report must note the rectification accordingly).

(3)  The Minister shall lay a copy of every report submitted to him or   her in    15

terms of subsection (1) before the National Assembly on one of the thirty days on which the Assembly next sits after he or she received it.

 

PART III

appointment, Tenure and Conditions of ServiCe of Boards of PubliC Entities

11     Appointment of boards of public entities                                                                       20

(1) Whenever a line Minister appoints a member of the board of a public entity, that Minister shall comply with this section as well as the requirements of the entity’s enabling instrument:

Provided that this section shall prevail over the enabling instrument to the     extent of any inconsistency.                                                                                                                                                                     25

(2)  No person shall be appointed as a member of the board of a public entity for a term longer than four years, and the appointment may be renewed for only one further such term.

(3)  No person shall be re-appointed to a board if he or she has already served

on that board for one or more periods, whether consecutive or not, amounting  in the   30

aggregate to eight years.

(4) A person shall not be appointed to the board of a public entity if he or she

is a member of two other such boards:

Provided that for the purposes of this subsection, a person who is a  member

of the boards of—                                                                                                                                  35

(a)       a public entity that owns or controls another such entity; and

(b)       the public entity that is owned or controlled by the entity referred to in paragraph (a);

shall be regarded as being a member of only one board.

(5) Subject to the Constitution and to any enactment governing the conditions    40

of service of persons in the full-time employment of the State, such persons may be appointed to the board of a public entity:

Provided that—

(i)        such persons shall not form a majority of the members appointed to any

such board;                                                                                                                      45


 

(ii)      no permanent secretary of a line or other Ministry shall be appointed to

or hold office as a member of any such board.

(6) Members of boards of public entities shall be appointed for their knowledge

of or experience in administration, management or any other field which is relevant to

5       the operation and management of the public entities concerned.

(7) A line Minister shall ensure that, so far as practicable—

(a)                 there are equal numbers of men and women on the board of every public entity for which he or she is responsible; and

(b)                all Zimbabwe’s regions are fairly represented by the members of the board

10                                of every public entity for which he or she is the line Minister; and

(c)                 the members of the board of every public entity of which he or she is the line Minister have an appropriate diversity of skills, experience or qualifications for managing the entity, including skills, experience or qualifications in the fields of law, accountancy and one or more of   the

15                                engineering disciplines;

but all appointments to such boards shall be made primarily on the basis of merit.

(8)  Where an appropriate directory or database referred to in section 45 (“Regulations”) (2)(c) has been established, a line Minister in the process of appointing persons to the board of a public entity must, in addition to canvassing candidates outside

20      such directory or database, have due regard to the selection of candidates listed on such directory or database.

(9)  In appointing or terminating the appointment of any member of the board of a public entity, the line Minister concerned must notify the President of his or her intention to make such appointment or effect such termination, and must not act   on

25       such intention without the prior endorsement of the President.

(10)  Where the enabling instrument of a public entity requires the line Minister to appoint to the entity’s board a person who is nominated by some other person or authority, the line Minister shall appoint that person notwithstanding anything to the contrary in subsection (6), (7), (8) or (9).

30                      (11)  If the number of members of the board of a public entity falls below the

number fixed by any law as a quorum of the board—

(a)                    the chief executive officer of the public entity concerned shall immediately

notify the line Minister, in writing, of that fact; and

(b)                   the line Minister shall take steps to fill the vacancies on the board within

35                                ninety days from the date on which the board’s membership fell below a quorum, and if within that period he or she is unable to appoint sufficient members to reach a quorum of the board, he or she shall cause the Unit to be notified immediately of that fact.

(12) Where a line Minister appoints a person to the board of a public   entity,

40      he or she shall cause written notice of the appointment to be sent to the Unit without delay, specifying—

(a)                 the name, address and such other personal particulars of the appointee as the Unit may require; and

(b)   the appointee’s qualifications; and

45                      (c)    the criteria on which the appointee was chosen for appointment; and

(d)       whether the appointee is a member of the board of another public entity and, if so, which board; and

(e)       whether the appointee has complied with section 37, requiring   certain

disclosures for the purpose of avoiding conflicts of interest.


 

(13) The head of the Unit shall ensure that as soon as practicable after a person has been appointed to the board of a public entity, a notice is published in the Gazette specifying the person’s name, the board to which he or she has been appointed and the duration of the appointment.

(14)    Every line Minister shall cause one or more lists to be kept at the offices     5

of his or her Ministry, showing—

(a)       the public entities of which he or she is the line Minister; and

(b)       the particulars referred to in subsection (12) in respect of each member of the boards of the public entities referred to in paragraph (a) of this

subsection;                                                                                                                       10

and shall ensure that the list or lists are kept up to date and available for inspection by

members of the public at all reasonable times during the Ministry’s normal office hours.

 

12    Remuneration of non-executive members of public entities

(1)  For the purpose of ensuring that, so far as is practicable, the remuneration

fixed for non-executive members of public entities are—                                                          15

(a)    fair and appropriate, due regard being had to the members’ qualifications

and experience and the functions they are expected to perform; and

(b)   reasonably consistent as between different public entities;

the Minister, may formulate standard sitting allowances, provisions for out-of-pocket

expenses and other payments or benefits compatible with service as  a non-executive      20

board member, which standards shall be applicable to board members of all public entities or any particular class of such entities:

(2)   In formulating standards  of remuneration for non-executive members  of public entities in terms of subsection (1), the Minister shall consult the Minister

responsible for finance and the line Ministers concerned and shall pay due regard to—       25

(a)                 the capacity of the public entities concerned to comply with the standards; and

(b)                standards of remuneration applicable to non-executive members of boards

of well-managed companies and other entities of similar size that perform

similar functions in the private sector; and                                                            30

(c)                 the need to ensure that the public entities concerned carry out their operations economically without sacrificing their efficiency and effectiveness.

(3) The Minister shall not formulate standards of remuneration for non-executive members of public entities that are inconsistent with this Act or the enabling instruments                                         35

of the public entities concerned.

(4) The Minister may from time to time amend or replace standards of remu- neration for non-executive members of public entities, and subsections (1) to (3) shall apply, with any necessary changes, to any such amendment or replacement.

(5) As soon as possible after formulating, amending or replacing any standards     40

of remuneration non-executive members of public entities in terms of this section, the Minister shall—

(a)                 submit the standards or amendment or replacement thereof for the approval of the Cabinet; and

(b)                after obtaining Cabinet’s approval, keep a copy of the standards and of     45

any amendment or replacement—

(i)      at the Minister’s offices, where it may be inspected by members of


 

the public, free of charge, at all reasonable times during the Minis- ter’s business hours; and

(ii) available in electronic form for inspection by members of the public on the website of the Ministry and the Unit.

5                     (6) When fixing the remuneration of a non-executive member, a line Minister or public entity shall observe any standards of remuneration applicable to non-executive members of public entities formulated in terms of this section and may depart from them only with the President’s written approval, given after the President has afforded the Minister and the Minister responsible for finance a reasonable opportunity to make

10      any representations on the proposed departure.

(7) The head of the line Ministry shall without delay if approval is given to his or her line Minister by the President in accordance with subsection (6) to depart from applicable standards of remuneration for non-executive members of public entities formulated in terms of this section—

15                     (a)          inform the head of the Unit of that fact and of the particulars of the departure;  and

(b) publish notice of the departure, and the particulars of it, in the Gazette and on the website of the Ministry, within thirty days of the departure being approved.

20                     (8) Any standard of remuneration for a non-executive member of a public entity that is fixed in contravention of subsection (5) shall be void and, if the member concerned has received any remuneration or benefit as a result of that contravention, he or she must reimburse the entity concerned or return to it any property constituting the benefit.

25                     (9) Unless prompt voluntary reimbursement is made of any  remuneration or benefit resulting from a contravention of subsection (6), the non-executive member of the public entity concerned shall be subjected to a surcharge levied in accordance with the Third Schedule for the reimbursable amount.

 

13    Conditions of service of executive members of public entities

30                     (1) For the purpose of ensuring that, so far as is practicable, conditions of

service fixed for executive members of public entities are—

(a)       fair and appropriate, due regard being had to the members’ qualifications

and experience and the functions they are expected to perform; and

(b)   reasonably consistent as between different public entities;

35   the Minister, may formulate model service conditions applicable to executive members of all public entities or any particular class of such entities:

 

(2)  In formulating model service conditions in terms of subsection (1), the Minister shall consult the Minister responsible for finance and the line Ministers concerned and shall pay due regard to—

40                     (a)    the capacity of the public entities concerned to comply with the conditions; and

(b) conditions applicable to members of boards of well-managed companies and other entities of similar size that perform similar functions in the private sector; and

45                     (c)          the need to ensure that the public entities concerned carry out their operations economically without sacrificing their efficiency and effectiveness.


 

(3)   The Minister shall not formulate model service conditions that are inconsistent with this Act or the enabling instruments of the public entities concerned.

(4) The Minister may from time to time amend or replace model service

conditions, and subsections (2) to (3) shall apply, with any necessary changes, to any

such amendment or replacement.                                                                                                         5

(5) As soon as possible after formulating, amending or replacing any model service conditions in terms of this section, the Minister shall—

(a)    submit the standards or amendment or replacement thereof for the approval of the Cabinet; and

(b)                   after being notified of the Cabinet’s approval—                                                  10

(i)                 transmit a copy of the standards and of any amendment or replace- ment at the Unit’s offices, where it may be inspected by members of the public, free of charge, at all reasonable times during the Unit’s business hours; and

(ii)                  keep a copy of the standards and of any amendment or replacement      15

available in electronic form for inspection by members of the public on the website of the Unit.

(6) When fixing the service conditions of an executive member, a line Minister

or public entity shall observe any applicable model service conditions formulated in  terms of this section and may depart from them only with the President’s written ap-                                       20 proval, given after the President has afforded the Minister and the Minister responsible

for finance a reasonable opportunity to make any representations on the proposed

departure.

(7) The head of the line Ministry shall without delay if approval is given   to

his or her line Minister by the President in accordance with subsection (6)   to depart     25

from applicable model service conditions formulated in terms of this section, inform the head of the Unit of that fact and of the particulars of the departure.

(8)    Any service condition fixed in contravention of subsection (5) shall be

void, and, if the member concerned has enjoyed any service condition resulting from

that contravention, he or she must reimburse the entity concerned or return to   it any    30

property constituting the service condition.

(9)   Unless prompt voluntary reimbursement is made of any money or money’s worth of a condition of service enjoyed in contravention of subsection (5), the executive member of the public entity concerned shall be subjected to a surcharge levied in accordance with the Third Schedule for the reimbursable amount.     35

 

14    Restriction on remuneration of board members of public entities

(1)    The Minister, with the approval of the Minister responsible for finance, and after consultation with the line Minister concerned, may by notice published in the Gazette specify the amount that may be received, by way of remuneration, allowances

and other benefits, by members of the board of any public entity:                                          40

Provided that if the line Minister does not respond within thirty days from his or her receipt of a written request by the Minister seeking consultation with respect to the Minister’s proposed amounts that may be received by board members by way of remuneration, allowances and other benefits, the consultation shall be deemed to have

been undertaken and the Minister may proceed to publish the relevant notice    in the     45

Gazette.


 

(2)   An amount may be specified for the purposes of subsection (1)—

(a)    as a specific amount or value; or

(b)       as a maximum amount or value; or

(c)       by reference to any other criteria that the Minister considers appropriate.

5                     (3) Notwithstanding any other law, where a notice has been published in terms of subsection (1) fixing an amount to be received by members of any board, no such members shall be paid or given any remuneration, allowance or benefit in excess of the amount specified in the notice:

Provided that a person who, immediately before the notice was published, was

10 being paid or given a higher amount shall be entitled to be paid or given that higher amount for three months after the publication of the notice.

(4) This section does not derogate from the obligation of an accounting officer or other member of the Civil Service employed in the line Ministry to comply with section 51A (“Separation of roles of appropriate Ministries and public entities”)(3) of

15 the Public Finance Management Act [Chapter 22:19], that is, to seek clearance from Treasury before approving the remuneration or allowances of any member or employee of a public entity.

(5) Unless prompt voluntary reimbursement is made of any remuneration,

allowance or benefit resulting from a contravention of subsection (3), the member of

20 the board of the public entity concerned shall be subjected to a surcharge levied in accordance with the Third Schedule for the reimbursable amount.

 

15    Resignation of board members of public entities

(1)    Where a board member of a public entity resigns, the head of the line

Ministry shall endeavour to ascertain from the member the reasons for his or her

25      resignation, and any findings made by the head of the line Ministry in that regard shall

be communicated without delay to the Unit.

(2)    Where two or more board members of a public entity resign, whether simultaneously or within a period of one month, the line Minister may conduct an investigation in order to ascertain the reasons for their resignations, and any findings

30      made by the line Minister shall be communicated without delay to the Office of   the

President and Cabinet.

(3) An investigation in terms of subsection (2) may be conducted as a special investigation in terms of section 41 (“Special investigations”) or in such other manner as may be prescribed or as the President, through the Office of the President and Cabinet,

35      may determine.

(4) A person whose resignation is the subject of inquiry in terms of subsection

(1) or investigation in terms of subsection (2) shall answer truthfully to the best of his or her ability all questions that are put to him or her as to the reasons for his or her resignation:

40                     Provided that this subsection shall not be construed as compelling   a person to answer any question whose answer may subject him or her to any civil or criminal penalty.

(5) In any case where a head of a line Ministry or a line Minister declines to exercise his or her powers under subsection (1) or (2), the Minister responsible for

45  this Act may, with the leave of the President, do so, after the President has afforded   the line Minister a reasonable opportunity to exercise such powers or to make such representations on the matter as the line Minister thinks fit or relevant.


 

16    Dismissal of board members of public entities

(1) Notwithstanding any provision to the contrary in the enabling instrument of the entity concerned, no board member of a public entity shall be dismissed or required to vacate his or her office unless—

(a)    he or she has been guilty of conduct inconsistent with his or her membership of the entity; or                                                                                                                                               5

(b)   he or she has become disqualified for appointment to the board; or

(c)                 where he or she was appointed to the board by virtue of having a particular

qualification, he or she has ceased to have that qualification; or

(d)                he or she has failed to comply with his or her conditions of service or

with the provisions of his or her performance contract; or                              10

(e)                 he or she, whether individually or together with other members of   the board, has failed to draw up a strategic plan or to comply with its provisions or to attain any material objective set out in it; or

(f)                  he or she has been absent, without just cause and without leave of the    board or its chairperson, from three or more consecutive meetings of the                                                    15

board;

nor, in any such case, unless the line Minister has been given at least seven days’ written

notice of the intended dismissal or removal from office.

(2)  The head of the line Ministry shall promptly inform the head of the  Unit

of the dismissal or removal from office of a board member of a public entity.                  20

(3)   If the head of the Unit considers that the dismissal or removal from office of a board member of a public entity, of which he or she has been informed in terms of subsection (2) or of which he or she has become aware in the absence of such information, will be unlawful or unjustified, he or she shall without delay inform the

Minister who may, if he or she agrees with the head of the Unit, request the line Minister  25

to reconsider the matter.

(4)   If the Minister and the line Minister are unable to resolve the question of whether or not a board member should be dismissed or required to vacate his or her office, the Minister shall seek the leave of the President to refer the matter to the Cabinet

for a decision.                                                                                                                                          30

(5) This section shall not—

(a) be construed as denying a board member any remedy to which he or she may be entitled in regard to unfair or unlawful dismissal or removal from office;

(b)   apply to the removal from office of a board member representing minority      35

interests.

PART IV

appointment  and  Conditions  of  ServiCe of  Senior Staff  of  PubliC Entities

 

 17    Appointment of chief executive officers of public entities

(1) Notwithstanding any other enactment, no person shall be appointed as chief   40

executive officer of a public entity—

(a)       for a term longer than five years, which term may be renewed for  only

one further such term;

(b)       if he or she has already served as chief executive officer of the entity

for one or more periods, whether consecutive or not, amounting  in the   45

aggregate to ten years;


 

(c) unless the appointment is reviewable annually by the entity’s board and terminable if, after such a review, the board finds that the appointee’s performance has not met the standards laid down in the appointee’s performance contract or in any other instrument regulating his or her

5                                employment:

Provided that no chief executive officer shall, even if his or her performance

has met such standards, be re-appointed after the tenth annual review.

(2) Notwithstanding any other enactment, the chief executive officer of every

public entity shall be appointed by the board of the entity in accordance with this section.

10                      (3) Before appointing a chief executive officer, the board of a public entity

shall—

(a)         publish, in a newspaper circulating in the area in which the public entity concerned conducts its activities, at least two advertisements calling for applications to fill the post of chief executive officer (in this  paragraph

15                                “newspaper” means a national newspaper or a newspaper circulating in the area where the public entity has its principal place of business); and

(b)        interview the  applicants, or  such of  them as  appear to  possess   the

qualifications for the post; and

(c)         select from among the interviewed applicants the person who appears to

20                                the board to be most suitable for appointment as chief executive officer, ensuring that the selection is made primarily on merit while ensuring that, so far as practicable, men and women and all Zimbabwe’s regions are fairly represented in the entity’s management.

(4) The board of every public entity shall ensure that the post of chief executive

25       officer of the entity is never left vacant for more than six months and that, in the event

of a vacancy of more than one month—

(a)       the entity’s deputy chief executive officer, if there is one, is appointed to act as chief executive officer; or

(b)       if there is no deputy chief executive officer, a member of the entity’s staff

30                               or a board member is appointed to act as chief executive officer; pending the appointment of a substantive chief executive officer.

(5) As soon as possible after being appointed or re-appointed a chief executive officer must comply with section 37, requiring certain disclosures for the purpose of avoiding conflicts of interest.

 

35       18    Appointment of senior staff of public entities

(1)   When appointing senior staff members, other than a chief executive officer, the board of every public entity shall ensure that, so far as practicable, men and women and all Zimbabwe’s regions are fairly represented in the entity’s management, but all such appointments shall be made primarily on the basis of merit.

40                     (2) Where the board of a public entity appoints a senior staff member, it shall cause written notice of the appointment to be sent to the line Minister without delay, specifying—

(a)                 the name, address and such other personal particulars of the appointee as

the Unit may require in terms of subsection (4);  and

45                      (b)   the appointee’s qualifications; and

(c)       the criteria on which the appointee was chosen for appointment; and

(d)       whether the appointee has complied with section 37, requiring   certain

disclosures for the purpose of avoiding conflicts of interest.

17


 

and without delay shall send the line Minister a copy of the appointee’s contract of employment with the entity.

(3) The head of the line Ministry shall promptly despatch to the Unit the particulars furnished by the board to the line Minister under subsection (2), including

a copy of the appointee’s contract of employment with the entity.                                           5

(4) The Office of the President and Cabinet may circulate to heads of line Ministries, the additional personal particulars required for the purposes of subsection (2)(a).

(5) Subject to subsection (6), this section does not derogate from any statutory power conferred on a line Minister to give policy directions to a board of a public entity.                                      10

(6)  If any action taken by a line Minister pursuant to a power referred to in subsection (5) has the effect of overriding a board’s judgment as to the fitness of any person to be employed by the entity for which it is responsible, and the head of the Unit considers that such action is contrary to any principle of good corporate governance embodied in the First and Second Schedules, the head of the Unit shall express his or       15 her opinion to that effect in writing to the Minister responsible for this Act, who shall,

if he or she thinks that the opinion has merit, seek the leave of the President to refer the matter to the Cabinet.

 

19    Conditions of service of senior staff of public entities

(1)   The conditions of service of chief executive officers and other senior staff   20

members of public entities shall—

(a)    be fixed by the boards of the entities concerned at properly  constituted

meetings; and

(b)   be consistent with the staff members’ performance contracts; and

(c)    specify clearly any terminal benefits to which the staff members are    25

entitled; and

(d)   be recorded fully in the minutes of the meetings at which the conditions

are fixed.

(2) For the purpose of ensuring that, so far as is practicable, conditions of service

fixed for chief executive officers and other senior staff members of public entities are—  30

(a)    fair and appropriate, due regard being had to their qualifications and

experience and the functions they are expected to perform; and

(b)   reasonably consistent as between different public entities;

the Minister, may formulate model service conditions applicable to chief executive officers and senior staff members of all public entities or any particular class of such                                      35 entities.

(3)  In formulating model service conditions in terms of subsection (2), the Minister shall, through the line Ministers concerned, consult the heads of line Ministries concerned and shall pay due regard to—

(a)                 the capacity of the public entities concerned to comply with the conditions;  40

and

(b)                conditions applicable to senior employees of well-managed companies and other entities of similar size that perform similar functions in the private sector; and

(c)                 the need to ensure that the public entities concerned carry out their     45 operations economically without sacrificing their efficiency and effectiveness.


 

(4) The  Minister shall not  formulate model service conditions that     are

inconsistent with this Act or the enabling instruments of the public entities concerned.

(5)   The Minister may from time to time amend or replace model service

conditions, and subsections (1) to (4) shall apply, with any necessary changes, to any

5       such amendment or replacement.

(6)  As soon as possible after formulating, amending or replacing any model service conditions in terms of this section, the Minister shall, after obtaining Cabinet’s approval, keep a copy of the model service conditions and of any amendment or replacement—

10                      (a)          at the Minister’s offices, where it may be inspected by members of the public, free of charge, at all reasonable times during the Minister’s business hours; and

(a)       available in electronic form for inspection by members of the public on the website of the Ministry and the Unit.

15                     (7) When fixing the service conditions of a chief executive officer   or senior staff member of a public entity, a board shall not, without the line Minister’s written approval given in accordance with subsection (9), depart from any applicable model service conditions formulated in terms of this section.

(8) If the line Minister considers that it is appropriate, on the basis of

20 representations made to him or her by the board, to depart from any applicable model service conditions formulated in terms of this section, the line Minister shall inform the President of his or her intention to do so, and shall not give the board approval to depart therefrom without the President’s written leave to do so, given after the President has afforded the Minister and the Minister responsible for finance a reasonable opportunity

25       to make any representations on the proposed departure.

(9) The head of the line Ministry shall without delay if approval is given by his or her line Minister in accordance with subsection (8) to depart from applicable model service conditions formulated in terms of this section, inform the head of the Unit of that fact and of the particulars of the departure.

30                      (10) Any service condition fixed in contravention of this section shall be void.

(11) Unless prompt voluntary reimbursement is made of any money or money’s worth of a condition of service enjoyed in contravention of this section, the non-executive member of the public entity concerned shall be subjected to a surcharge levied in accordance with the Third Schedule for the reimbursable amount.

 

35       20    Restriction on remuneration of senior staff of public entities

(1)    The Minister, with the approval of the Minister responsible for finance, and after consultation with the line Minister concerned, may by notice published in the Gazette, specify the maximum amounts that may be received, by way of remuneration, allowances and other benefits, by the chief executive officer and other senior staff

40       members of any public entity:

Provided that if the line Minister does not respond within thirty days from his or her receipt of a written request by the Minister seeking consultation with respect to the Minister’s proposed amounts that may be received by board members by way of remuneration, allowances and other benefits, the consultation shall be deemed to have

45       been undertaken and the Minister may proceed to publish the relevant notice in the

Gazette.

(2)  In specifying the maximum amounts that may be received, by way of


 

remuneration, allowances and other benefits, by the chief executive officer and other senior staff members of any public entity, the Minister shall be guided by the principle that the proportion of such remuneration, allowances and benefits that may be received by all employees of the public entity concerned (including the chief executive officer

and other senior staff members) must not in general exceed thirty per centum of that        5

entity’s revenues or operational budget in the past financial year.

(In this subsection “operational budget” means the detailed projection of all estimated income and expenses based on forecasted revenue during a given period (usually one year), and has particular reference  to  an  entity  which  is  funded  to  a significant degree by State subventions or other monies not deriving from any revenues                                                                                                                10 generated by it).

(3) Notwithstanding any other law, where a notice has been published in terms of subsection (1), no person to whom the notice applies shall be paid or given any remuneration, allowance or benefit in excess of the amount specified in the notice:

Provided that a person who, immediately before the notice was published, was    15 being paid or given a higher amount shall be entitled to be paid or given that higher amount for three months after the publication of the notice.

(4) Unless prompt voluntary reimbursement is made of  any  remuneration, allowance or benefit resulting from a contravention of subsection (3), the recipient concerned shall be subjected to a surcharge levied in accordance with the Third Schedule                                                                                           20 for the reimbursable amount.

 

21         Restriction on terminal benefits payable to executive members and senior staff members of public entities

(1)            Subject to this section, no public entity shall pay any amount by way of a gratuity or other terminal benefit to a former executive member or senior staff member                                       25 in respect of his or her service on the entity’s board or the entity, unless the proposed amount has been notified to the line Minister and the Minister responsible for finance

and approved or ratified by shareholders or stakeholders at the annual meeting of the

public entity concerned that is convened in terms of section 33(3):

Provided that, where the amount is paid in accordance with a scheme or     30

arrangement that has been approved by the line Minister and the Minister responsible for finance, such approval need not be obtained for the payment of that particular amount.

(2)         Unless prompt voluntary reimbursement is made of any amount resulting  from a contravention of subsection (1), the recipient concerned shall be subjected to a                                     35 surcharge levied in accordance with the Third Schedule for the reimbursable amount.

 

PART V

StrategiC Plans and PerformanCe ContraCts

 

22         Strategic plans of public entities

(1)        The board of every public entity shall, in accordance with this section, draw   40

up a strategic plan for every public entity for which it is responsible, to—

(a)                 set the entity’s objectives and priorities for a period of between two and six years, as the board may decide; and

(b)                determine the manner in which the entity is to achieve those objectives

and priorities;  and                                                                                                        45


 

(c)                 strengthen the entity’s management systems with a view to achieving those objectives and priorities.

(2)       A strategic plan shall deal with such of the following matters as are relevant to the entity—

5                      (a)    the core functions  of  the entity,  and the relative  importance of those functions;

(b)   key performance indicators by which the entity’s performance   will be evaluated;

(c)    the structure of the entity’s business and financial plan;

10                      (d)   measures needed to protect the entity’s financial soundness;

(e)    the principles to be followed at the end of each financial year in respect

of any surplus in the entity’s revenues;

(f)        where the entity provides any service or conducts any commercial or semi-commercial business, the standards of service to be provided  and

15                                the relationship between the entity and other business entities;

(g)       the relationship between the State and the entity;

(h)       the exercise of the functions of the line Minister and the board under the entity’s enabling instrument;

(i)        any other matter relating to the performance of the entity’s functions.

20                     (3) The board of every public entity shall draw up a strategic plan   and shall consult the line Minister, the Minister and Minister responsible for finance on all material provisions of the plan and pay due regard to any representations and recommendations the line Minister, the Minister and the Minister responsible for finance may make in regard to the plan.

25                      (4) After approving a strategic plan, the board of the public entity concerned

shall—

(a)       without delay send a copy of the plan to—

(i)              the line Minister, who shall lay a copy of the plan before the National Assembly on one of the ten days on which the Assembly sits after

30                                          the line Minister approves it; and

(ii)              the Unit; and

(iii)   the Minister responsible for finance;

and

(b)       cause a copy of the plan to be kept—

35                                 (i)       at the entity’s office, where it may be inspected by members of the public free of charge at all reasonable times during the entity’s business hours; and

(ii) available in electronic form for inspection by members of the public on the website of the Unit and of the entity.

 

40       23    Performance contracts with senior staff of public entities

(1)   Upon the appointment of a person as chief executive officer or senior staff member of a public entity, the board of the entity shall require him or her to enter into a written performance contract with the board, in accordance with this section.

(2) A performance contract shall—

45                      (a)         if applicable, contain provisions relating to any matter affecting the efficient performance of the person’s duties respecting the public entity concerned; and


 

(b)       contain provisions—

(i)              specifying key performance indicators by which the person’s performance will be measured; and

(ii)              prescribing the penalties, including dismissal, suspension  and forfeiture of remuneration or other benefits, to be incurred   if the                                              5 person fails to perform his or her duties efficiently in   accordance

with the contract; and

(iii)               requiring the person’s performance to be evaluated by the board of the entity concerned—

A.                  at least once every six months, in the case of a chief executive     10

officer;

B.                   at such intervals as may be prescribed, in the case of any other senior staff member.

(3)   Notwithstanding any other enactment, a person shall not assume office as chief executive officer or senior staff member of a public entity unless he or  she has                                        15 entered into a performance contract in terms of this section.

(4)   The board of a public entity must without delay transmit—

(a)       to the head of the line Ministry a copy of the performance contract with

the chief executive officer and a copy of every performance contract with

a senior staff member;                                                                                                 20

(b)       to the Unit a copy of the performance contract with the chief  executive

officer.

(5) Nothing in this section shall be construed as preventing the board of a public entity from entering into performance contracts with employees who are not   senior

staff members.                                                                                                                                         25

 

24    Review and monitoring of  compliance with strategic    plans and performance contracts

(1)   In this section “review”, in relation to—

(a)                 a strategic plan, means an evaluation of the degree of compliance and progress (if any) achieved towards attaining the objectives of its strategic                                                       30

plan during the previous year;

(b)                a performance contract, means an annual appraisal of the performance of an individual senior staff member who is a party to such contract, as measured against specified key performance indicators and any    other

benchmarks approved by the Unit.                                                                           35

(2)   The board of every public entity shall annually review its current strategic plan and every current performance contract with senior staff members of such entity, and report the results of its review to the line Minister and the Minister.

(3)    Within ninety days of the end of the entity’s financial year, the board of every

public entity shall, together with the annual report it is required to submit to Parliament    40

through its line Minister (or if the enabling instrument of the entity in question contains no such requirement, such entity shall by virtue of this section, together with an annual report)—

(a)       submit to its line Minister a copy of its current strategic plan; and

(b)       copies of current performance contracts with senior staff    members of     45

such entity; and

(c)       the results of its reviews conducted in conformity to subsection (2).


 

(4)   The Unit shall monitor the compliance of every board of a public   entity

with this section, to which end —

(a)                 every board of a public entity shall, within ninety days after the 31st December in each year, submit to the Unit the annual report and   other

5                                documents referred to in subsection (3); and

(b)                the Unit shall evaluate the annual report and other documents referred to in subsection (3) within a period of thirty days after receiving them, and shall, after the evaluation, make known in writing to the Minister its comments or concerns (if any) with respect to the report and documents,

10                                whereupon the Minister shall transmit in writing to the line Minister concerned so much of these comments or concerns as appear to the Minister to be relevant or valid.

(5)  The line Minister shall lay before National Assembly the annual report submitted to him or her in terms of subsection (3), together with copies of the current

15    strategic plan, not earlier than ninety days after the 31st December in each year and   no later than one hundred and fifty days after that date, and shall submit in or together with such documents the comments or concerns (if any) transmitted by the Minister responsible for this Act under subsection (4)(b), to the extent that they may still be relevant or to the extent that the board of the entity concerned has not (in the transmitting

20       Minister’s opinion) adequately remedied, clarified or accommodated them by the date

on which the line Minister reports to the National Assembly.

(6) As soon as practicable after laying before the National Assembly the annual report in terms of subsection (5), the head of the line Ministry concerned shall make it available in electronic form for inspection by members of the public on the website

25       of the Ministry and of the Unit.

 

25    Performance contracts with board members of public entities

(1)   Within two months after a person is appointed to the board of a public entity, the line Minister shall enter into a written performance contract with the member, in accordance with this section and any recommendations made by the Unit:

30                     Provided that board members representing minority interests shall not be required to enter into performance contracts in terms of this section.

(2) A performance contract may contain provisions relating to any matter affecting the efficient performance of the member’s duties in relation to the public entity concerned.

35                     (3) Without limiting subsection (2), the following conditions shall    apply to every member of the board of a public entity as if they were contained in the member’s performance contract—

(a)       in the performance of the functions of his or her office, the member shall

at all times—

40                                  (i)   act honestly;  and

(ii)   exercise a reasonable degree of care and diligence;

(b)       the member, while holding office and thereafter, shall not make improper use of information acquired by virtue of his or her position as a member to gain, directly or indirectly, an advantage for himself or herself or for

45                                any other person or to cause detriment to the public entity;

(c) the member shall not make use of his or her position as a member to gain, directly or indirectly, an advantage for himself or herself or for any other person or cause detriment to the public entity.


 

(4) Notwithstanding any other enactment, if within two months after a member’s appointment to the board of a public entity he or she has not entered into a performance contract in terms of subsection (1), he or she shall thereupon cease to be a member of the board unless he or she establishes that—

(a)                 the failure to enter into the contract was attributable to undue delay on the     5

part of the line Minister or any person acting on that Minister’s behalf; or

(b)                one or more of the provisions of the contract were so grossly unreasonable

that he or she was justified in refusing to sign it.

(5)  Copies of every performance contract concluded in terms of  this section    10 shall without delay be filed for record at the office of the line Minister concerned and transmitted to the Office of the President and Cabinet.

(6)  If a person, having entered into a performance contract in terms of this section, contravenes a condition referred to in subsection (3) or any other condition of

the contract—                                                                                                                                          15

(a) notwithstanding anything to the contrary in the enabling instrument of the public entity concerned, the contravention shall be a ground for removing the member from office;

(b)                   whether or not the member has been removed from office, the line Minister

or the public entity concerned may by proceedings in a competent court     20

recover from him or her, as a debt due to the entity—

(i)      the amount or value of any damage or loss suffered by the entity as a result of the contravention; and

(ii)   the amount or value of any profit or advantage that accrued to him

or her or to any other person he or she intended to benefit through    25

the contravention.

(7) Subsection (6) shall not be construed as limiting any other law relating to the criminal or civil liability of a member of a board, and shall not prevent the institution of criminal or civil proceedings in respect of any liability referred to in that subsection.

 

PART VI                                                                              30

board Charters, Codes of EthiCs and National Code of Corporate GovernanCe

 

26    Public entities to honour Good Corporate Governance Code and prepare board charters and codes of ethics

(1)  The board of every public entity shall conduct the business and affairs of

the entity in accordance with—                                                                                                          35

(a)                 the provisions of the Good Corporate Governance Code, where the entity is a public commercial entity; and

(b)                such of the principles of good governance set out in the Second Schedule as are applicable to the public entity concerned, where it is not a company.

(2)  Subject to this Part—                                                                                                       40

(a)    the board of every public entity shall prepare a board charter;

(b)   the chief executive officer of every public entity shall prepare a code of

ethics for the entity;

and shall conduct the business and affairs of the entity in accordance with that charter

and code.                                                                                                                                                   45


 

(3) A board charter and code of ethics shall incorporate such of the principles set out in section 27 as are applicable to the public entity concerned.

(4) So far as is practicable and appropriate, the board of a public entity and the chief executive officer shall consult the employees of the entity and the general public

5       when formulating a board charter and code of ethics.

(5) The Unit shall provide the board of a public entity and chief executive officer with whatever assistance it can in the preparation of the entity’s board charter and code of ethics.

 

27    Principles and contents of board charters and codes of ethics

10                     (1) Every board charter and code of ethics shall give effect to   the following principles—

(a)                 the promotion and maintenance of a high standard of professional ethics; and

(b)   efficient and economic use of available resources; and

15                      (c)    the provision of services impartially, fairly, equitably and without bias; and

(d) responsiveness to the needs of the people of Zimbabwe, including the prompt and sensitive processing of complaints by members of the public with respect to the entity’s interaction with them; and

20                      (e)    co-operation with  governmental  institutions and  other public entities; and

(f)        openness and transparency in the internal workings and procedures of the public entity concerned, and in its dealings with the public; and

(g)       the maximising of the human resources of the public entity  concerned;

25                                and

(h)       commercial viability, in the case of a public commercial entity;

and generally shall be directed at ensuring efficiency, effectiveness, responsibility, accountability and honesty in the procedures, operations and activities of the public entity concerned.

 

30       28    Approval of board charters and codes of ethics

(1) Having prepared a board charter in terms of section 26, the board of a public entity shall without delay secure the line Minister’s approval of the charter before sending it to the Office of the President and Cabinet.

(2) The line Minister may withhold his or her approval of a board charter if he

35       or she considers that any of its provisions—

(a)                 contravene this Act or any other enactment; or

(b)                are contrary to the policy of the Government or to the public interest;

and in that event the public entity shall without delay alter the code to take account of the line Minister’s views.

40                     (3) Having prepared a code of ethics in terms of section 26, the chief executive officer of a public entity shall without delay secure the board’s approval of the code before sending it to the Office of the President and Cabinet, which shall transmit the same to the Unit for evaluation.

(4) The board may withhold its approval of a code of ethics if it considers that

45       any of its provisions—

(a)                 contravene this Act or any other enactment; or


 

(b)                are contrary to the policy of the Government or to the public interest;

and in that event the chief executive officer shall without delay alter the code to take

account of the board’s views.

(5)  If on receipt of a board charter and code of ethics the Unit considers  that

any of its provisions—                                                                                                                            5

(a)                 contravene this Act or any other enactment; or

(b)                are contrary to the public interest;

the head of the Unit shall inform the Minister accordingly, whereupon the Minister shall endeavour, by negotiation with the line Minister and (through the line Minister) the   board of the public entity concerned, to secure the amendment of the charter or code.                                                            10

(6) If the Minister fails to secure the amendment of a charter or code in terms of subsection (5), and the Minister is of the opinion that the failure may be detrimental to the business of the entity in question, the Minister shall seek the leave of the President to refer the matter to Cabinet.

 

29      Amendment of board charters and codes of ethics                                                    15

The board of a public entity and the entity’s chief executive officer may respectively amend the entity’s charter and code of ethics at any time, and sections 26, 27 and 28 shall apply, with any necessary changes, to such an amendment.

 

30      Board charters and codes of ethics to be available for inspection

The board of every public entity shall ensure that a copy of the entity’s board    20

charter and codes of ethics are kept—

(a)       at the entity’s office, where they may be inspected by members of the public free of charge at all reasonable times during the entity’s business hours;  and

(b)   available in electronic form for inspection by members of the public on     25

the entity’s website.

 

31      Monitoring of compliance with Good Corporate Governance Code, board charters and codes of ethics

(1)  In this section “standard of compliance” in relation to a public entity refers

to the level of compliance by the entity with the Good Corporate Governance Code, such      30

of the principles of good governance set out in the Second Schedule as are applicable to the public entity concerned, and the relevant board charter.

(2) Subject to this Act and any other enactment—

(a)                 every line Minister is responsible for monitoring compliance by the public entity of which he or she is the line Minister with the   Good Corporate                                                     35

Governance Code, such of the principles of good governance set out in the Second Schedule as are applicable to the public entity concerned, and its board charter; and

(b)                every board of a public entity is responsible for monitoring compliance

by the employees of the public entity with the entity’s code of ethics; and      40

(c)                 the Unit is responsible for overseeing general compliance by public entities with the Good Corporate Governance Code and such of the principles of good governance set out in the Second Schedule as are applicable to the public entities concerned.


 

(3) In the general exercise of the line Minister’s responsibility under subsection (2)(a), or upon a request made in writing to the head of the line Ministry by the Unit to investigate a particular alleged instance of non-compliances that has come to the notice of the Unit (which request must be accompanied by any information at the disposal of

5       the Unit that supports the request), the line Minister may—

(a)       require the board or the chief executive officer of any public entity to supply the line Minister with such information regarding the entity’s standard of compliance as the line Minister may reasonably require; and

(b)       send officers of the line Ministry to conduct such inspections and inquiries

10                                at the offices of any public entity as the line Minister considers reasonably

necessary to assess the entity’s standard of compliance.

(4) In any case where a line Minister declines to exercise his or her powers under subsection (3), the Minister responsible for this Act may seek the leave of the President to empower the Unit to do so, after the President has afforded the line Minister

15  a reasonable opportunity to exercise such powers or to make such representations on the matter as the line Minister thinks fit or relevant (if the President gives leave to the Unit to proceed, the Unit shall exercise the powers under subsection (3) as if references to the line Minister and the line Ministry were substituted by references to the Minister and the Unit).

20                     (5) An officer of the line Ministry or of the Unit, as the case may be, may for the purposes of subsection (2)(b) require any board member or employee of the public entity concerned—

(a)       to produce to the officer any documents relating to the entity’s standard

of compliance that are in the person’s custody or under his or her control;

25                                and

(b)       to provide the officer with any information relating to the entity’s standard

of compliance; and

(c)       to give the officer all reasonable assistance in connection with the officer’s

inspection or inquiry.

30                      (5) A person who—

(a)       provides the line Minister,  the Unit or an officer of the line Ministry  or Unit (as the case may be) with false information for the purpose of subsection (2) or (4), knowing it to be false or having no reasonable grounds for believing it to be true; or

35                      (b) without just cause, fails or refuses to answer any question or provide any information or produce any document when required to do so in terms of subsection (2) or (3); or

(c) hinders or obstructs an officer of the line Ministry or Unit (as the case may be) in the exercise of the officer’s duties under subsection (4);

40 shall be guilty of an offence and liable to a fine not exceeding level five or to imprisonment for a period not exceeding six months or to both such fine and such imprisonment.

 

32    Application of other codes of corporate governance to public entities

Where a public entity is a company and required to comply with—

45                      (a)    a code of good corporate governance prescribed under the Securities and Exchange Act [Chapter 24:25] or any other enactment; or

(b)   the listing rules of any securities exchange;

it shall, to the extent that the requirements or standards concerned are more stringent than those provided for under this Act, comply with such code and rules.


 

PART VII

ConduCt  of  business  by boards  of  publiC entities

 

33      Meetings of boards of public entities

(1)  The chairperson of the board of every public entity shall ensure that the   board meets at least once every three months.                                                                                                                                 5

(2)   Notwithstanding anything to the contrary in the enabling instrument concerned, but subject to the Constitution, a board of a public entity may meet without a quorum for ninety days after the number of members appointed to it ceased to constitute a quorum of the board:

Provided that any decisions reached by the board while its membership does     10

not constitute a quorum shall cease to have effect after the ninety-day period   unless

they have been ratified by a meeting of the board at which a quorum is present.

(3) At least once a year, the board of every public entity shall convene an annual general meeting, that is to say, a meeting to which—

(a)       representatives of the Unit; and                                                                                15

(b)       the Accountant-General; and

(c)       representatives of the line Ministry; and

(d)       representatives of any minority shareholders in the entity concerned; and

(e)       the Auditor-General; and

(f)        such other persons as may be prescribed;                                                               20

are invited to attend and discuss the entity’s operations and conduct during the previous financial year and its plans for the next financial year, and any other matters of mutual interest.

(4) At least twice a year, every line Minister shall meet the board of each public entity for which he or she is responsible, for the purpose of discussing the entity’s                                      25 conduct and plans, the board’s compliance with its strategic plan, and any other matters

of mutual interest.

(5) Minutes shall be kept in accordance with section 35 of every meeting under

subsection (3) or (4) as if the meeting was a meeting of the board of the entity.

 

34      Conflicts of interest on part of board members and staff of public entities         30

(1)  If—

(a)                 a member of a board of a public entity or senior staff member of a public entity—

(i)  being a board member, knowingly acquires or holds a direct or  indirect pecuniary interest in any matter that is under consideration                                             35 by the board; or

(ii)  owns any property or has a right in property or a direct or indirect pecuniary interest in a company or association of persons which results in his or her private interests coming or appearing to come

into conflict with his or her functions as a board member or senior   40

staff member of the public entity; or

(iii)  knowingly acquires or holds a direct or indirect pecuniary interest in any matter that is or, to his or her knowledge, is likely to be the subject-matter of a contract between the public entity and any other

person;  or                                                                                                             45


 

(iv)  knows or has reason to believe that any of his or her associates—

A.             has acquired or holds a direct or indirect pecuniary interest in any matter that (being a board member) is under consideration by the board or that is or, to his or her knowledge, is likely to be the subject-

5                                          matter of a contract between the public entity and any other person; or

B.             owns any property or has a right in property or a direct or indirect pecuniary interest in a company or association of persons which results in his or her private interests coming or appearing to come

10                                          into conflict with his or her functions as a board member or senior

staff member of the public entity;

or

(b)                for any other reason, the private interests of a board member or senior staff

member of a public entity come into conflict with his or her functions as

15                                a board member or member of the entity’s staff;

the board member or senior staff member shall forthwith disclose the fact to the entity’s board.

(2) A member referred to in subsection (1) shall—

(a)  if he or she is a board member, take no part in the consideration or

20                                discussion of, or vote on, any question before the board which relates to any interest, property or right referred to in that subsection;

(b)  if he or she is a senior staff member of a public entity, take no part in the entity’s dealings in relation to any matter requiring disclosure under that subsection, except on the written instructions of the board of the  entity

25                                concerned, given after the disclosure of the interest concerned.

(3)  No employee of a public entity shall be present when the entity’s board discusses his or her conditions of service.

(4)   The board of every public entity shall request all senior staff members of the entity to sign, as soon as possible after their first appointment, a document stating

30       that they are aware of and will abide by their obligations under this section.

(5)   The chief executive officer of every public entity shall request all members of the entity’s board to sign, as soon as possible after their first appointment to the board, a document stating that they are aware of and will abide by their obligations under this section.

35                      (6) Until—

(a)       a senior staff member of a public entity who has been requested to sign

the document referred to in subsection (4) has signed the document;  or

(b)       a board member of a public entity who has been requested to sign the document referred to in subsection (5) has signed the document;

40       he or she shall not—

(c)       take part in any business of the board, in the case of a board member; or

(d)       in the case of a board member, receive any remuneration or allowance in respect of his or her membership of the board, or, in the case of senior staff member,  receive any remuneration or allowance in respect of  his

45                                or her employment by the entity.

(7) Any person who contravenes subsection (1), (2) or (3) shall be guilty of an offence and liable to a fine not exceeding level four or to imprisonment for a period not exceeding three months or to both such fine and such imprisonment.


 

35      Minutes of meetings of boards of public entities

(1)  The board of every public entity shall cause minutes of all its meetings, and all meetings of its committees, to be entered in books kept for the purpose.

(2)  Minutes referred to in subsection (1) shall record accurately and fully the proceedings at the meetings concerned and all decisions taken at the meetings.                                                                         5

(3)  Minutes referred to in subsection (1) which purport to be signed, with the authority of the board or the committee concerned, as the case may be, by the chairperson of the meeting to which the minutes relate or by the chairperson of the next following meeting, shall be accepted for all purposes as prima facie evidence of the proceedings

of and decisions taken at the meeting concerned.                                                                         10

(4) The chief executive officer of every public entity shall ensure that a copy of every resolution of entity’s board, signed by the chairperson of the meeting, is sent to the line Minister and the Unit without delay after it has been adopted.

36      Audit of accounts of public entities

Subject to the Public Finance Management Act [Chapter 22:19], the accounts of       15

every public entity shall be audited annually by—

(a)                 the Auditor-General; or

(b)                a person who is registered as a public auditor in terms of the  Public Accountants and Auditors Act [Chapter 27:12], appointed by the Auditor- General;                                       20

and the Auditor-General or the public auditor, as the case may be, shall submit the audit report to the line Minister, the Minister responsible for finance and the Minister responsible for this Act, as well as to the board of the entity.

PART VIII

General                                                                              25

37      Declaration of assets by board members and senior staff of public entities

(1) In the interests of transparency and the avoidance of conflicts of interest, as soon as possible after being appointed or re-appointed (and in any event within three months after the appointment or re-appointment) as—

(a)                 a member of the board of a public entity, every member of the board; or   30

(b)                a senior staff member of a public entity, every senior staff member of a public entity;

shall provide the Office of the President and Cabinet with a written declaration listing

in full—

(c)                 all immovable property which the member or senior staff member owns,      35

leases or in which he or she has any other interest; and

(d)                any item of movable property, exceeding one hundred thousand dollars ($100 000) or such greater value as may be prescribed, which the member or senior staff member owns, leases or in which he or she has any other

interest; and                                                                                                                    40

(e)                 any business in which the member or senior staff member has an interest or which he or she plays any part in running; and

(f)                  in relation to every associate of the member or senior staff member—

(i)              all immovable property owned or leased by the associate, or in which

the associate has any other interest; and                                                       45


 

(ii)              any item of movable property, exceeding one hundred thousand dollars ($100 000) or such greater value as may be prescribed, which the associate owns, leases or in which he or she has any other interest; and

5                               (iii)   any business in which the associate has an interest or which  he or she plays any part in running;

and stating in each case the nature of the interest in the property or business concerned.

(2)  The part of the declaration referred to in subsection (1)(f) must either be countersigned by the associate concerned, or be endorsed in writing by the member or

10       senior staff member concerned to be true to the best of his or her knowledge and belief.

(3)  In addition to the declaration required by subsection (1), every member of the board of a public entity and every senior staff member shall provide the Office of the President and Cabinet with a further written declaration setting out the matters referred to in that subsection—

15                      (a)    on the anniversary of his or her appointment or re-appointment    to the board or to the post in question; and

(b) within two months after ceasing to be a member of the board or ceasing to be a senior staff member.

(4) If —

20                      (a)    a member of the board of a public entity or senior staff member refuses to provide the Office of the President and Cabinet with any declaration required by subsection (1) or (3); or

(b)                a member of the board of a public entity or senior staff member thereof intentionally fails to list any property or interest in a declaration provided

25                                to the Office of the President and Cabinet in terms of subsection (1)  or

(3);  or

(c)                 any question arises as to the omission of any property or interest in a declaration provided to the Office of the President and Cabinet in terms of subsection (1) or (3), whether in the course of the board’s or the entity’s

30                                proceedings or otherwise, for the omission of which the responsible member of the board has no adequate explanation;

the member or senior staff member shall thereupon cease to be a member of the board or (where the contravention relates to subsection (3)(b)) be disqualified for reappointment, or, in the case of a senior staff member, cease to be employed in that or any other

35       capacity in the entity concerned or (where the contravention relates to subsection (3)

(b)) be disqualified for re-employment.

 

38  Responsibilities of State appointees to boards of certain public entities

Every appointee of the State to the board of a public entity referred to in paragraph

(b), (c) or (d) of the definition of “public entity” in section 2(1) has an obligation to act

40       in the best interests of the State, that is to say—

(a)                 to promote the State’s interests and policies in relation to the business or operations of the entity and in accordance with any instructions given by the line Minister, and to solicit such instructions from the line Minister in appropriate cases; and

45                      (b)   to act as a channel of two-way communication between the line Minister and the entity concerned; and

(c)  at all times in the performance of his or her functions as the State’s appointee—

(i)      to act honestly; and


 

(ii)     to exercise a reasonable degree of care and diligence; and

(iii)     to keep the responsible Minister fully and timeously informed     of all matters affecting the State’s interests in the course of the deliberations of the board of the entity concerned, and in  relation

to the business or operations the operations of the entity.                         5

39      Implementing manuals

(1) The Unit shall develop, update and make available to public entities one or more manuals in consultation with line Ministries to guide the implementation of this Act, including (but not limited to) the setting of performance management standards

by the boards and staffs of public entities, the formulation by boards of strategic plans,     10

board effectiveness, risk management, standard performance contracts for boards, standard forms and procedures, and the like.

(2) Manuals may be specific to named sectors of the economy or the   public

domain in which public entities operate.

(3) The Minister shall approve every manual for publication, whether as a       15

statutory instrument or otherwise.

 

40      Corporate governance rating of public entities

The Unit shall annually carry out a good corporate governance rating of public entities in accordance with selected and prescribed criteria, which rating shall be done

in the prescribed manner and its results published annually by notice in   the Gazette     20

and in such other media as the Unit deems fit.

 

41      Special investigations

(1)   If a line Minister considers it necessary or desirable to do so, the line Minister may by notice in the Gazette direct that a special investigation be conducted

into such matters concerning the operations, dealings, affairs, membership,  assets or     25

liabilities of a public entity for which he or she is the responsible Minister, as may be

specified in the notice.

(2) A special investigation may take the form , or be inclusive of, a special or forensic audit of the public entity in question.

(3) The line Minister may appoint one or more persons as special investigators,     30

on such terms and conditions as the Minister may specify in the instrument of appointment, to conduct an investigation in terms of this section.

(4) As soon as possible after appointing a special investigator, the line Minister

shall notify the appointment in the Gazette.

(5) The powers of a special investigator, and the procedure to be followed in     35

a special investigation, shall be as prescribed in section 42.

(6) The line Minister shall give prior written notification of its intention to exercise any of its powers under this section to the head of the line Ministry, who shall thereupon promptly inform the head of the Unit of the imminent investigation.

(7) A special investigation under this section may be conducted in parallel with     40

or jointly with any other investigation into the affairs of the public entity concerned, whether under the Public Finance Management Act or other enactment:

Provided that—

(a)                 where the enabling instrument of a public entity makes provision for the special investigation of its affairs, this section shall prevail in a case where                                                       45

there is a possibility of concurrent investigations taking place; and


 

(b)                the President, on the recommendation of the Minister responsible for this Act, may give directions to the line Minister on the consolidation, co- ordination or co-operation of the work of investigators where concurrent investigations are undertaken into the entity concerned.

5                      (8) On completion of an investigation the special investigators shall report to the line Minister on what action, if any, is required to be taken to remedy any problems that prompted the investigation in the first place or any other problems revealed by the investigation.

(9) The line Minister shall transmit a copy of the special investigator’s report

10 to the head of the line Ministry who shall thereupon promptly avail a copy of it to the head of the Unit, together with a plan of corrective action to be taken in relation to the investigated public entity in the light of the recommendations made by the special investigator or special investigators.

(10) If the Minister responsible for this Act has reasonable cause to  believe,

15 on the basis of information availed to him or her by the Unit or any other source, that any action or failure to take action in accordance with this section on the part of a line Minister is contrary to any principle of good corporate governance embodied in the First and Second Schedules, the Minister responsible for this Act shall seek the leave of the President to refer the matter to Cabinet, which may itself authorise a special

20       investigation in terms of this section as if it were the line Minister.

 

42    Powers of special investigators

(1)           For the purpose of a special investigation under section 41 a special investigator may require any person to produce for examination by the special investigator, at such time and place and as may be appointed by the special investigator

25 for that purpose, any deeds, plans, instruments, books, records, accounts, trade lists, stock lists or documents which the special investigator may consider necessary for the purposes of the special investigation.

(2) Any deeds, plans, instruments, books, records, accounts, trade lists, stock lists or documents which in terms of subsection (1) are produced to a special investigator,

30 may be retained by the special investigator for as long as they may be reasonably required for the special investigation.

(3)  Any person who, in terms of subsection (1), produces any deed, plan, instrument, book, record, account, trade list, stock list or document which is not a ledger, cash-book, journal, paid cheque, bank statement, deposit slip, stock sheet, invoice or

35 other book of account may be allowed by a special investigator any reasonable expenses necessarily incurred in producing it or obtaining and producing a copy of it.

(4)   A special investigator may in connection with a special investigation, by reasonable notice in writing, require any person whether on his or her own behalf or as the representative of any person, or any person whom the special investigator may

40 consider able to furnish information, to attend at a time and place to be named by the special investigator for the purpose of being examined on oath or otherwise, at the discretion of special investigator, respecting any transactions or any matters affecting the same, or any of them or any part thereof, relevant to the special investigation. Any person so attending may be allowed by the special investigator any reasonable expenses

45       necessarily incurred by such person in so attending.

(5)    Where any statement has been made by any person as a result of his or her being examined on oath under subsection (4), such statement shall be recorded in writing and shall be read over to or by the person making it, who, after making such corrections therein as he or she may think necessary, may sign it.


 

(6)   Any person required to attend in terms of subsection (4) shall be entitled to be accompanied by a legal practitioner, accountant or other adviser, and any person making a statement in terms of subsections (4) and (5) shall be furnished with a copy thereof.

(7)  If any special investigator engaged in carrying out a special investigation,      5 satisfies a magistrate by statement made on oath that there are reasonable grounds for suspecting that such person has committed an offence against this Act or any other

law, the magistrate may by warrant authorise such special investigator and any other

officers designated by the special investigator to exercise the following powers—

(a)  without previous notice, at any reasonable time during the day enter    10 any premises whatsoever and on such premises search for any moneys, valuables, deeds, plans, instruments, books, records, accounts, trade lists, stock lists or documents;

(b)   in carrying out any such search, open or cause to be removed and opened

any article in which he or she suspects any moneys,   valuables, deeds,     15 plans, instruments, books, records, accounts, trade lists, stock lists or documents to be contained;

(c)    seize any such deeds, plans, instruments, books, records, accounts, trade

lists, stock lists or documents as in his opinion may afford evidence which

may be material to the special investigation;                                                         20

(d) retain any such deeds, plans, instruments, books, records, accounts, trade lists, stock lists or documents for as long as they may be reasonably required for the special investigation or for any criminal or other proceedings.

(8) Any special investigator engaged in carrying out the provisions of section     25

41 and this section may, if he or she has reasonable grounds for believing that it is

necessary to do so for the purpose of the special investigation—

(a)       at any reasonable time during the day enter any business premises; or

(b)       require any person to produce for its inspection  any  book,  record, statement, account, trade list, stock list or other document; or                                                                                 30

(c)       require any person to prepare and additionally, or alternatively, to produce for inspection a print-out or other reproduction of any information stored in a computer or other information retrieval system; or

(d)       take possession of any document or other thing referred to in paragraph (b)

or (c) for so long as may be necessary for the purpose of any examination,    35

investigation, trial or inquiry; or

(e)       require any person reasonably suspected of having committed an offence against this Act or any other law or any person who may be able to supply information in connection with a suspected offence against this Act  or

any other law to give his or her name and address.                                             40

(9) Any special investigator authorised in accordance with—

(a)       subsection (7), when exercising any power under that subsection, shall on demand produce the warrant issued to him or her thereunder; or

(b)       subsection (8), when exercising any power under that subsection, shall

on demand produce proof that he or she is a special investigator.                   45

(10)  Any person whose deeds, plans, instruments, books, records, accounts,   trade lists, stock lists or documents have been retained in terms of subsection (2) or   which have been seized or taken in terms of subsection (7) or (8) shall be entitled to examine and make extracts from them during office hours or such further hours as the special investigator may in his or her discretion allow and under such supervision as         50

the special investigator may determine.


 

(11) A special investigator is hereby empowered to administer oaths to persons examined in terms of this section. Any person who, after having been duly sworn, wilfully makes a false statement to the special investigator on any matter relevant to the inquiry, knowing such statement to be false or not knowing or believing it to   be

5 true, shall be guilty of an offence and liable to a fine not exceeding level seven or to imprisonment for a period not exceeding two years or to both such fine and such im- prisonment.

(12) Any person who—

(a)       falsely holds himself out to be a special investigator carrying out the

10                                provisions of section 41 or this section; or

(b)       hinders, obstructs or assaults a special investigator in the exercise of his

or her functions in terms of section 41 or this section; or

(c)       wilfully fails to comply with any lawful demand made by a special

investigator in the exercise of his or her functions in terms of section 41

15                                or this section;

shall be guilty of an offence and liable to a fine not exceeding level seven or to imprisonment for a period not exceeding six months or to both such fine and such imprisonment.

(13) A special investigator may, in addition to the persons authorised to apply

20      for a warrant under the Interception of Communications Act [Chapter 11:20]  (No. 6 of 2007), have power to apply for a warrant under that Act.

 

43    Notification of establishment and dissolution of public entities

(1)    The head of a line Ministry shall notify the head of the Unit in writing within thirty days of—

25                      (a)    the formation or establishment of a public entity otherwise than  by Act of Parliament, and transmit together with such notification a copy of the relevant enabling instrument;

(b)  the dissolution of a public entity that is not established by an Act of Parliament, or that is dissolved otherwise than by the repeal of its

30                                constitutive Act of Parliament, and transmit together with such notification

a copy of the relevant enabling instrument;

(c)  any amendment to the enabling instrument (not being an Act of Parliament) of a public entity, and transmit together with such notification a copy of the relevant amendment;

35                      (d)   the particulars any material change to the ownership or control of a public entity that is not reflected in any amendment of the enabling instrument thereof:

Provided that any question as to whether any such change is “material” shall be referred by the head of the line Ministry to the head

40                                of the Unit for determination.

(2) Within sixty days of the fixed date, every head of a line Ministry shall comply with subsection (1) with respect to any existing public entity referred to in paragraphs (a) to (d).

 

44    Exemptions

45                     (1) The Minister may by notice in writing to the public entity concerned, exempt the entity from any provision of this Act, where the Minister is satisfied, on the basis of representations from the line Minister, that there are compelling reasons for the exemption in view of—


 

(a)       the nature or size of the entity; or

(b)       any unusual difficulty the entity may encounter in complying with   the

provision;

and may in similar fashion amend or withdraw any such exemption:

Provided that the line Minister and Minister shall together, no later than thirty       5 days after the end of the financial year of the public entity in question in which the exemption was granted, review the  necessity  for  continuing the  exemption and,  if needed, amend or withdraw it.

(2) The reason, nature and extent of every exemption in favour of a public entity must be notified in the annual report of the entity immediately following the grant of                                    10 the exemption.

(3)  The head of the Unit shall ensure that a list of all exemptions granted in terms of subsection (1), specifying their terms and conditions and the reason why they were granted, is kept at the Unit’s offices where it may be inspected by members   of

the public at all reasonable times during the Unit’s business hours. In addition, the list     15

of exemptions shall be kept available in electronic form for inspection by members of the public on the website of the Unit.

 

45    Regulations

(1) Subject to subsection (3), the Minister may by regulation prescribe anything which by this Act is required or permitted to be prescribed or which, in his or her                                   20 opinion, is necessary or convenient to be prescribed in order to give effect to this Act.

(2) Without derogating from the generality of subsection (1), regulations made

in terms of subsection (1) may provide for—

(a)    induction programmes and programmes to enhance the efficiency   and

effectiveness of board members;                                                                               25

(b)       the standard remuneration for civil servants serving as board members;

(c)       the establishment of one or more directories or databases of potential candidates for appointment to boards;

(d)                   the qualifications and experience required for appointment as a senior staff

member of any public entity or class of public entities, and the procedures    30

to be followed in such appointments;

(e)                    measures, including training programmes, to enhance the efficiency and

effectiveness of senior staff members of public entities;

(f)                     the disclosure of remuneration, allowances and benefits paid to    board

members and senior staff members of public entities;                                        35

(g)                the recovery of amounts paid unlawfully by public entities to their board members and senior staff members;

(h)                the establishment of committees by boards of public entities and the responsibilities and functions of such committees;

(i)    reports to be submitted by boards or chief executive officers   of public    40

entities to the Unit or to their line Ministers;

(j)    the stakeholders or classes of stakeholders that may be invited to annual general meetings for the purpose of section 33(3)(f);

(k)   measures for safeguarding the confidentiality of, and securing authorised

access to, declarations of assets by board members and senior   staff of      45

public entities;

(l)                   the circumstances in which the Secretary to the Treasury is empowered to recover by means of a surcharge raised under the Third Schedule from


 

a public entity or from persons who are in the employment of a public entity, or are members of its board, or who were in such employment or were such members, any public resources (as defined in that Schedule) that have been misused, lost or destroyed by the public entity or its employees,

5                                agents or board members;

(m)            penalties for contraventions of the regulations:

Provided that no such penalty shall exceed a fine of level fourteen or imprisonment for a period of five years or both such fine and such imprisonment.

10                     (3) Before making regulations in terms of subsection (1) the    Minister shall consult all line Ministers whose public entities will be affected by the regulations.

 

46    Amendment of Schedules

(1) Subject to subsection (2), the Minister may by statutory instrument amend—

(a)    the First Schedule in order to reflect any changes made to the  National

15                                Code of Corporate Governance Zimbabwe, and in so doing   may, after consultation with line Ministers, specify that any part of the Code (as amended or not) shall be binding on public entities or any class thereof as if enacted by way of regulations;

(b)   the Second Schedule in order to—

20                                  (i)       extend the application or improve the efficacy of codes of good

governance;  or

(ii) give effect to generally accepted standards of good corporate governance.

(2) The Minister shall not publish a statutory instrument in terms of subsection

25       (1) unless—

(a)                 he or she has given not less than two months’ notice in the Gazette and in one or more newspapers circulating generally in Zimbabwe, of the substance of the proposed amendment and has paid due regard to any comments and suggestions he or she may have received from members

30                                of the public regarding the proposal; and

(b)                the National Assembly has passed a resolution approving the amendment.

 

47    Savings and transitional provisions

(1)   Within two months after the fixed date, the chief executive officer of every

public entity shall provide the Unit, in writing, with the following particulars—

35                      (a)    in regard to all the members of the entity’s board—

(i)      their names and addresses; and

(ii)     which of them are executive members and which are independent members; and

(iii)   the dates on which they were first appointed to the board and   the

40                                          dates on which their current terms of office expire; and

(iv)       their terms and conditions of service, in particular their current

remuneration, allowances and benefits;

(b)   in regard to himself or herself and employees of the entity concerned

holding office on the next two levels of management below the level of

45                                chief executive officer—

(i)      their names and addresses; and


 

(ii) the dates on which they were first appointed to their current positions and, where applicable, the dates on which their current terms of office expire; and

(iii)       their terms and conditions of service, in particular their current

remuneration, allowances and benefits;                                                          5

and the line Minister shall ensure compliance with this subsection.

(2)   The term of office of a person who, on the fixed date, was a board member, chief executive officer or senior staff member of a public entity shall not be renewed or extended—

(a)    except on terms and conditions compatible with this Act; or                          10

(b)                   in the case of a board member, unless his or her continuation in office would be consistent with section 11 (“Appointment of boards of public entities”); or

(c)                    in the case of a chief executive officer, unless his or her continuation

in office would be consistent with section 17 (“Appointment of chief      15

executive officers of public entities”); or

(d)                   in the case of a senior staff member other than a chief executive officer, unless his or her continuation in office would be consistent with section 18 (Appointment of senior staff of public entities”).

(3)   Where, on the commencement date, a person holds office as chief executive    20

officer of a public entity and had held that office—

(a)       for more than ten years, his or her term of office shall end six months after the fixed date unless—

(i)      under his or her service conditions it ends sooner; or

(ii)     the board, with the approval of the line Minister, appoints  him or    25

her for one more term of office, which term begins on the date  of

the re-appointment;

(b)       for less than five years, his or her term of office shall end five years after

his or her initial appointment, unless under his or her service conditions

it ends sooner.                                                                                                                 30

(4)  Notwithstanding any other enactment or anything in the conditions of service of the member concerned, a permanent secretary of a Ministry who, on the fixed date, was a board member of a public entity may continue to serve as a member for two months after the fixed date, after which, if he or she is still a permanent Secretary, he

or she shall cease to be a member.                                                                                                     35

(5)    Within six months after the fixed date, the board of every public   entity


shall—


(a)    draw up a strategic plan for the entity in accordance with section 22 (“Strategic plans of public entities”); and

(b)   enter into performance contracts with the chief executive    officer and    40 all senior staff members of the entity in accordance with section 23 (“Performance contracts with senior staff of public entities”).

(6) Every member of the board of a public entity or senior staff member thereof


in office or employed on the fixed date shall provide the Office of the President and Cabinet with the written declaration referred to in section 37(1) within two months of                                      45 the fixed date (and sections 37(2) and (3) applies to that member accordingly) unless

the member has earlier ceased to be a member for any reason.

(7) Within six months after the fixed date, the responsible Minister of  every

public entity shall enter into performance contracts with the members of the  entity’s


 

board in accordance with section 25 (“Performance contracts with board members of public entities”).

(8) A person who—

(a)    provides the Office of the President and Cabinet or an officer of the Unit

5                               with false information for the purpose of subsection (1) (b), knowing it to be false or having no reasonable grounds for believing it to be true; or

(b) without just cause, fails or refuses to answer any question or provide any information or produce any document when required to do so in terms of subsection (1)(b);

10 shall be guilty of an offence and liable to a fine not exceeding level five or to imprisonment for a period not exceeding six months or to both such fine and such imprisonment.

 

FIRST SCHEDULE (Sections 31(2) and 46)

national Code on Corporate GovernanCe Zimbabwe

15                                                                         CHAPTER I

appliCation of the Code and Derivatives

1.  This Code applies to all business entities regardless of the manner and form of their incorporation or establishment and whether the business entity is in the public or private sector or it is non-profit making. There are however certain entities  which

20 require a sector approach to corporate governance. Accordingly, codes which derive from the main principles of this Code are encouraged and should be developed.

2. Special sectors, such as the banking and financial services sector, partnerships, trusts and small to medium enterprises, should have specific codes of their own which take a sector approach to corporate governance.

25                3. The sector-based codes supplement and add value to, and should be read together with, this Code.

4. If a provision of a sector-based code is inconsistent with any principle of this

Code then the principle of this Code prevails to the extent of that inconsistency.

5.  Small to medium businesses, including family owned businesses,  constitute

30 a special sector which requires special focus. Accordingly special principles and best practice recommendations for this sector should incorporate the provisions of the current legislation on small to medium enterprises and lift the bar on corporate governance above that prescribed in legislation.

6.  The public sector has its own framework of governance which has been in

35 existence since November 2010. It is recommended that most of the provisions of this framework should be enacted into law so as to ensure its enforcement. In regard to this sector the enactment into law of the framework will be a shift from the “comply or explain basis or corporate governance to the “comply or else” strategy.

7.  Other sectors deserving special consideration will be considered as part of  a

40      review of this Code or any derivative code.

 

PART II

ownership and Control

Preamble

8. In a company shareholders provide risk capital which the management controls

45      under the leadership of a Board of Directors. There must be a functional balance   of


 

power among these three groups for the company to prosper and for all the stakeholders

to derive benefit.

Ownership

Principles

9. Corporate power should not be concentrated in one person or in a small group of       5 persons because this will impact negatively on focused, effective and ethical corporate leadership and may result in corporate failure.

10. Corporate power, represented by the right to vote on a one share one vote basis,

must always be aligned with economic rights. Any misalignment must be justified and

be approved by the shareholders.                                                                                                       10

Recommendations

11. The right to vote should be extended to all shareholders.

12.  Full, timely and transparent disclosure should be made in the annual reports regarding the exercise of corporate power.

13. The Board the managers and the majority shareholder must respect the rights       15

of minority shareholders.

Control

Principles

14. The ultimate authority of any company is its annual general meeting or extraordinary general meeting of shareholders where they exercise their rights in terms                                                  20 of the statutes of the company and the law.

15.      Shareholders in general meeting have the power to make business decisions concerning the company and to take any action which they deem appropriate for the protection and development of the company.

16.    A shareholder’ meeting is a forum where the board and the management inform    25 the shareholders about the company’s operations, management, administration and achievements and gives the shareholders the opportunity to participate in formulating strategies for the company.

17.     The shareholders, the board and the management of the company protect and promote the interests of the company and its stakeholders.                                                                                                            30

18.  Nominee shareholders should disclose the beneficial owners of the    shares

upon request by the relevant company or regulatory authorities.

Recommendations

19.  The company’s managers and employees should be given the opportunity to

own shares in the company through appropriate share ownership schemes as may be      35

approved by the shareholders in general meeting.

20.         The community in which a company operates should benefit from its operations.

21.        Shareholder relations should, where applicable, be governed by written shareholder agreements which specify, among other things, the purchase price of the                                                               40

shares, the purchasing preferences, the exercise of voting rights and mechanisms for resolving disputes and conflicts of interest. In the case of State contracts there has to be compliance with the legislation enacted in terms of section 315 of the Constitution in relation to joint-venture contracts for the construction and operation of infrastructure

and facilities and concessions of mineral and other rights.                                                         45


 

22.        Shareholder agreement must be written in a simple language and made available and accessible to all shareholders and relevant regulating authorities.

23.        The company must conduct its business in a manner that best serves the interests of the shareholders, including minority shareholders and other stakeholders

5       of the company.

24. A major or majority shareholder should not be involved in the day-to-day management of the company, but if such involvement is inevitable then, as may be appropriate, the involvement should be regulated by a clear agreement and where applicable, the agreement’s terms and conditions should be approved by shareholders

10       in a general meeting.

25. Shareholders should be given reasonable and transparent access to relevant records which must ordinarily be availed to them but without compromising commercially sensitive information whose disclosure is not in the best interests of the company.

15                26. The notice convening a shareholder’ meeting must be given to all shareholders in sufficient time to allow them enough time to formulate their positions on the agenda and consult with other persons who will attend the meeting or discuss the agenda with them.

27. A shareholders’ meeting must be convened at a place and on a date and at a

20 time which makes it possible for all shareholders to attend the meeting. The meeting should be convened by giving at least twenty-one days’ notice or such other period as may be specified by law. The greater to complexity of the issues to be considered at the meeting and the wider the dispersion of the shareholders, the more time should be given.

25                28. The notice must contain full details of the registration process and sufficient information to enable shareholders to decide whether they will attend the meeting and how they will participate in the discussions.

29. Greater use of electronic devices or other facilitative instruments, such as web

casting, e-mails, electronics and print media and proxy voting, should be encouraged.

30                30. Meetings of shareholders should be conducted in a simple and inexpensive manner. The shareholders should be given sufficient time to prepare adequately for the meeting and to contribute to the discussions. At a meeting shareholders should be allowed to request for the adjournment or postponement of the meeting if matters of great complexity under consideration.

35                31. A list of persons authorised to participate in a shareholders meeting and their contact details must be given to all shareholders to enable to shareholder to analyse possible voting patterns and position themselves accordingly.

32.         Documents which are important, such as a summary of the company’s strategic plan, reports on the company’s performance indicators and growth prospects,

40 management practices and policies pursued by the board, reports on analyst briefings, including positive and negative media reports, should be made available to all shareholders in good time to give them adequate time to prepare for the shareholders meeting.

33.     The information and reports given to shareholders for the purpose of a share-

45   holders meeting must be organised in a manner which allows for easy co-relation for the information or reports which specific agenda items and which facilitates a thorough review of the agenda items.

34. Agenda items must be clear and simple and leave no room for ambiguity.

35. Chairperson of committees of the Board should attend shareholders meetings


 

to respond to issues which relate to their areas of jurisdiction or competence and to assist the chairperson of the Board to answer any questions.

36. The quorum of a shareholders’ meeting must be defined in order to ensure reasonable participation by all classes of shareholders. Voting rules must be simple and available to all shareholders.  5

37.  Minutes of shareholders’ meetings should be prepared in a simple way and must be sufficiently detailed to communicate the discussions which took place, the resolutions adopted and dissenting views expressed by the participants.

38. The procedures for holding annual general meetings should not be unnecessarily expensive or complicated and should ensure equitable treatment of all shareholders.                         10

39. Voting rules, especially rules on voting by proxy, must be clear, objective and

simple.

40. A proxy should vote according to the wishes of the beneficial owner of shares

in the company.

41. A block voting system should be adopted at shareholders’ meetings convened       15

to elect directors. Listed companies which are more than thirty percent owned by one person adopt a block voting system. Rules for implementing such a system should be incorporated in the articles of association.

42. Voting caps are inimical to corporate democracy and should only be permitted

in circumstances where the approach where the approach is justified and has been        20

approved by the Board.

43. Absentia voting methods, such as voting by e-mail or fax, should be encour- aged provided that the procedures and processes are clearly formulated to avoid abuse.

44. Procedures and mechanisms which make it possible for a majority shareholders

to object to a majority decision and which enable them to refer conflicts between them      25

and controlling shareholders to arbitration, should be established.

45. Dilution of voting rights must not be permitted unless authorised by a resolution

passed by a majority of all shareholders.

46.  Where minority shareholders are not represented on the Board, they must

be given the right to formally present their views on critical issues  for consideration    30

by Board provided that they cumulatively hold at least ten percent for the company’s shares.

47.   Brief curriculum vitae of every director for election or re-election should

accompany the notice of the meeting appearing in the annual report.

48. Any anti-takeover measures or strategies must be approved by shareholders      35

at a meeting held for that purpose.

49. When a merger or takeover occurs, minority shareholders should be given the

opportunity to sell their shares at market value.

50.  Ownership by any one person of shares in excess of thirty-five percent of the issued ordinary shares of a company should, where appropriate, trigger a buy-out offer                                                       40

in which all shareholders must be treated equally.

51. A company’s memorandum and articles of association must comply with the law and best practice principles in this Code.


 

PART III

board  of  DireCtors  and  DireCtors

Preamble

52. A company is a legal fiction but the law permits it to do things which natural

5 persons can do. A company acts through natural persons, mainly the Board of Directors which is the governing and controlling body of a company. To achieve the company’s goals and objectives, the directors must possess certain qualities, play certain roles and perform certain functions and duties.

 

role and FunCtion of the Board

10                                                                           Principles

53. The Board of Directors should provide effective corporate and entrepreneurial leadership.

54.  The leadership of the Board must be based on—

(a)       ethics, professionalism and good morality;

15                     (b)   the notion that strategy,  risk, performance and    sustainability are inseparable;

(c)  prudent and effective controls which make it possible for risks to be assessed and managed property;

(d)  complete compliance with, and respect for, applicable laws, especially the

20                               Bill of Rights as set out in the Constitution and adherence to non-binding rules, codes and best practice standards;

(e)  the recognition that the best interests of the company and its stakeholders must always be promoted.

Recommendations

25                55. The Board should provide leadership by—

(a)  formulating and implementing business rescue procedures and other turnaround strategies as soon as the company becomes financially distressed;

(b)  setting the company’s strategic aims and ensuring that the necessary

30                               financial and human resources are in a place for the company to meet its

objectives and review management performance;

(c)  appointing an independent non-executive chairperson who does not double up as chief executive officer of the company and, where the chairperson is also the chief executive officer, disclosing that fact in the annual report,

35                               together with the reasons therefore;

(d)  establishing procedures for appointing and dismissing the chief executive officer of the company and putting in place a proper framework for the appointment of other executives;

(e)  framing and implementing a code of ethics, morally and professionalism

40                               for the company, its employees, management and board members; and

(f)   being accountable to all shareholders and other stakeholders of the company and treating equally.

56.  The Board should have a charter setting out its role and functions, which include the following—

45                     (a)    determining the company’s purpose, vision, mission and values;

(b)                setting strategies for achieving the company’s purpose;


 

(c)                 setting parameters for excising leadership, enterprise, integrity and good judgement;

(d)                ensuring that procedures, policies and practices are established and implemented;

(e)                 approving, monitoring and evaluating the implementation of strategies,      5

policies, procedures and business plans;

(f)                  identifying key risks and key performance indicators of the company;

(g)                ensuring that technology and systems used by the company are adequate to run its business viably;

(g)                establishing proper succession plans for Board members, the chairperson,    10

executive director and senior members of management;

(h)                regularly assessing the company’s performance and effectiveness    and

that of individual directors and the chief executive officer;

(i)                   accounting to the annual report for the directors’ collective and individual performance at least once a year;                                                                                                                              15

(j)                   monitoring on continuous basis the company’s solvency and stability  to pay its debts as they fall and making necessary and reasonable interventions in this regard.

ConduCt  and  Responsibilities of  the Board  and  DireCtors

Principles                                                                            20

57.  In this discharge of its role and functions every Board must conduct itself with honesty and integrity and, above all, must always act in the best interests of the company. When acting in the best interests of the company, directors should consider the interests of all shareholders and other stakeholders.

58.   The Board must correct corporate misdemeanours as and     when  they are     25

detected in order to ensure that the corporate goals are achieved and the integrity and reputation of the company, its shareholders and other stakeholders are protected.

Recommendations

59. The charter referred to in paragraph 56 should set out the Board’ responsibilities,

which include that every director—                                                                                                  30

(a)                    has time and energy for , and commitment to, the company by attending a minimum of seventy-five percent of Board and Board committee meetings, all annual general meetings and all-stakeholders meetings, and assisting the chairperson in answering questions raised at such meeting;

(b)   is knowledgeable about the financial, social and political environment in      35

which the company operates;

(c)       is in a position to make informed decisions;

(d)       acts independently and his her independence is constantly judged, assessed and monitored in accordance  with this Code;

(e)       possesses, to the extent possible, the requisite skills and   knowledge in      40

relation to Information Communication Technology (ICT) and supportive equipment.

60.  The Board should ensure that—

(a)       it obtains independent professional advice when necessary;

(b)   confidential matters of the company are treated as such as and   are not     45

divulged to anybody without its authority;

(c)       procedures and systems on the governance of information, knowledge and experience are established to act as checks and balances;


 

(d)       the performance of the company’s management is monitored and evaluated against set targets, complemented by an appropriate reward system in order to attract and retain talent;

(e)       the company is ICT compliant in terms of requisite skills and, knowledge

5                                and supportive equipment;

(f)                     the company’s accounting and financial reporting systems are sound;

(g)                   the company’s risk management measures and financial controls are

properly supervised;

(h)   the company’s systems, procedures and policies are in place to  resolve

10                                conflicts of interests among and between    directors, management, shareholders, the company and other stakeholders;

(i)        Corporate governance in relation to the company is properly monitored;

(j)    the company is not a good corporate citizen but is seen to be one;

(k)   every Board member is given an opportunity to disagree with fellow

15                                members where necessary;

(l)    the company’s major shareholders and other stakeholders are identified and

a clear policy on communicating with and relating to them is formulated;

(m) the annual activity report of the company is submitted to the shareholders’ meeting for adoption.

20                                                                   duties  of  DireCtors

Principles

61.  Directors have legal duties of good faith, loyalty, care, skill and diligent in the discharge of their functions. They also have duties which are conscience-based and reflect their culture and values.

25                62. The duty of good faith and loyalty requires that directors should honestly apply their minds and act in the best interests of the company at all times, ensure that there is no conflict between their interests and those of the company, and that they are loyal to the company and its business.

63. The duty of care requires that directors should act with the degree of care

30   expected of a reasonable person in charge of the assets of an incapacitated person,    that they are good stewards of the company’s assets, and that they apply their minds honestly in making decisions concerning the company’s business.

64. The duty of diligence requires that directors should understand the information

given to them and come to any decision making forum fully prepared and   informed

35 about the issues to be discussed. In this regard directors must study, understand and implement every duty imposed upon them by law or by best practice.

 

Moral Duties

65. The moral duty of conscience requires that directors should act with intellectual honesty and independence of mind in the best interests of the company and in accordance

40       with the principle of inclusive stakeholder approach to corporate governance.

66.  The moral duty of character requires that directors should be of, and show, good character in whatever they do for the company and that they are always candid and possess the courage to do the right thing.

67. The moral duty of hard work requires that directors should always see personal

45       benefits as being bi-products of hard work.

68.  The moral duty of patriotism and survival in the face of adversity requires that director should work for the good of the country and the resourceful, innovative and creative especially when faced with difficult circumstances.


 

69. The moral duty of inclusivity requires that directors should take an inclusive approach by embracing the legitimate interests and expectations of the company and all its stakeholders  in decision making and strategy.

70. The moral duty of common sense requires that directors should have the ability

to listen and to find their way in the world of business.                                                               5

71. The moral duty of speaking the truth all the time requires that a director should not only always speak the truth but should also show that he or she believes in what he or she believes in what he or she says and acts on it.

72.  The moral duty of courage requires that a director should overcome fear in   order to do the right thing; that he or she should take a position even if it makes him                                                         10

or her unpopular and that he or she should create an ethical environment even when faced with opposition from superiors and subordinates.

73.  The moral duty of conviction requires a director to show commitment and passion in whatever he or she does.

74.   The moral duty of creative requires a director top inspire and generates      15

trust in others; think about others and their concerns before thinking about himself or herself; trust in his or her intuition and rely on it as much as he or she relies on his or her intellect and experience and embrace change, and uncertainty.

75. The moral duties enumerated above find expression in the concept of Umuntu

(Hunhu) which is expressed as Umunhu, Ngumuntu meaning “I am because you are,     20

and you are because we are.

Recommendation

76.  The Board of directors should engage in selective corporate disclosure.

77.  The Board should not permit a situation to develop whereby the company is shunned by investors because of a failure of the directors to meet the legal and moral                                  25 standards set out in this Code.

78. Directors should bear in mind that there is a strong link between law and best practice codes in respect of principles of good governance.

Qualities, Membership Criteria and QualifiCations of Board Members

Principles                                                                            30

79. The Board should be composed of persons with good leadership qualities and core competences required by the company required by the company, such as accounting or financial EXPERTISE, LEGAL SKILLS, BUSINESS AND MANAGERIAL experience, industry knowledge and strategic planning experience.

Recommendations                                                                     35

80.            The charter referred to in paragraph 56 should set out core qualities, membership criteria and qualifications of Board members including the need for the appointment of Board members who—

(a)       are mature and minimum qualifications as may be prescribed by the rules

of the company;                                                                                                             40

(b)                have integrity, good character, high credibility, probity, assiduousness, knowledge, and skill and experience required to bring an independent judgement to bear on issues of strategy, performance, resources mobilisation and utilisation, key appointments and standards of conduct;

(c)                 are up to date with tax obligations;                                                                          45

(d)   have the academic qualifications required to understand and provide

corporate leadership and enhance shareholder value, preferably a relevant


 

academic degree or other equivalent qualification as may be prescribed

by the board;

(e)    have the natural appetite for knowledge, self-improvement and the capacity

to define and achieve corporate goals in a time manner;

5                     (f)    have the necessary emotional and social intelligence and the capacity to do what is right and good, an attitude premised on an inner value base which includes maximising benefits and maximising harm to others;

(g)        have an internal disposition that inclines towards justice before    profit

and truth before sales and personality that makes principle rather   than

10                               popularity the arbiter of morality;

(h)        have competence in their field of endeavour and permanent commitment to quality performance and a spirit of dedication to achieving the greatest good;

(i)                   have the ability to take into account the interests of all who may be affected

15                               by the business decisions which they make before making them;

(j)                   always meet their own needs and requirements in ways which do not compromise the needs and requirements of others;

(k)                indulge in thinking that leads to the making of good choices; and

(l)                   have not been convicted of a serious criminal offence by a court of law.

20                                                 direCtors: SeleCtion and Appointment

Principles

81.         All directors should be appointed through a formal, robust and   transparent

process that reflects broadly the diversity of the shareholders.

82.         It is the Board’s responsibility to recommend directors for appointment and

25      shareholders’ responsibility to elect and appoint them.

83.          No election or dismissal of any director should be left to the whims of the controlling shareholder.

84. Where appropriate, a nomination committee should be established with clear

terms of reference on how to invite and recommend the nomination of new directors

30      by the Board and their election or re-election by shareholders.

Remuneration

85. The charter referred to in paragraph 56 should set out policies and procedures for the selection and appointment of directors and provide that—

(a)       the procedures for appointing Board members should be a matter for

35                               the Board as a whole, assisted by the nomination committee where appropriate, but subject to shareholders approving and electing or re- electing the directors;

(b)       the Board should determine the experience and personal traits of its

non-executive directors in relation to its size and the specific nature  of

40                               its activities;

(c)       the Board should determine the nature of information which may be disclosed by its prospective members including the identity of the proposed candidates, their levels of education, positions held over the last five years and at the time of nomination or election, nature of  their

45                               relations with the company, membership of other boards, company, nature of relations with major business partners of the company and shareholders and their financial standing;

(d)       opinions and views of all shareholders should always be taken into account when recommending persons for election of the Board. In  this


 

regard, block voting should be adopted to protect the rights of minority shareholders;

(e)       the Board should ascertain whether potential candidates and competent to contribute to decision making and that they have the necessary knowledge

and experience for fill any knowledge gaps on the Board as well the    5

integrity, skills and capacity to discharge duties of the Board;

(f)        the appointment of directors should be by written agreements between   them and the company and  should  incorporate  a  code  of  conduct  of directors and set out the remuneration payable to and the terms of the    terms of the insurance cover provided for directors;        10

(g)       the major or majority shareholders should not use their power to elect to the Board persons who do not meet the criteria set by the Board and approved by the shareholders;

(h)       where a nomination committee is established it should be chaired by an independent non-executive director, be wholly composed of independent                                                          15

non-executive directors and its tasks should include—

(i)              determining the number of executive and non-executive posts required;

(ii)              recommending selection of Board members of the basis of established

and approved criteria only;                                                                               20

(iii)               considering the number of other directorships held and the experience of the proposed candidates;

(iv)               considering skills and past history of the proposed candidates;

(v)   checking if the proposed candidates are fit and proper persons   to

act as director with reference to their personal and commercial      25

references, their ages and community standing;

(vi)  consideration and recommendation the nomination, appointment and election of the proposed candidates from a list of persons by blocks of minority shareholders holding a minimum of ten percent

and a maximum of fifteen percent in the company, each block being    30

entitled to a seat on the Board;

(vii)  considering and recommending the nomination, appointment and election of candidates from a list of no more than three candidates  from a list of no more than three candidates proposed by institutional investors, trusts or pension funds which together have a combined         35

minimum shareholding of fifteen percent and a maximum shareholding deserving a seat on the Board;

(viii)   considering the demands of other relevant stakeholders who may require Board representation and advising on the best methods of nominating, selecting, appointing or electing their candidates to take                                                                                                  40

up the seats.

board Composition, StruCture, Number and IndependenCe of Board

Principles

86. A Board should be appropriately composed and structured so as to ensure that power is evenly balanced and that it is exercised in the best interests of the company.                                         45

87.  The Board should ideally have a majority of non-executive members, the

majority of whom should be independent as defined in this Code.

88.  Where a major shareholder is directly represented on the Board a formal agreement which defines the shareholder’s rights, duties and obligations should be concluded between the shareholders and the company and approved by a special                                                                                                                          50


 

resolution passed by elected Board members and shareholders present at a meeting convened for that purpose.

Recommendations

89.  The tenure of the chairperson of the Board should be confirmed annually by

5       the Board. The chairperson should not double up as the company’s chief executive

officer, but where this is inevitable—

(a)       the appointment must be approved at the annual general meeting;

(b)       a senior lead director should be appointed by Board members to perform

roles, duties and functions as may be defined by the Board in a   formal

10                                appointed contract;

(c)       a majority of the Board members must be independent non-executive directors.

90. A Board should—

(a)       not be determined by a single individual or a group of individuals; and

15                      (b)    have an  appropriate balance between executive   and non-executive directors and not less than sixty percent of board members should be non-executive director and the majority of non-executive directors should be independent.

91. The roles of the chairperson of the Board and chief executive officer should be

20 kept separate and where the two roles are merged, special reasons for combing the roles should be disclosed and the safeguards provided in this Code must be implemented.

92.  The Board should, where appropriate through committees composed only of independent non-executive members or in which such members are in the majority. It should have in place properly formulated terms of reference which include the scope

25 of authority, composition roles, responsibilities and duties of the committees. The essential committees are Audit Committee, Risk and Committee, Dispute Resolution Committee and Remuneration Committee.

93. A proper balance should be maintained between continuity of Board member- ship and the sourcing of new ideas through the appointment of new members.

30                94. Every Board should consider whether its size, diversity   and demographics make it effective. Diversity relates to academic qualifications, technical expertise, relevant industry knowledge, experience, nationality, age, race and gender.

95. When determining the number of directors to serve on the Board, the collective

knowledge, skills, experience and resources required for conducting the business   of

35       the Board should be considered.

96.  Factors determine the number of directors to be appointed include—

(a)       the evolving circumstances, the needs of the company and the nature of its business;

(b)                   the need to have sufficient directors to structure Board committees

40                                appropriately;

(c)                    potential difficulties of raising a quorum with a small Board;

(d)   the need to comply the regulatory requirements.

97. As a minimum, two executive directors should be appointed to the Board, being the chief executive officer and the director responsible for finance. This will   ensure

45 that there is more than one point of contract between the Board and management. As a minimum, three non-executive directors should be appointed to the Board, the majority of them being independent.


 

98.  Board members should not serve on more than six boards at the same time and should this threshold be exceeded, the Board members concerned should give good and sufficient reasons for that and demonstrate ability, availability and capacity to discharge their roles, functions and duties in ways which best serve the interests of

the company, its shareholders and other stakeholders. Such reasons must be subjected     5

to scrutiny and approved by a resolution of at least fifty percent of shareholders present

at a meeting convened for that purpose.

99. A person should not be appointed as chairperson of more than four boards and should this threshold be exceeded, then the person concerned should offer good and sufficient reasons for that demonstrate ability; availability and capacity  to discharge                                                                      10 their roles, functions and duties in ways which best serve the interests of the company,

its shareholders and other stakeholders. Such reasons must be subjected to scrutiny and approved by a resolution of at least sixty percent of shareholders present at a meeting convened for that purpose.

100. A director of a subsidiary company should not be appointed to sit    on the   15 Board of the holding company except as an alternate director for succession planning purpose.

101. Chief executive officers should not trade Board positions with other chief executive officers.

102. A Board should be composed and structured in such a way that it excludes     20

the influence of shadow directors, that is to say, persons who are not Board members

but are somehow able to give instructions to directors.

103. Directors appointed for their professional skills, such as lawyers, accountants or engineers should not be allowed to provide professional services to the   company

through their firms unless good reasons confirming convergence, and not conflict of      25

interest, exist. Such reasons must be approved by a resolution passed by a minimum of sixty percent of Board members present at a meeting convened for that purpose and disclosed fully in the annual report.

104. Any term exceeding nine years in aggregate for independent non-executive directors should be subjected to a particularly rigorous review by the Board with                                 30 special focus  on performance and any factors which may impair their independence.

The review must also take into account the need for refreshing the Board by making new appointments.

105.   An  independent  non-executive  director  may  serve   more  than  twelve years if, after an independent assessment by the Board, there are no   relationships or                            35 circumstances likely to affect the director’s independence and decision making, such as impairment of character or judgment by long service. A statement to this effect should

be included in the integrated report.

106.   A Board member appointed as a special representative or by virtue of employment status or representation ceases to be a member when such special status                                    40 ceases.

107. The size of the Board must be such that it allows for swift, prudent and fruitful discussion and decision making and the efficient composition of committees.

the  Independent  Non-exeCutive  DireCtor

Principles                                                                            45

108. Independent non-executive directors are appointed to serve the Board and board committees, to balance corporate power and to protect the interest of the company, minority shareholders and other stakeholders.

109. Independent non-executive directors should be independent in character and


 

judgment and should not have relationships or circumstances which are likely to affect, or appear to affect their independence.

Recommendations

110. Independent non-executive directors should remain independent throughout

5 their tenure as Board members. The Board must assume the responsibility of determining, annually, whether a Board member is independent and fully disclose its findings to the annual general meeting.

offiCers of the Board

Main Principles

10                111. There should be a clearly accepted and delineated division of responsibilities at leadership levels of the company to ensure that a proper balance of power and authority exists and that no single individual has unfettered powers of decision making.

112.       The chairperson of the Board should be chosen for his or her impeccable professional reputation, ample managerial experience, undisputed     integrity,

15 steadfastness, a clear commitment to the interests of the company and the unconditional trust he or she enjoys from shareholders and members of the Board.

113.    The chairperson of the Board should not perform the role of the chief executive

officer but if he or she does so, the principles enunciated in this Code should apply.

Recommendations

20                                                                          Chairperson

114. The Board as a whole must annually evaluate the independence of its

chairperson.

115. The Board should weigh any factor affecting the independence of the chairperson against the need to preserve effective continuity in Board leadership.

25                116. The chairperson’s roles and functions should be formalized and, in doing so, factors such as the life cycle or circumstances of the company, the complexity of the company’s operations, the qualities of the chief executive officer and management team, and the skills and experience of each Board member, should be taken into account.

117. Retired chief executive officers should not be appointed as board members

30 or chairpersons of Boards until three years have passed from the end of their tenure as executive directors and, even then, they may only be considered for appointment as non- executive members or chairpersons after they have been adjudged to be independent.

118. A person must not chair more than four boards of listed companies but where he does so, the Board and shareholders must give their approval and, in the case of

35       shareholders, by a resolution passed at a meeting properly convened for that purpose.

119.      The chairperson of the Board should—

(a)       not be a member of the audit committee or its chairperson;

(b)       not hair the risk or remuneration committee but may be a member of it;

(c)       be a member of and may chair the nomination committee;

40                      (d)  provide  leadership  to  the  Board  but  without  adversely  affecting the collective responsibility of the Board and the individual duties of its members;

(e)       set the ethical tone for the Board;

(f)        identify and participate in the selection of Board members with the

45                                assistance of a nomination committee where it exists, and   oversee the formal succession plan of Board members, chief executive officer and other senior management officers, such as chief finance officer;


 

(g) formulate together with the chief executive officer and the company secretary, the annual plan of work of the Board on the basis of agreed objectives and play an active part in setting the agenda of Board meetings so as to have a clear understanding of the objectives of the meetings;

(h)                preside at Board meetings and ensure that the time devoted to the meetings       5

is used productively;

(i)                   encourage collegiality among Board members but without inhibiting candid debate and creative tension in Board meetings;

(j)    effectively manage conflicts of interest of Board members in ways which ensure that directors concerned recuse themselves from participating in                                  10 discussions and decisions in which they are conflicted unless they are required to provide specific input during any such discussions;

(k)       ensure that the information in the Board pack is couched in simple and understandable language;

(l)        act as the link between the Board and management, and particularly    15

between the Board and the chief executive officer;

(m)     carry on friendly relations with Board members and management while at the same time maintaining an arm’s length relationship with them;

(n)       ensure that complete, timely, relevant, accurate, honest and accessible information is placed before the Board to enable the Board to make                                               20 informed decision;

(o)       monitor how the member of the Board work together and how individual directors perform and interact at meetings;

(p)       know the strengths and weaknesses of each Board member  and  take appropriate measures to address any weaknesses without losing sight of                                        25 human frailties;

(q)                   develop the skills and enhance the confidence of directors by encouraging

them to speak and actively contribute at Board meetings;

(r)                     build and maintain the trust and confidence of all stakeholders in the

company;                                                                                                                         30

(s) uphold rigorous procedures in  preparing for meetings by  studying  and discussing with the chief executive officer the information packs distributed to participants and providing appropriate input.

120.  The chairperson of the Board should—

(a)       ensure that all directors are made aware of their   roles, responsibilities     35

and duties through a tailor-made induction programme buttressed by a formal programme of continuing professional education;

(b)       ensure that good relations are maintained with the company’s major shareholders and its strategic stakeholders;

(c)       ensure that decisions made by the Board are executed timeously and     40

effectively;

(d)       ensure that Board members operate as a team but without discouraging creative tension between them which allows for effective debate;

(e)       ensure that chairpersons of committees attend and actively   participate

at annual and extraordinary general meetings and stakeholder inter-face      45

meetings;

(f)        liaise with chairpersons of Board committees on matters of interest;

(g)       be a good listener and the last person to enter the debate and the last person to express a view on an issue;

(h)   meet with directors in the absence of the chief executive officer and     50


 

senior management at least twice a year to discuss performance issues concerning management and the business;

(i) know his or her rights and duties when chairing the Board, shareholder and other stakeholder meetings;

5                      (j)    interact with stakeholders of the company on a need to know basis;

(k) meet with the chief executive officer or the chief finance officer or the company secretary, or all three of them together, before Board meetings to discuss important issues and agree on the agenda;

(l)        put in place a succession plan for his or her position to ensure continuity

10                                and timely refreshment of talent and leadership;

(m)     discourage intellectual naivety and encourage intellectual honesty among and between members in Board discussions, reasoning and decision- making.

Chief exeCutive offiCer and other exeCutive offiCers

15                                                                            Principles

121. The chief executive officer or managing director is in charge of the day to day running of the company. The Board may delegate certain of its roles, functions and duties to the chief executive officer on the basis of established benchmarks and performance indicators.

20                 122. The collective responsibility of management vests in the chief executive

officer who bears the ultimate responsibility for all decisions and management functions.

Recommendations

123. The chief executive officer and other senior executives of the company should

be appointed by the Board and be accountable to it.

25                124. The Board must ensure that the chief executive officer and the chief finance officer are appointed in terms of written contracts of employment.

125.  The chief executive officer’s remuneration should be based on individual company and should also be performance and incentive based, and such remuneration should be approved by shareholders in a resolution passed by a majority of the members

30       present at a meeting convened for that purpose.

126. The appointment of the chief executive officer must be based on merit; skill, leadership qualities, and experience without losing sight of the need to promote gender equality.

127.  The chief executive officer should not be a chairperson or director of   any

35       company outside the group without the written approval of the Board.

128. The chief executive officer or members of senior management must not chair

the boards of subsidiary companies but may be non-executive directors thereof.

129.  Achief executive officer of a subsidiary company should not sit on the Board

of the holding company.

40                 130. The chief executive officer and senior managers should ensure that—

(a)                 the day to day business of the company is properly managed within the approved framework of delegated authority, company strategies, policies, budgets and that business plans are timeously developed and presented to the Board for its consideration and approval and Board decisions are

45                                effectively implemented;

(b)                the company has a corporate culture that promotes sustainable ethical practices, encourages individual integrity and fulfils the social responsibility objectives and  imperatives of the company;


 

(c)                 the company complies with all relevant laws;

(d)                the company applies all recommended best practice standards, failing which they must explain the failure to the Board and stakeholders of the company.

131.  The chief executive officer should—                                                                              5

(a)       serve as the chief representative of the company and its business;

(b)       recommend or appoint the executive team and ensure that proper succession planning;

(c)       develop and recommend to the Board yearly business plans and budgets

that support the company’s long term strategies;                                                  10

(d)       develop and recommend to the Board yearly business plans and budgets that support the company’s long term strategies;

(e)       monitor and report to the Board on the performance of the company and its conformance with compliance imperatives;

(f)    establish an organizational structure appropriate to the  achievement of     15

the company’s strategies;

(g) set the tone, provide ethical leadership and create a good ethical environment for management and the general workforce.

Company SeCretary

Principles                                                                            20

132.  A company secretary plays a pivotal role in the corporate governance of   a company. He or she is the gate-keeper of good corporate governance and for this reason the Board should appoint a suitably qualified, competent and experienced company secretary capable of maintaining a cordial but arm’s length relationship with

the members of the Board at the personal level.                                                                            25

133. A company secretary must be appointed where it is mandatory to do so. In other cases, consideration should be given to appointing a company secretary where the size of the company and the demands of its business require it.

134. The power to appoint and remove a company secretary vests in the Board or other authority depending on the nature and size of the company or entity concerned.                                         30

135.  The Board should be aware of the company secretary’s duties and  should

empower the company secretary to properly fulfill those duties.

136.  The company secretary should not be a director of the company unless the

nature and size of the company or entity makes it necessary and the law permits it to

be done.                                                                                                                                                     35

Recommendations

137. A company secretary should strive to achieve the realization of good corporate

governance principles by, among other things—

(a)       assisting the nomination committee by ensuring that the procedure   for

the appointment of directors is complied with;                                                     40

(b)       assisting in the proper induction, orientation, ongoing training and education of directors and assessing their individual training needs and those of executive managers in their fiduciary and other governance responsibilities;

(c)       assisting and guiding directors in appreciating their role, responsibilities    45

and duties, and discharging them in the best interests of the company;