An Overview Analysis Of Shareholder Activism In Zimbabwe

Shareholder activism refers to any legal mechanisms that disgruntled shareholders invoke to change an investee company’s undesirable decisions, policies and practices. Shareholder activism entails, inter alia, measures, campaigns and/or proposals that are employed by one or more shareholders of a company to effect some reform in that company regarding its business, governance, management, strategy or in respect of a particular corporate action or fundamental transaction that is considered or undertaken by their company. Therefore, shareholder activism is one of the tools that could be employed by shareholders in Zimbabwe to voice their concerns and change certain poor corporate decisions and/or illicit conduct of company directors. As such, shareholders of companies in Zimbabwe have a plethora of mechanisms that could assist them to voice their concerns and promote good corporate governance practices. For example, in 2014, Zimbabwe introduced the National Code of Corporate Governance (Corporate Governance Code 2014) which consolidated corporate governance principles in a single policy instrument. The Corporate Governance Code 2014 empowers shareholder activist to promote good corporate governance practices by selling their shares, exercising their right to vote at annual general meetings and enforcing certain disclosure and transparency requirements in Zimbabwe. Zimbabwe has also recently enacted the Companies and Other Business Entities Act [Chapter 24:31] 4 of 2019 (COBE Act). The COBE Act provides shareholders with several avenues such as the derivative action, the oppression remedy and the appraisal remedy by which disgruntled shareholders could compel company directors to change their decisions and actions. However, despite these legislative and self-regulatory activism mechanisms that shareholders could employ to improve good corporate governance practices, corporate mismanagement remains a major problem in Zimbabwe. This article analyses shareholder activism under the current self-regulatory and statutory framework in Zimbabwe. It appears that the current statutory and self-regulatory framework for shareholder activism is flawed and inadequately enforced to combat shareholder passivity challenges in most companies in Zimbabwe. Accordingly, some recommendations that could be employed by policy makers and other relevant stakeholders to effectively promote shareholder activism in Zimbabwe are provided.