Beneficial ownership transparency in Zambia

  • Publication date: 21 February 2023
  • Author: Moira Mukuka Legal Practitioners

Executive summary

This report provides a comprehensive review and analysis of the beneficial ownership (BO) laws, regulations and policies in Zambia. It identifies the gaps, inconsistencies and practical challenges faced in implementing BO in Zambia and provides practical recommendations on how the legislative, regulatory and policy framework on BO can be improved. The report provides an overview of BO transparency in Zambia and pinpoints areas that may require further assistance and support in order to establish an effective BO disclosure regime. Zambia’s BO framework has been measured against the Open Ownership (OO) Principles, the Financial Action Task Force (FATF) Recommendations 24 and 25 and the Extractive Industries Transparency Initiative (EITI) Requirement 2.5 on BO.

Zambia has made meaningful progress towards effective BO disclosure and transparency. For example, the enactment of the Companies Act, No. 10 of 2017 (the Companies Act), as amended by the Companies (Amendment) Act, No. 2 of 2020, was a major stride towards BO transparency, as it introduced the definition of BO, the creation of a centralised and public BO register and requirements for companies to disclose their BO information to the Patents and Companies Registration Agency (PACRA). However, our assessment of Zambia’s BO framework reveals that despite having shown commitment to BO transparency and implementing BO reforms, there are still gaps, conflicts and inconsistencies in the legal framework that hinder effective disclosure. This has been exacerbated by challenges in practical implementation of BO reforms, including the costs and financial implications that come with maintaining a digital public registry and the low level of compliance due to a lack of awareness among private sector actors. Regardless, our analysis reveals that these can be addressed by strengthening the legislative framework through legal reform and introducing practical and more effective institutional approaches to BO implementation.

The next legislative amendment cycle is in the first quarter of 2023, and the Companies Act, among other laws, will be tabled before Parliament for amendment. In this report, our main recommendations relate to amendment of the identified legislation and institutional reforms in order to strengthen and optimise the BO framework.

Some of the suggested recommendations include:

  1. Amendment of the Companies Act to include a non-exhaustive list of examples/ways in which BO interests can be held.
  2. Harmonisation of the definitions and thresholds of BO.
  3. Introduction of an effective enforcement and sanctions regime for breach of BO obligations.
  4. Interlinking the PACRA system on BO with public registries and other data platforms hosted by government agencies to enhance verification processes.
  5. Implementation of more realistic and effective measures to verify BO information to ensure its adequacy and accuracy.

In the following sections of this report, we identify the gaps and inconsistencies in Zambia’s BO legal framework and provide practical and clear recommendations, in line with the OO Principles, the FATF Recommendations 24 and 25 and the EITI Requirement 2.5 on BO, on how Zambia can strengthen its BO regime.

Next page: Introduction