Beneficial ownership transparency in Zambia
Introduction
Moira Mukuka Legal Practitioners (hereafter: the Consultant) has been engaged by Global Impact, in collaboration with OO, to support the strengthening of BO transparency in Zambia. The Consultant has undertaken a legislative mapping of the laws that provide for, or are relevant to, BO. Arising from this legislative mapping, the Consultant has prepared this report with analysis of the mapped legislation, identifying the gaps and inconsistencies and making recommendations in line with the OO Principles, the FATF Recommendations 24 and 25 and the EITI Requirement 2.5 on BO. This report primarily focuses on the Companies Act and amendments thereto, as well as on the changes that PACRA should implement in the upcoming legislative amendment cycle to improve the BO transparency of companies in Zambia.
Methodology
The Consultant undertook legislative and policy mapping (the legislative mapping report), through which it identified the key existing legislative and policy frameworks that guide BO transparency implementation, disclosure and data use in Zambia. The Consultant analysed the mapped legislation using the framework of the OO Principles, the FATF Recommendations 24 and 25 and the EITI Requirement 2.5 on BO. The OO Principles [1] set a standard for effective BO disclosure and guide governments, international institutions, civil society and the private sector in understanding and advocating for effective reforms. They are a set of nine interrelated and interdependent principles centred around data disclosure and collection; data availability and accessibility; and data quality and reliability. The FATF Recommendations [2] 24 and 25 provide specific guidance on the implementation of transparency checks and disclosure on the BO of legal persons and legal arrangements. From an extractive perspective, the EITI Requirement [3] 2.5 recommends that countries publicly disclose BO information and maintain a publicly available BO register.
The Consultant undertook its analysis on BO legislation, regulations and policies through desktop research and evaluation of the laws and regulations identified in the legislative mapping report. The Consultant also engaged in-person interviews of representatives from key stakeholders to get their views on the status of BO transparency and what policy or legislative changes could be implemented to improve the legislative framework of BO transparency. The interviews provided context to our findings and highlighted the specific challenges faced in implementing BO transparency and disclosure.
We also presented our recommendations in a stakeholder convening where the stakeholders provided insights on what resources would be required to implement the recommendations. We engaged the following stakeholders:
- PACRA
- Financial Intelligence Centre
- Zambia Public Procurement Authority
- Zambia Extractive Industries Transparency Initiative
- Mining Cadastre under the Ministry of Mines
- Ministry of Lands
Report structure
This report consists of three (3) sections:
1. Introduction: Sets out the general background of the report, the methodology and the synopsis of BO recommendations in the context of the BO legislative landscape in Zambia.
2. Legislative and policy review: Assesses, reviews and analyses the mapped BO legislation by using the following categories:
a. Section, which identifies the particular section in the relevant legislation requiring comment and analysis.
b. Provision, which summarises the regulation set out in the identified section of the relevant legislation.
c. Gaps, conflicts and inconsistencies with other laws, OO Principles, FATF Recommendations 24 and 25 and EITI Requirement 2.5, which sets out how the provision in the identified section is inconsistent with or does not fully capture the meaning of the respective OO Principles, FATF Recommendations 24 and 25 and EITI Requirement 2.5 or is otherwise inconsistent with other laws on BO.
d. Regulator challenges, which sets out the practical and institutional challenges, as shared by the regulator, that present a challenge to implementing the provisions of the legislation against the OO Principles, the FATF Recommendations 24 and 25 and the EITI Requirement 2.5 on BO.
e. Recommendations, which sets out the Consultant’s recommendations on how the identified provisions can be amended or rectified to strengthen BO legislation in line with the OO Principles, the FATF Recommendations 24 and 25 and the EITI Requirement 2.5 on BO. It also provides practical recommendations considering the identified challenges faced by the regulator.
3. Synopsis of recommendations: Provides a synopsis of the general and legislative recommendations and assigns them to the responsible agency/government body.
Footnotes
[1] Open Ownership (updated July 2021), The Open Ownership Principles. Retrieved from: https://openownershiporgprod-1b54.kxcdn.com/media/documents/oo-guidance-open-ownership-principles-2021-07.pdf.
[2] FATF (updated March 2022), The FATF Recommendations: International Standards on Combatting Money Laundering and the Financing of Terrorism & Proliferation. Retrieved from: https://www.fatf-gafi.org/content/dam/recommandations/pdf/FATF%20Recommendations%202012.pdf.coredownload.inline.pdf.
[3] EITI (17 June 2019), “EITI Requirements”. Retrieved from: https://eiti.org/eiti-requirements.