Beneficial ownership transparency in Zambia
Synopsis of recommendations
| Responsible agency | Legislative recommendations | General recommendations |
|---|---|---|
| Patent and Company Registration Agency |
(a) The Companies Regulations should be amended to make provisions for capturing BO information relating to substantial economic benefit derived from transactions and substantial interest. (b) Amend the Companies Act to include a non-exhaustive list of means/ways in which BO can be held, as is the case, for example, in Slovakia’s Act on the Register of Public Sector Partners and on Amendments to Certain Laws (Act No. 315/2015). (c) Amend the definition of substantial economic benefit as far as it relates to transactions by defining the term “transaction”. The definition must clarify what parameters should be taken into account when considering economic benefits. (d) Amend the definition of “control” in the Companies Act to make it consistent with the threshold of 5% set out in the definition of “substantial economic benefit” and “substantial interest”. (e) Amend Section 12 of the Companies Act by deletion of the particulars to be provided in Section 12(3)(e). It should instead provide that the particulars of BO information shall be as prescribed in the Regulations. (f) Revise the Companies Act to provide that sanctions for breach of BO obligations will be provided under the Regulations. (g) Revise the Companies Regulations to include specific penalties for different types of compliance violations, including failure to submit BO information; late, incomplete, incorrect or false submission; and persistent noncompliance. (h) Revise the Companies Regulations to clearly specify the targeted person on whom the penalty will be imposed, whether it is the beneficial owner, declaring person, legal entity or company officers. (i) Revise the Companies Regulations to provide for penalisation of compliance violations through the imposition of administrative fines and other non-financial sanctions, including restrictions on voting rights, board appointments, processing of annual returns and deactivation of a company where noncompliance has persisted for a specified period of time. (j) Revise the Companies Act and Companies Regulations to reserve criminal sanctions for serious BO violations, such as knowingly making false BO declarations, concealing the true beneficial owners of the company, etc. In this regard, section 359 of the Companies Act should be amended to include BO. (k) Revise the BO declaration forms to allow data on the first layer of the ownership chain of a company to be collected for ease and consistency in data collection. The data should be collected in a structured format for interoperability. (l) Amend the Companies Act to include a broad legal basis for the publication of BO information, such as transparency and accountability, in order to meet requirements of the Data Protection Act No. 3 of 2021 and to mitigate against challenges for submission of BO information. (m) Amend the Companies Regulations to clearly define and justify the grounds upon which publication of BO information may be exempted. (n) Amend the Companies Act to implement measures to ensure the adequacy and accuracy of BO information, including an express provision that information declared to the Registrar shall be legally binding. (o) Adopt verification measures, such as requiring BO disclosures to be notarised before submission. (p) Strengthen verification by having recourse to the INRIS. (q) Amend section 270(3) of the Act to make it clear that all companies must confirm, update or provide BO information when filing annual returns. (r) The annual returns indicating change in BO information should also include the nature of the BO and the dates on which BO commenced or ended, as the case may be. This should be accompanied by the Notice of Change of BO form. (s) Amend section 272 of the Companies Act to provide that companies should expressly declare that BO information is the same and has not changed when filing a no change annual return. The section should also clearly state that a declaration of BO should be made where there has been a change. (t) Amend the Registration of Business Names Act by including an obligation for disclosure of BO information of businesses by incorporating requirements of the Companies Act. (u) Amend the BN Form BIII (Application for Registration of Business Name) to include requirement for disclosure of BO. |
(a) One of the qualifications to be considered as having control under the Banking and Financial Services Act is to hold 50% of the issued share capital of a company. This conflicts with the OO Principles, which stipulate that thresholds should be low to reduce the risk that someone with relevant ownership or control remains hidden. (b) Further, the definition of “significant shareholding” means a person who has direct or indirect shareholding or a beneficial interest of 10% or more of the share capital of a financial service provider. |
| Ministry of Mines and Minerals Development |
(a) Amend the Mines Act to include an obligation for mining and exploration licence holders to declare BO information to PACRA. It should also include a requirement for licence holders to provide evidence of compliance with BO declaration from PACRA. (b) Amend the Mines Act to define BO by cross-referencing to the Companies Act. (c) Amend the Mines Act to require BO declaration at licence application stage, renewal stage, transfer stage and at any point where BO changes. (d) Amend the Mines Act to reduce the threshold for what amounts to “control” from 50% of the equity to 5% to align with the threshold in the Companies Act. (e) Amend the Mines Regulations to include provisions for submission of BO in the declaration forms, for which the Mining Cadastre can verify against the BO register maintained by PACRA. |
(a) The Mining Cadastre system should be linked to the PACRA system in a way that allows Mining Cadastre staff to extract BO information and verify against what has been provided by licence holders and applicants. (b) The Ministry of Mines can strengthen verification by having recourse to the INRIS as a reference point. |
| Ministry of Lands |
(a) Amend the Lands (Perpetual Succession) Act by providing a definition for BO which is specific to trusts. (b) Amend the Lands (Perpetual Succession) Act to provide for verification of information submitted by applicants. (c) Promulgate regulations for the Lands (Perpetual Succession) Act to create a standard BO declaration form. (d) Provide a definition of BO in the Lands and Deeds Registry Act which cross-references the Companies Act. (e) Include a provision that companies that wish to own, purchase, transfer or otherwise convey land must declare their BO to PACRA. |
(a) The Ministry of Lands system should be linked to the PACRA system in a way that allows their staff to extract BO information and verify against what has been provided by applicants. (b) Strengthen verification by having recourse to the INRIS. |
| Financial Intelligence Centre | Amend legislation to include a specific threshold of a share in dividends that amounts to control from an AML perspective. | N/A |
| Bank of Zambia |
(a) Amend the Banking and Financial Services Act by lowering the threshold under the definition of “control” in relation to issued share capital of a financial service provider. (b) Revise the Banking and Financial Services Act by amending the definition of BO, control and significant shareholding to be aligned with that in the Companies Act. We recommend a value of 5% on the basis that financial service providers are important industries that require stringent and robust disclosure requirements. |
N/A |
| Securities and Exchange Commission | The threshold under the definition of control in the Securities Act in relation to the issued share capital of a company should be lowered to be consistent with the Companies Act at 25%. | N/A |
| Zambia Public Procurement Authority | Amend the Regulations to provide that beneficial owners are also liable to sanctions and not only directors, shareholders and other principal officers of erring suppliers, as is currently the case. |
(a) Procuring entities and the regulator, the Zambia Public Procurement Agency, should have access to the BO register maintained by PACRA. (b) Procuring entities may seek to strengthen verification by having recourse to the INRIS. |
| Zambia Revenue Authority | N/A | The Zambia Revenue Authority should have access to the BO register maintained by PACRA on companies, the Ministry of Lands on Trusts and the INRIS for verification purposes. |