THE LEGISLATIVE CORRELATION BETWEEN THE NEW COMPANIES ACT 2017 AND THE PATENTS AND COMPANIES REGISTRATION AGENCY IN ZAMBIA. A CRITICAL ANALYSIS.
A DISSERTATION SUBMITTED TO THE SCHOOL OF LAW OF THE UNIVERSITY OF ZAMBIA (UNZA) IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF THE BACHELOR OF LAWS DEGREE IN COMMERCIAL LAW (LLB – COMMERCIAL LAW).
I, NONDE MAELA, of Student Number G12022 do hereby declare that this dissertation presents my own work and that to the best of my knowledge, no similar piece of work has been previously submitted for the award at this university or another university. Where work of another scholar has been used, it has been duly acknowledged.
All rights reserved. No part of this paper shall be reproduced or reprinted without the author’s prior authorization.
THE UNIVERSITY OF ZAMBIA
SCHOOL OF LAW
IN ASSOCIATION WITH
THE ZAMBIA CENTRE FOR ACCOUNTANCY STUDIES
I recommend that this obligatory essay prepared under my supervision
THE LEGISLATIVE CORRELATION BETWEEN THE NEW COMPANIES ACT 2017 AND THE PATENTS AND COMPANIES REGISTRATION AGENCY IN ZAMBIA. A CRITICAL ANALYSIS
Be accepted for examination. I have checked it carefully and I am satisfied that it fulfils the requirements relating to format as laid down in the regulations governing Directed Research Essays.
Mr Dennis Chileshe Signature
DEDICATIONThis research is dedicated firstly to my late parents Mr. Davies S. Maela and Mrs. Sara Chulu. May your souls continue to rest in eternal peace.This research is further dedicated to my sons Ku’wala, Davies Daniel and Nonde Jnr.
To begin with, I give thanks to the almighty God for the life he has blessed me with and the ability to progress through law school till completion.
My heartfelt thanks go to my Supervisor, Mr. Dennis Chileshe, for his guidance without which, it would not have been possible to write this scholarly work.
I also want to give thanks to my beautiful mother Violet Chulu, for the support and engorgement she gave to me after the demise of my parents. When the future seemed to be dark you always provided the touch to show me away through.
I’m further thankful to my sister’s Major Lillian Maela and Mrs. Brenda Chilandu, who together with my brothers Gideon Maela, Mulenga Maela and Chanda Maela provided the much needed support and encouragement that was needed to endure through the hardships that resulted from my pursuit of my law degree. I thank you for your perseverance and patience you have exhibited.
Lastly, but definitely not least, my heartfelt thanks to all my friends and family to be specific, Jayjay Chitendi, Dhozinta Mpuka, Mumbi Chisanga, James Zimba, Abraham Akiwempindi and all those that I may have forgotten to mention. I thank you all for the support you provided and the keen interest in ensuring I succeed in all my studies.ABSTRACTThe Patents and Companies Registration Agency (PACRA) is an autonomous statutory body under the Ministry of Commerce, Trade and Industry in Zambia. Its principal functions are to operate a legal system for registration and protection of commercial and industrial property and to serve as a legal depository of the information tendered for registration. One of the critical roles of PACRA is to promote the establishment and maintenance of a computerized information Centre for the publicity of company transactions, financial positions and the dissemination of technical information contained in patent documents to potential and actual users. In section 2 of the Act, PACRA is designated as a supervisory authority. One of the responsibilities of the supervisory authority is to disclose to the Centre information bordering on Money Laundering, Terrorist Financing and other serious crime as they conduct day to day activities. Taken literally, the need for a system for the registration of companies, business names various aspects of intellectual property law and anything incidental to the foregoing is one that has been acknowledged in many jurisdictions globally. In light of that it has been noted that there has been an increased effort by governments around the world, to streamline their business registration systems in order to gain whatever advantage they could in creating growth and jobs. This essay will attempt to critically assess the efficacy of this piece of legislation and its institutions which presents some very peculiar and rather subtle features and the correlation if any with the Companies Act 2017. This study will further, analyze the Companies Act 2017 to see if this current Companies Act 2017 has managed to address the issues that previous legislature has failed to address and further look at the remedies if any for the breach of natural justice that PACRA Act has not addressed and have thus been amended. This research provides a detailed analysis of the Companies Act 2017 a few months into its enactment as the Company Act that will be a guide to all matters of Companies and Company in the Republic of Zambia. This research in so doing provides brings out a brief history of Companies Act. This research further gives a detailed explanation of the Companies Act 2017 and outlines the innovations and challenges faced by the Act, in so doing this research will further go into detail the Challenges these being Centralization of the Agency, Board Appointments and Composition and the discretionary powers and the principles of Natural Justice. This research will then attempt to provide a critical examination of Part III of the 2017 Companies Act focusing on its administration as well as the administration of other Acts that fall within its jurisdiction and the administration of Intellectual Property Law. This research will then take a detailed look at the International Board of Patents and Companies Registration called the, Patents and Companies Registration in Southern Africa from a Comparative analysis with the Companies Act 2017. The major recommendations that stem from this research will be threefold and will focus on: 1) the decentralization of PACRA and sensitization of the masses. 2) The Compliance and Regulation of Business Activities 3) the Repeal and Assessment of Laws.
TABLE OF STATUTESThe Companies (certificate validation) Cap 414 Act of the Laws of Zambia.
The Registration of Business Names Act No. 16 of 2011 assented to on 12th April, 2011.
The Companies Act 2017 of the Laws of Zambia.
The Patents Act Cap 400 of the Laws of Zambia.
The Trademarks Act Cap 401 of the Laws of Zambia.
The Registered Designs Act Cap 402 of the Laws of Zambia.
The Companies Act, 1994. Cap 388 of the laws of Zambia.
TABLE OF CASESBell v The Eden Project Limited (1) The Eden Trust (2) (2002) 1 BCLC 313
Gomba Holding U.K Limited and Others v. Minories Finance Limited and Others
Magnum (Zambia) Limited V Basit Quandri and Others (1981) Z.R. 141 HC
Re Gurr v. Zambia Airways Corporation Ltd 1998 3 SA 175 (SCA)
Re Smit v Fawcett 1942 Ch 304, CA
Reuss (Princess) v. Bos (1871) LRSS HL 176
List of AcronymsCEEC- Citizens Economic Empowerment Commission
CIPC- Companies and Intellectual Property Commission
GDP- Gross Domestic Product
IP- Intellectual Property
OCIPE- Office of Companies and Intellectual Property Commission
PACRA- Patents and Companies Registration Agency
ROCIP- Registrar of Companies and Intellectual Property
SME’s- Small Medium Sized Enterprises
TRIPS- The Agreement on Trade-Related Aspects of Intellectual Property Rights
UK- United Kingdom
UN- United Nations
ZDA- Zambia Development Agency
TOC o “1-3” h z u DEDICATION PAGEREF _Toc514864930 h ivACKNOWLEDGEMENTS PAGEREF _Toc514864931 h vABSTRACT PAGEREF _Toc514864932 h viTABLE OF STATUTES PAGEREF _Toc514864933 h viiTABLE OF CASES PAGEREF _Toc514864934 h viiiList of Acronyms PAGEREF _Toc514864935 h ixCHAPTER ONE PAGEREF _Toc514864936 h 1General Introduction PAGEREF _Toc514864937 h 11.1.Introduction PAGEREF _Toc514864938 h 11.2.Background PAGEREF _Toc514864939 h 21.3.Statement of the Problem PAGEREF _Toc514864940 h 41.4.Research Objectives PAGEREF _Toc514864941 h 51.5.Research Questions PAGEREF _Toc514864942 h 51.6.Significance of the Study PAGEREF _Toc514864943 h 61.6.1.Scope of research PAGEREF _Toc514864944 h 71.7.Literature review: PAGEREF _Toc514864945 h 71.8Methodology PAGEREF _Toc514864946 h 81.8.Conclusion PAGEREF _Toc514864947 h 9CHAPTER OUTLINE PAGEREF _Toc514864948 h 9CHAPTER TWO PAGEREF _Toc514864949 h 11Company Act 2017: The Challenges and Innovations Patents and Companies Registration Agency Act 2010 PAGEREF _Toc514864950 h 112.1Introduction PAGEREF _Toc514864951 h 112.2INNOVATIONS PAGEREF _Toc514864952 h 122.2.1The Encouragement of Entrepreneurship and Small Business PAGEREF _Toc514864953 h 122.2.2Focus on enhancing small business enterprises. PAGEREF _Toc514864954 h 152.2.3Corporate Capacity ; Administration of Company Law with regard to Intellectual Property. PAGEREF _Toc514864955 h 152.3CHALLENGES PAGEREF _Toc514864956 h 172.3.1Rushed Decentralization of the Agency (PACRA) PAGEREF _Toc514864957 h 172.3.2Board Appointments and Composition PAGEREF _Toc514864958 h 182.3.3Discretionary powers and the principles of natural justice PAGEREF _Toc514864959 h 202.4Conclusion PAGEREF _Toc514864960 h 23CHAPTER THREE PAGEREF _Toc514864961 h 25A Critical Examination of Part XVI (Administration of Act) PAGEREF _Toc514864962 h 253.1 Introduction PAGEREF _Toc514864963 h 253.2 The Administration of Company Law (PART XVI) PAGEREF _Toc514864964 h 253.3 The Companies Act PAGEREF _Toc514864965 h 253.4 The Administration of Company Intellectual Property Law PAGEREF _Toc514864966 h 293.4.1 Patents Act Cap 400 of the Laws of Zambia PAGEREF _Toc514864967 h 303.4.2 Registered Industrial Designs Act Chapter 402 of the Laws of Zambia PAGEREF _Toc514864968 h 323.5 CONCLUSION PAGEREF _Toc514864969 h 32CHAPTER 4 PAGEREF _Toc514864970 h 33THE PATENTS AND COMPANIES REGISTRATION IN SOUTHERN AND CENTRAL AFRICA; A COMPARATIVE ANALYSIS PAGEREF _Toc514864971 h 334.1Introduction PAGEREF _Toc514864972 h 334.2The Institutions in Various Jurisdictions PAGEREF _Toc514864973 h 334.3Comparisons PAGEREF _Toc514864974 h 344.4Registration of Business names in Southern and Central Africa PAGEREF _Toc514864975 h 344.5Southern and Central Africa Company Laws linking to Companies PAGEREF _Toc514864976 h 364.6Differences PAGEREF _Toc514864977 h 374.7Registration of Business Names in the Selected Countries PAGEREF _Toc514864978 h 374.8Company Laws Relating to Companies in Selected Countries PAGEREF _Toc514864979 h 384.9Conclusion PAGEREF _Toc514864980 h 39CHAPTER 5 PAGEREF _Toc514864981 h 41CONCLUSIONS AND RECOMMENDATIONS PAGEREF _Toc514864982 h 415.1Introduction PAGEREF _Toc514864983 h 415.2Outcomes PAGEREF _Toc514864984 h 415.3Recommendations PAGEREF _Toc514864985 h 425.3.1The Decentralization of the agency and sensitization of the masses PAGEREF _Toc514864986 h 425.3.2The Compliance and Regulation of Business Activities PAGEREF _Toc514864987 h 445.3.3The Repeal and Assessment of Laws PAGEREF _Toc514864988 h 455.3.4The Composition of the Board and Discretionary Powers PAGEREF _Toc514864989 h 475.4Conclusion PAGEREF _Toc514864990 h 47Bibliography PAGEREF _Toc514864991 h 49
CHAPTER ONE General IntroductionIntroductionOver the last couple of decades, quite a lot of countries have acknowledged the significance of smooth and efficient business start-up procedures. A functioning business registration system1 is viewed as an essential regulatory requirement of any economy, and in addition, a predictable, transparent and modern business registration system is recognized1to help promote private sector growth and job generation. Business registration represents the beginning of an economic life cycle for1entrepreneurs. The need for a system for the registration of business names, companies, various aspects of intellectual property law and anything incidental to the foregoing is one that has been acknowledged in many jurisdictions around2the world.
The patents and Companies Registration Agency Act No. 15 of 2010 of the Laws of Zambia was enacted to respond to the needs of the business community in a bid to create an efficient agency and amalgamating the mandate of the Registrar previously provided for under various pieces of legislation. The Act gives the Registrar the2authorization to oversee the administration of the Companies Act, Registration of Business Names Act, the Patents Act, the Trade Marks Act, the Registered Designs Act and the Companies2(Certificate3Validation) Act. The Patents and Companies Registration Agency Act is an Act which among other things creates the regulatory body called the Patents and Companies Registration Agency (PACRA). This research study seeks to give a brief historical back ground as to what was prevailing prior to the Companies Act 2017 and analyze the Companies Act 2017 with regard3ito Part 16, the Administration Act of Companies registered with regard to PACRA. Furthermore the statement of the problem and the significance of the study will put into perspective and will also highlight the methodology to be employed by the study. Thereafter, a conclusion will be drawn from the information that will be collected and analyzed.
BackgroundThe Patents and Companies Registration Agency (PACRA) is an autonomous statutory body under the Ministry of Commerce, Trade and Industry in Zambia. Its principal functions4are to operate a legal system for registration and protection of commercial and industrial property and to serve as a legal depository of the information2tendered for registration. One of the critical roles of PACRA is to promote the establishment and maintenance of a computerized information Centre for the publicity of company transactions, financial positions and the dissemination of technical information contained in patent documents to potential and3actual users. In section 2 of the Act, PACRA is designated as a supervisory authority. One of the responsibilities of the supervisory authority is to disclose to the5Centre information bordering on Money Laundering, Terrorist Financing and other5serious crime as they conduct day to day activities.
Taken literally, the need for a system for the registration of companies, business names various aspects of intellectual property law and6anything incidental to the foregoing is one that has been acknowledged in many jurisdictions7globally. In light of that it has been noted that there has been an increased effort by governments around the world, to streamline their business registration systems in order to gain whatever advantage they could in creating growth and8jobs. This essay will attempt to critically assess the efficacy of this piece of legislation and its institutions which presents some very peculiar and rather subtle features7and the correlation if any with the Companies Act 2017. This study will further, analyze the Companies Act 2017 to see if this current Companies Act 2017 has managed to address the issues that previous legislature has failed to8address and further look at the remedies if any for the breach of natural justice that PACRA Act has not addressed and have thus been8amended.
The PACRA Act was passed in 2010. The Act inter-alia transformed old legislature of doing business as a Company in Zambia into a legal entity with perpetual succession and a common0seal, capable of suing and being sued in its corporate name and with power, subject to the provisions of the Act, to do all such things as a body corporate may by law do and0perform. It further created the office of the Chief Executive Officer responsible for the management and administration of the affairs of the Agency and, in particular the various statutes that where active in Zambia8before its enactment.
The enactment of the PACRA Act was the solution to the wide-spread problems alluded to previous legislature or government controlled entities for instance PACRO faced. However, there are other difficulties still being faced which were in existence during the life-time of PACRO which have not been addressed by the PACRA Act and further9some issues that have arisen out of the PACRA Act, it is for this reason that this study aims that the Companies Act 2017 is analyzed so as to understand if these issues have been addressed in it. There are some of the few9issues that can be pointed9out about PACRA and must be addressed by the Companies Act 2017 is that PACRA is limited to the line of rail making registration of businesses in remote areas very difficult. This situation has9encouraged the growth of the informal sector thereby excluding some businesses from contributing to the Gross Domestic Product (GDP) and limiting the tax base. In addition, the9lack of a decentralized business registration system currently make compliance with the provisions of various pieces of legislation expensive leading9to high cost of doing business in9Zambia.
Furthermore examination of the Companies Act 2017 leads to the discovery that certain sections of the PACRA Act had addressed the breach of the principles of natural justice that was not addressed in the previous PACRO. One such breach is9seemingly contained in section 5 (1) (b) of PACRO which empowered the Agency to receive, investigate and prosecute complaints of alleged breach of the Act. It is therefore the view of this treatise that giving the Agency powers to9issue registration certificates and to receive, investigate and prosecute alleged complaints is in breach of the principle of natural justice. In addition, many sections of the PACRA Act give the Agency blanket authority which is subject9to abuse.
This study will further examine the seemingly wide discretionary powers vested in the Agency and also attempt to determine susceptibility to abuse. Additionally, it is imperative9to examine whether the Agency in carrying out its mandate adheres to the principles of good corporate governance. This exposition will attempt to critically analyze various aspects of the Companies Act 2017, point out9any shortcoming of the Bill and how these shortcomings could be addressed. The study will also undertake comparative study of similar legislation in other jurisdictions these being South Africa, Botswana and Namibia. It will9also examine the patents and companies registration procedure and its intricacies from different jurisdictions giving a comparative analysis of the procedures to the one prevailing in our jurisdiction. Furthermore, the9advent of the Company Act of 2017 of the Laws of Zambia which may spark mixed reactions from the business community and these reactions will be examined and recommendations made there9to.
Statement of the ProblemThe Companies Registry has seen a steady growth of the number of companies being registered prior to the opening up of Zambia’s economy. In order to the9regulate the growth in the number of companies9in Zambia, the companies Act was enacted in 1994 and the moving of the companies registry to an independent building separate from the Ministry of Commerce this was so as to adequately accommodate the growing number of people starting their own businesses. However good accommodation only of9the Companies Registry, and a Companies Act that from many researchers, scholars and time, have reviewed Zambia’s Company Acts have pointed out that the PACRA Act does not adequately address the needs of Companies and regulation of Companies9in Zambia is not enough to sustain and meet the needs of Companies and the rapid growth of new businesses it is for this reason that this research aims to answer if the new Companies Act 2017 of the laws of Zambia has addressed issues regarding the needs9of Companies and regulation of Companies or9not.
This paper attempts to critically analyze9the Company Act of 2017 with regard to Company Administration in Zambia, giving an appraisal of the novel piece of legislation and also highlighting any areas of weaknesses the Company Act of 2017 may9have. This study will in addition, analyze the various pieces of legislation falling under the Registrar’s mandate highlighting areas that may be in need for change. Furthermore, this paper will offer a comparative analysis of the Companies Act 20179with legislation from a few select Southern African Countries and see9which areas the Zambian Company Law may follow suit.
Research Objectives(a) To analyze the law that governed Companies before and after Zambia’s independence to the enactment of the9Companies Act 2017.
(b) To analyze Company Act of 2017 Administration Act and the correlation with previous Company9Law Legislature specifically the PACRA Act of 2010 and PACRO.
(c) To evaluate the roles and duties of Companies Registry in Zambian Company Law.
(d) To analyze if the cost of doing business in Zambia is due to lack of decentralization of Company Registration in Zambia.
Research Questions(a) What Company Law governed Zambian Companies before Companies Act 2017?
(b) What is the correlation between the Companies Act 20179and it’s predecease the PACRA Act of 2010?
(c) What are the roles and duties of Companies Registry in Zambia?
(d) Why lack of decentralization of Companies Registry increases the cost of doing business in Zambia?
(e) Why previous Acts and Policies cannot fit in this technological era and will the Companies Act 2017 be effective?
Significance of the StudyThis study can be said to be of great significance both theoretically and practically. Theoretically, it is understood that the Companies Act 20179is focused regulating the institutional framework9for all the enterprises that directly or indirectly promote growth, employment, innovation, stability, good governance and in9assisting Zambian Companies in becoming more competitive internationally. Thus the institution is one face with the critical task of promoting government policy and ultimately national development as it will be under the supervision of a board constituted by9government. It is therefore significant to ensure9that the mandate of the Bill is carried out meticulously and effectively. This discourse will endeavor to critically analyze the PACRA Act and also the agency, consider if the mandate is sufficient in order for Companies Act 2017 to effectively carry out its job and highlight if there will be a need9for reform.
In light of the significance of the existence of a smooth running Registry, this study is important because registration, especially9of business names and companies is a tool utilized in the everyday lives of most Zambians. The use of PACRA has become increasingly important as more and more people across the country seek to register businesses, 9trademarks or patents. It is important to ensure that the mechanisms employed in the registration process generally are of the highest standard in order to result in9efficiency of the Agency.
In addition, stable and professional business9registration institutions help establish standards of trust, transparency, and predictability, ensure that the public is informed of the facts as quickly as possible. Simply stated, the Agency is supposed to run as a ‘well-oiled machine’ catering efficiently9to the needs of the business community. Thus, it is important to ensure that the legislation behind the Agency is sufficient enough9to ensure the smooth running of the Agency. The Companies Act 20179focuses on further regulating the institutional framework for all the enterprises that directly or indirectly promote growth, employment, innovation, stability, good governance and in assisting Zambian companies in becoming more competitive9internationally.
Scope of researchThis study focuses on analyzing Company Law in light of the new enacted Company Act 2017 in Zambia, the structures and procedure in the Act before the Company Act 2017, it will also analysis the PACRA Agency with regard to other jurisdiction namely Botswana, Namibia and South Africa and the instruments they use to conduct business in their countries, a comparison and difference between our way of conducting business, the differences and to find out how best we as a country can fall in line with Business, Innovation and economy growth.
Literature review:Company Law is defined very broadly as being the total of those legal principles which regulate both large and small scale organizations of industrial and business management and finance9in most branches of everyday economic life and which define the relative rights and duties of those participating in those organizations and delimit the powers of the organization vis-à-vis the external9world. Keith Abbott a company law scholar defines a company as an association with personality9distinct from that of its members. According to the Zambian Companies Act, the company is defined as a9company incorporated under the Act or subject to section 4 and division 14.3, an existing9company.
Due to the increase in the number of companies being setup in Zambia, the patents and companies registration9agency act was enacted to regulate companies through the creation of the Patents and Companies Registration Agency (PACRA), which replace the Patents and Companies Registration office (PACRO) which was a department run9under the Ministry of Commerce, Trade and Industry. PACRO was meant to be a regulatory and9depository of business related information. However there was no legal and statutory instruments establishing9it, hence it was merely a department under a Ministry, PACRA was created to make the regulation of businesses more efficient by making an independent body governed by legal instruments9and independent as compared to9PACRO. The key functions of PACRA are to register companies, business names, trademarks and industrial designs, also to grant patents, the creation of the Agency harmonized the Companies9Act, the Certificates9Validation Act , the Registration of Business Names Act, the Patents Act, the Trade Marks9Act and Registered Design9Act under one Regulatory9body. PACRA though addressing some of the problems and shortcomings of PACRO still has some issues that need to be addressed, lack of decentralization is one of them, and PACRA still only operates along the line of rail this lack of a decentralized business registration system makes9the cost of doing business in9Zambia rise. Furthermore the PARCO Act9was discovered to have certain sections of the Act in breach of the principle of natural justice. For instance section 5 (1) (b) of the PACRA Act9which empowers the Agency to receive, investigate and prosecute complaints of the alleged breach of the Act. It was9therefore the view of these treatise that giving the Agency powers to issue registration certificates and9to receive, investigate and prosecute alleged complaints is in breach of the principle9of natural justice It is due to such.
In conducting research into the Agency and the Act, this paper will employ the legal comparative approach which by its nature concentrates on previous legislature that Zambia has enacted prior to the current9Companies Act 2017. The research will be a desktop research and thus the demonstrative or a priori method of logical analysis will be used so that the implications of Companies Act 2017 will be unfolded and juxtaposed with the relevant law in Zambia and other9jurisdictions. It should therefore be kept in mind that this method emphasizes logical implications of the premise9or validity of the inference rather than its truth value or desirability.
This research will critically analyze the Patents and Companies Registration Agency Act, giving approaches of the Company Bill of 2017 of the Laws of Zambia and highlighting any areas of9weakness the old may have and may have been changed in the Companies Act 2017. The research will use a qualitative approach method by reviewing and examining the literature9on Company Law, The Patents Act Cap 400 and Companies9Act 2017 of the Laws of Zambia.
ConclusionIt is a trite fact that the west has prospered through the liberal market economy; that is an economy driven by the private9sector. The contribution and role played by the Agency is critical to the stable and steady growth of the private sector and in turn to national development. Mostly as a result of ignorance and lack of understanding of the law, Zambia9has alienated its citizens from contributing to the growth of the economy. This is a matter that can be fixed through massive sensitization and the simplification of certain cardinal pieces of legislation like9the Company Acts that continue to evolve with the current global changes that add value to the economic Zambian Gross Domestic Product from anyone who’s making a profit in any form9of Business in Zambia.
CHAPTER OUTLINEThis research comprises of five Chapters that elaborate the detailed analysis of the Companies Act 2017 a few months into its enactment as the Company Act that will be a guide to all matters of Companies and Company in The Republic of Zambia.
Chapter one of this research will be comprised of the introduction on Company Law in Zambia, a brief history of Companies and the legislature, a synopsis of the Companies Act 2017 and the critical analysis of the Companies Act 2017 .
Chapter two will further continue to explain the Companies Act 2017 into detail by looking at the innovations and challenges the Companies Act 2017, may have and face in the case of innovation the research will critically look at the separate legal existence of the how it has improved on the creation of an umbrella body as an Act, the enhancing on small business enterprises in Zambia and administration of Intellectual Property Law. The Chapter will further go into detail the Challenges these being Centralization of the Agency, Board Appointments and Composition and the discretionary powers and the principles of Natural Justice.
In Chapter three, the research will have a critical examination of Part III of the Companies Act 2017 of the Laws of Zambia. The focus in this Chapter is to critically look at the Administration of Company, the Companies Act 2017 and other Acts that fall within the jurisdiction of Company Law in Zambia and the Administration of Intellectual Property Law.
Chapter four will elaborate and go in detail and look at the international board of Patents and Companies Registration called the, Patents and Companies Registration in Southern Africa from a Comparative analysis with the Companies Act 2017 from their merits perspective and demerits perspective.
In the final Chapter which will be chapter five of this research, the research will give conclusions and recommendations, these being the findings of the research the recommendations and finally the conclusion of the research.
CHAPTER TWOCompany Act 2017: The Challenges and Innovations Patents and Companies Registration Agency Act 2010IntroductionThe Patents and Companies Registration Agency’s principle functions are to operate a legal system for registration and protection of commercial and industrial property and to serve as a legal depository of information tendered for9registration. As already stated in chapter one of this essay, then Patents and Companies Agency Act is the paramount law governing registration of various business in Zambia providing the legal basis9for what is supposedly one of the important institutions organizing and galvanizing the economy. The reason9for this is simple; it all begins at the Agency. The9Patents and Companies Registration Agency Act, 2010 established PACRA and thus provides for its functions and the powers of the officers of9the Agency.
The function and objectives of the Patents and Companies Agency Act 2010 has been stipulated in the preamble which states that the Act was enacted to establish the Patents and Companies Registration9Agency, provide for the functions of the Agency and also to transfer from the government to the agency the functions and powers of the offices of the Registrar of the Companies, Registrar of Registered Business names,9Registrar of Patents, Registrar of Trademarks and Registrar9of Registered Designs. Its mission is to promote innovation, orderly trade and competitiveness of the Zambian industry and commerce through the provision9of information and the registration system of commercial and industrial property rights.
This chapter will attempt to critically examine the Patents and Companies Registration Act 2010 with regard to Company Act 2017 and will to9this effect essentially be divided into9two parts. The first part will comprise an attempt to appraise the Act examining various innovations that are as a result of the enactment of the Patents and Companies Agency9Act, 2010 and establishment of the Agency that was as a result of the enactment while the second part will highlight certain sections under the Company Act of 2017 that have9given rise to debate and the challenges still being faced by the Agency in the fulfilling of its objectives laid out under the legal9norms of Company Law that’s administrated in Commonwealth Countries globally.
INNOVATIONSThe Encouragement of Entrepreneurship and Small BusinessThe first and perhaps the most noticeable innovations under the Company Act of 2017 of the republic of Zambia is the continued effort to9promote and empower the development of the economy by encouraging entrepreneurship, enterprise efficiency, flexibility and simplicity in the formation and maintenance of companies; provide for the incorporation, 9categorisation, management and administration of different types of companies; provide the procedure for the approval of company names, change of name and conversion of companies; provide for shareholders’ rights and9obligations, the conduct of meetings and the passing of resolutions by9shareholders; to encourage transparency and high standards of corporate governance by providing for the functions and obligations of company secretaries and directors. The term director is not defined by the Companies Act, it does however state that
“…any person who is appointed by the members of a company to direct and administer the business of the company shall be deemed to be a director of the company.”
The fiduciary duties of directors are laid out in case law, following the English common law system however, case law in Zambia is sparse and emphasizes loyalty to the company. The main common law duties of directors are outlined as follows:
A director is expected to act bona fide in the interest of the company. That is to say the directors have a fiduciary duty to avoid any conflicts of interest. It was stated in the case of Re Smit v Fawcett by Lord Greene MR that:
“Directors must exercise their discretion bona tide in what they consider- not what a court may consider is in the best interests of the company, and not for any Collateral purpose”
It was further stated in the case of Bell v The Eden Project Limited (1) The Eden Trust (2) where a director attempted to register the company Trademark in his own name that he (the director) was in breach of his fiduciary duty as registering the trademark in his own names would be considered to be in his personal interest and not that of the company.
The director is obligated to exercise reasonable care and skill in carrying out his duties. It was observed in the case of Dorchester Finance Co. v Stebbing two non-executive directors signed blank cheques at the request of a full time director who in turn embezzled company funds. The two non-executive directors were found to be negligent especially as they were both qualified accountants.
In determining whether a director has applied reasonable care a judge looks to the general knowledge, skill and experience expected from a ‘reasonable diligent person’ in their position.
It was can also be noted that transparency is essential in these appointments. Transparency is defined by the Black’s Law Dictionary as:
“Openness, clarity, lack of guile and attempts to hide damaging information. The word is used of financial disclosures, organizational policies and practices, law making and other activities where organizations interact with the public.”
Transparency is an essential element of a well-functioning system of corporate governance. Just as good government requires transparency so that the people can effectively judge whether their interests are being served, corporations must also act in a democratic and transparent manner so that their owners can make educated decisions about their investments.
This in turn enhances corporate governance. Corporate Governance is an issue of global importance. It promotes the efficient use of resources be the corporation. It also promotes investor confidence and encourages business. Till recently however, issues of transparency and accountability where not taken on board, this is based on the fact that corporate governance is considered to be quite a new phenomenon in the Zambian context.
Further services include to provide for issue of shares, share capital requirements,9procedures for alteration and reduction of share capital and disclosure requirements of companies; provide for the public issue of shares, the issue and registration of charges and debentures; incorporate financial9reporting provisions, maintenance of accounting records, and access to financial information of companies; provide for amalgamations; provide for the registration of foreign companies doing9business in Zambia; provide for the deregistration of companies; repeal and replace the Companies Act, 1994; and provide for matters connected with or incidental to the9foregoing.
The Company Act of 2017 has continued to provide for PACRA the perpetual succession and a common seal, capable9of suing and being sued in its corporate name and with power, subject to the provisions of the Act, to do all such things as a body corporate may by law do and9perform. What this entails is palpable; the Agency will continue enjoying all the benefits that accrue as a result of one being a body9corporate at law including the owning of property and may be held responsible for human rights9violations. Therefore, the Agency will continue to be held personally liable for9any wrong doing as you would hold a company incorporated under the Company Act of 2017 liable.
The Company Act of 2017 has further continued to create an umbrella body that is seemingly vital to the registration and operation of 21st century way of doing businesses in9Zambia as it has been noted in the above paragraph, this is start point of economic growth. The creation of the Company Act 2017 has brought a sense of sanity back to the Agency which did not run so smoothly during the Company Act 2010 and9before. Prior to the enactment of this Company Act of 2017 applications to the Agency for instance the registration of a Company name could take up to a week from the9online registration to standing in line as system failures at its branches which in turn has in some cases lead to corruption and bribery as people wanted to register their companies or conduct searches as promptly as9possible.
Focus on enhancing small business enterprises.In addition, the agency has prioritized the formalization of small businesses as well as businesses run by the youth. Consequently, in light of this, the Agency has continued to embark upon decentralization9of its services in all provinces of9Zambia. In furtherance of this goal, the Agency has continued to working with micro financing institutions and commercial banks in providing their services in all business sectors and in mobile registrations of Companies. This entails capturing the informal sector and9to a certain extent formalizing it and having them contribute to the country’s gross9domestic product.
Corporate Capacity & Administration of Company Law with regard to Intellectual Property.The Agency’s mandate of granting industrial property rights in the Company Act 2017 under part III (Corporate Capacity and Administration) it has further recognized that intellectual9property is a tool for promoting socio-economic development of nations. Therefore, development of a nation is gradually becoming dependent on creations of the human mind and the application of such knowledge and ideas as intellectual capital9in various areas of development which has significantly contributed to the creation of which in these9nations. Industrialized countries have effectively utilized intellectual property as a tool for social and economic development while developing countries including Zambia have continued to lag behind in this area. In this regard, during the enactment of the9PACRA Act stakeholders and parliament repealed and replaced the industrial property legal regime and through the Industrial Design Act No.22 of 2016 which was brought about as a result9of the PARCA Act. Among other new features, because of new9global laws, Company law in Commonwealth Countries have broadened the scope of protectable intellectual property assets to assets to include service marks which have been vital in promoting trade in services; geographical9indications which are essential in developing natural and agricultural products; and utility models which protect minor inventions mainly by small businesses and also to widen the scope to the9possible protection of traditional folklore which is currently not recognized as befitting of9protection therefore we must note that, countries like Zambia,9Botswana, South Africa etc. have not left their aspect of company law behind this innovation in Company9Law.
Additionally, it has been accepted that, despite there being many stakeholders in the intellectual property of Company law field, a significant number of them are not aware of their role in intellectual property of Company Law development and utilization in most African9Countries. Therefore, pursuant to the mandate granted to the Agency in part XVI (Administration Act) of the Company9Act 2017, awareness programs in the print and electronic media on the importance of registering a business, patent, and a trademark would has been9intensified. This is also in relation to not only the aforementioned youth program started in9the previous Company Act but also to awareness on the laws governed by the Agency.
CHALLENGESIn spite of the innovations advanced, the Company Act of 2017 in its recent time of enactment has received a certain amount of criticism from stakeholders and the Agency continues not to be free9from challenges. Some of the criticisms and challenges of the Agency because of the new Company Act 2017 are;
Rushed Decentralization of the Agency (PACRA)The Agency until recently has had a limited outreach9with offices limited to only the provincial headquarters in the country mostly in only the provincial headquarters thus limiting business registration to the very few in the province because of the logistic expenses. This is a concern9because it makes the registration of businesses in remote areas very difficult. This situation has encouraged the growth of the informal sector thereby excluding some businesses from contributing to the Gross Domestic9Product (GDP) and limiting the tax base. In addition, the lack of adequate decentralized business registration in all districts across Zambia and the inefficient online system they introduction after the Company Act 2010 has made compliance with PACRA expensive leading to high cost of doing business in9Zambia. Seemingly, this is more of a policy9issue and thus not a concern for the drafters. However, upon examination it is clear that the loss is suffered by the Agency and in the long run the country loses out from this contribution to the economy. This is so, because9while the Agency loses out financially, certain9stakeholders away from the line of rail are susceptible to penalties incurred as a result of inadequate Administrative systems9put in place to make registration easy. Therefore it is of great respect that in the Company Act of 2017, the issue of decentralizing the Agency has been maintained as it has been thus making the Agency to be accessible countrywide as a strategic plan for the Agency in the coming9future.
It must be pointed out that the Agency in the last decade entered into partnerships with the Citizen’s Economic Empowerment Commission (CEEC) through which it provides its services in9districts like Kasama, Mansa and Solwezi and its regional offices in provincial headquarters across Zambia such as in Chipata, Livingstone, Mongu, 9etc. This is all in the bid to bring its services closer to the business community and thereby reduce the9cost of registration and furthermore, it has entered into partnerships with local authorities and under this service, applicants able to collect and submit application forms and receive certificates through local9authorities.
However, the current agency agreements between some regulatory authorities such as Ministry of Health and Ministry of9Commerce, Trade and Industry, though stipulated in Law are not satisfactory as there is no operational framework as to the nature and degree of the exercise9of the delegated functions, 9which has resulted in duplication of processes and procedures and issue of permits and licenses and in certain cases commission for carrying out those functions is not paid9for. On the other hand, the principals do not receive the revenue for the issuance of such licenses, permits or certifications, thereby raising the issue of accountability within the system of Company Law in Zambia as a9whole.
Board Appointments and CompositionAs the scale in the activities of corporations has9increased immeasurably, the governance of these entities has assumed considerable importance. Business Corporations have an enduring impact on societies and economies and how corporations are governed, their ownership and control, and objectives they pursue, the rights they9respect, the responsibilities they recognize and how they distribute the value they create has become a matter of significance not only for their directors and shareholders but also the wider community they9serve. In light of this there is need to ensure that the composition of the Board is such that it is able to carry out its functions meticulously and without outside9influence.
It is observed that the institutions and expertise for qualifying persons to be appointed to the Board are specified and stipulated in the Company Act of 2017 with the exception of the ‘two9other persons’ to be appointed by the Minister. In addition, the Minister has continued to have the9instruction to appoint the chairperson and vice-chairperson of the board9a situation prevailing only under7PACRA (and a few other institutions such as the Zambia Development Agency) which is contrary to modern corporate governance practice. This7practice of giving unfettered power to the Minister is not democratic and in the long run weakens the7Board. It would be more desirable if the members of the Board elected their own Chairperson and Vice-Chairperson to engender trust and confidence. The Chairperson7and Vice-Chairperson should not feel indebted to anyone7on their appointments and many more effectively carry out their7functions.
Furthermore, the Company Act of 2017 under7part III (Corporate Capacity and Administration) stipulates the7institutions and stakeholder to be appointed as a member of the board. The issue to be considered here is the relevance of certain appointments and whether or not certain stakeholders left out should have been included. For7instance one might consider that a lawyer specialized in the commercial industry should have been considered to be appointed as a member of7the board considering the nature of the business carried7out.
The Company Act of 2017 has reduced the centralization of power which brought about concerns in the past regarding7section 7 (b) of the power of the Minister in the PACRA Act of the previous Company Act of 2010. This is because of the increasing trend by Government to dissolve Boards and7relieve members of these Boards of their duties which effectively undermined the principles of corporate good7governance. The result of this may lead to people shying away from appointments to7the Board for fear of being relieved of their duties and flimsy grounds and in most cases also lead to corrupt practices as individuals in the Board try to enrich themselves before they lose their positions.
In furtherance of this there is also a need to overhaul7the Companies Act in order to not only enhance corporate governance but also corporate social responsibility and7the creation of an ideal legal platform for the modernization of the registry and the maintenance of an ideal business7environment. There is also7a need to continue aligning the Company Law in Zambia with other relevant laws and make corporate law much more responsive to national economic development7challenges. Effective enforcement of the Companies Act has also emerged as another challenge as regards compliance with some of the regulations laid7out by the Company Act of 2017.
Discretionary powers and the principles of natural justiceDiscretion denotes right or power to choose between several alternatives and every aspect of administration presupposes vesting of wide7discretionary powers. In relation to PACRA, this would include7the issuance of licenses, appointment of people to the board etc. Discretion exists in its7worst form in the arbitrary will of rulers, and therefore today discretionary power claimed by government institutions and officials must have statutory7basis. This preposition is fostered by the desire for certainty, fairness and the elimination of personal factor in7administration.
The determinant of discretion is that the language confers an element of personal judgement and this can be as regards the act itself or the7manner in which the act is done. Where neither the purpose nor legislative standards are specified the discretion is said to be absolute and unfettered or unqualified. Possible tyranny of individual public officials is a very7serious problem defying both political and judicial controls because by its nature discretionary power is not susceptible to7external control but it is however, situation that can be controlled by7statute. The lack of which may result in the administrators being authorized7to legislate and even judge and furthermore execute at one go, without fear of the electorate’s scrutiny for re-election or having the training of a judge7respectively.
It is imperative to note that discretion is important for personalized treatment of problems in administration7of public health, safety, education, licensing, planning7and development etc. as is it possible for legislator to7draft for every conceivable constraint. However, in certain instances they avoid wide discretionary powers in administration as these have in most situations7been abused.
Examination of Part XVII (Enforcement and General Provisions) of7the Company Act 2017 reveals various circumstance under7which, the Minister or the Board of the Agency, is at liberty to utilize its discretion in the decision making process. Some of these circumstance give rise to question the necessity of the said discretion. The first red flag to be raised7as regards discretionary powers may be found in Part XVII of company act of 2017 where it provides for the appointment7of other persons without specifying the qualification that the persons must possess and this is clearly a section that is7open to abuse. The Minister is a section that is7open to abuse. The7Minister is at discretion to appoint any random two members whether they add value to the board or7not.
In addition the Company Act 2017 vests in the Minister, the power to remove a member of the Board and the Act does not state under what conditions that power may be7exercised. The aforementioned power7may be abuse. This is supported by developments in parastatals where members serving on similar boards are relieved of their duties without good7reasons. Therefore, the Act should specify under what circumstances the Minister may remove a member of the Board7thus to limit the susceptibility of the abuse of the said discretionary7powers.
Tied7to the use of discretionary powers are the7principles of natural justice which concern procedural fairness and aim7at ensuring a fair decision is reached by an objective decision maker. This is important because maintaining procedural fairness protects the rights of individual and enhances public confidence in the7process. Another principle7of great relevance to this exposition is that of ‘nemo judex in parte7sua’ which translated means that no one ought to be judge in his or7her case.
The aforementioned principles are directly related7to the requirement that deciding authority must be unbiased when according the hearing or making the decision. In a manner of speaking that it is important for7investigators and decision-makers to act without bias in all procedures connected with the making of a7decision. A decision-maker must be impartial and must make a decision based on a balanced and considered assessment7of the information and evidence before him or her without favoring one party over7another. Even where no actual bias exists, 7investigators and decision-makers should be careful to avoid the appearance of bias and they should ensure that there is no conflict of interest which would make it inappropriate7for them to conduct the7investigation.
What constitutes the observance7of natural justice in all cases cannot be simply stated. The law requires fairness from a person exercising an administrative power. Granted, this is not something that can be set down in anticipation or in a fixed body7of rules, as what is fair in any given situation depends on the circumstances. However, statutes must7be construed in a manner that they do not contradict laid down principles that have come to be regarded as a fixed body of7rules.
As can be seen in Part XVI (Administration of Act) of the Company7Act of 2017 which empowers the Agency to receive, investigate and prosecute complaints of alleged breach of the Act raises concern as regards7the principles of natural justice. Giving the Agency powers to issue registration certificates and receive, investigate and prosecute alleged complaints7was in breach of the principle of natural justice. How can it be that the agency7can objectively examine a claim against it? As illustrated above, a decision7maker must be impartial and show no bias arriving at a conclusion7and an investigator should ensure there is no conflict of interest. Allowing the7agency to receive and carry out any complaints regarding a breach of the current7company act of 2017 any Acts administered by it shows a flagrant breach7of the principles of natural justice.
Furthermore, it7must be noted that there is an appeal mechanism established under7each of the Acts the Registrar administers which therefore leads to a conflict between the various statutes and the Company Act of 2017. The question to be7raised is which Act supersedes the other when a conflict arises. This begs7the question what then is the function of the appeal procedure7established under each of the Acts listed in Part XVI (Administration of Act). There is need for a clear distinction to be drawn between the appeal procedure in the respective Acts and the functions of the Agency as laid out in Part XVI. Moreover, there should be an independent body established to receive any alleged breaches of the Act and prosecute the offences under the Company Act of%2017.
In addition, as there is no express mechanism under*the PACRA Act, section 3 of which provides inter-alia that the Agency is a body corporate which may sue and be sued in its own name, one must rely on the seemingly*unjust section 5 (b) which vests in the agency, the*power to receiver and investigate all complaints of a suspected breach of the Company Act 2017 and any*Act Administered by the Agency should be reported to the Agency and*an investigation carried out there in if any complaint arises. Thus the liability of the Board is limited to the scope provided for under the Company Act*2017 via the*Registrar.
ConclusionThis chapter has attempted to analyze the Company Act 2017 in a bid to highlight the innovations continued from previous Acts before its enactment. Innovations which it must*be stated*would not*be possible without the Acts as prior to the said enactment; PACRO as it was so called was*simply a department in the Ministry of Trade, Commerce and*industry. It*then*went on to underline the challenges still faced by the Agency in*carrying out its functions and*further draw attention to certain sections of the Act that may bring rise to*debate.
Ensuring Zambia’s*continued adherence to the various conventions and treaties on the protection*of intellectual property, namely, trademarks, patents and industrial designs;
Promotion of the establishment and maintenance of a computerized information Centre %for the publicity of company transactions, financial positions and the dissemination% of technical information contained in patent documents to potential and actual4users.
CHAPTER THREEA Critical Examination of Part XVI (Administration of Act)3.1 IntroductionIt is the fulfilment of the above listed functions that will be the main focus of this chapter citing any challenges that4the Agency may face in execution of its mandate in relation to the Company Act 2017 regarding the PACRA Act. To this effect the chapter will be divided into two parts; the first will deal with the company law aspect of PACRA, that is to say the administration of the Companies Act and the Registration of Business Names4Act while the second part will deal with the intellectual property law aspect of the Agency as it administers the Patents4Act, Trademarks Act and the Registered Designs Act.
3.2 The Administration of Company Law (PART XVI)Nearly every aspect of Company4law and the law relating to business associations relies on PACRA as a4starting point. In light of this, it would suffice to state that the Agency is an extremely vital cog in seemingly immense contraption, working together to ensure the continued adherence of various companies to the law. Key functions4performed in this regard include the registration of companies and business4names. Overall, PACRA is a regulator and a depository of business related4information. The Agency is responsible for providing business registration for all firms operating in Zambia.
3.3 The Companies ActThe Companies Act, provides for the formation, administration4and winding up of registered corporate bodies, the Act is administered by the Patents and Companies Registration Agency (PACRA) which is established under the Patents and Companies Registration Agency Act. The most recent was enacted in 2017 to repealing the replacing the Company Act of 1994 which also repealed and replaced the Companies Act of 1921. The Companies Act was further amended by the Companies (Amendment) Act No.12 of42010 and the Companies (Amendment) Act No. 24 of 2011. The concern of former’s Amendment Act is to provide for the alignment of the Companies4Act with the newly enacted Patents and Companies Registration4Agency Act while the latter is mainly concerned with PART IX (Share and Share Capital) of the Act which deals with receiverships and4liquidations.
Effectively, a company comes into being upon the issuance4of a certificate of incorporation. The certificate is issued4upon the completion of formal registration with the Registrar of Companies Payment of registration4fees and the lodgment of the necessary formal documents, comprising mainly of copies of the articles of association duly signed by initial subscribers4for the shares. The functions as listed above are the preserve of the Registrar of the Agency by virtue of the Companies Act No. 12 of 2010. Aside from the incorporation of companies, another legal burden place on4companies of significance to this paper is the need to ensure that companies make available to shareholders, creditors and the incorporation of companies, 4another legal burden placed on companies of significance to this paper is the need to ensure that companies makes available to shareholders, creditors and4the general public as much information as is reasonably4required. Consequently, in light of this, companies’ should4file documents into the registry regarding various issues including particulars of directors, annual4returns and copies of special4resolutions.
Other aspects of Company Law administered by the4Agency aside from the incorporation of a company include the appointment of liquidators, receivers and also amendment of share capital of a company.
A liquidator is an officer appointed when a company goes into liquidation. He has the responsibility of collecting4all of the assets of the company and setting all claims against the company before putting the company4into dissolution. It was established in the case of Reuss (Princess) v. Bos that a registered company can only be extinguished by winding-up or in certain cases by being struck off the register without winding-up proceedings being taken. To it can further be noted that that the liquidation process refers to a process through which the company is taken out of the hands of its directors, its assets are then realized by the liquidator, and its debts are paid out of the proceeds of realization. The Companies Act under Section 286(1) Outlines the powers of the Liquidator I provides that:
“Where a winding-up order has been made or provisional liquidator has been appointed, the liquidator or provisional liquidator shall take into his custody or under his control all the property and things in action to which the Company is or appears to be entitled.”
Liquidation is the legal end point of a company. Liquidation is defined by the Black’s Law Dictionary as the act or process of converting assets into cash, especially to settle debts. Liquidation encompasses winding up and the gathering in of the assets for the subsequent distribution to creditors. It should be noted that once a company goes into liquidation it means that it has gone beyond the point where it could have been hoped to be revived. This is so because the duties of the liquidator is to take apart the company’s assets in a bid to settle debts. This can be noticed from the Companies Act which outlines the powers of the liquidator, it provides in Section 289(2) the following:
The liquidator may, with the authority either of the court or of the committee of inspection–
(a) Carry on the business of the company, so far as is necessary for the beneficial winding-up thereof, after the four weeks following the date of the winding-up order;
(b) Pay any class of creditors in full, subject to section three hundred and forty-six;
(c) make any compromise or arrangement with creditors, persons claiming to be creditors, or persons having or alleging themselves to have any claim against the company, whether present or future, certain or contingent, ascertained or sounding only in damages or whereby the company may be rendered liable;
(d) compromise any debts and liabilities capable of resulting in debts and any claims of any kind, whether present or future, certain or contingent, ascertained or sounding only in damages, that subsist or are supposed to subsist between the company on the one hand and a member, a debtor or person apprehending on the other;
(e) Make arrangements on all questions in any way relating to or affecting the assets or the winding-up of the company; and
(f) Take any security for the discharge of any such debt, liability or claim, and give a complete discharge in respect thereof.
It can be noticed that the role then of the liquidator in mainly the realization and distribution of the assets to the creditors.
A receiver is a person appointed for the purpose of protecting4the interests of the mortgagee, the mortgagor and subsequent encumbrances, as well as guarantors of the debt secured by the4debenture. It was held in the case of Gomba Holding U.K Limited and Others v Minories Finance Limited and Others that:
The Receiver is appointed by the debenture holder on the happening of specified events and becomes the mortgagor’s agent whether the mortgagor likes it or not. And as a matter of contract between the mortgagor and the debenture holder, the mortgagor will pay the Receivers fees.
It was also observed in the case of Magnum (Zambia) Limited V Basit Quandri and Others that a receiver is an agent of the company under receivership and is there to secure the interests of the debenture holder.
One has a primary duty to realize the assets charged by that debenture with a view to liquidating the debt owing to4the mortgagee. A receiver’s power to sell the charged assets arises from the terms of the debenture4pursuant to which he is appointed4together with the powers set out in a court order or deed of appointment.
The above discussion gives a few examples of the4types of registries to be kept by PACRA that should be readily available to the public and to shareholders of a company in order for them to get4comprehensive knowledge of the companies they deal with. Therefore, efforts must be made in order to sensitize the public in this4regard.
One of the said limits is the4present reality that PACRA only has offices in the provincial headquarters and very few districts in Zambia, the low productivity and profitability4of Small and Medium Enterprises (SMEs), which essentially may be perceived as adding to the cost of doing business, and which may in turn affect4compliance levels. One would be led to conclude that the economics of implementation were not given much thought. It is therefore, important that4introduction of other forms of registration be considered such as using local authorities’ as4agents for registration of businesses.
According to the Zambia Business Survey of 2016, less than two percent of SMEs are registered with PACRA or local4authorities. There is need to ensure that provisions in the legislation are not a barrier to the intended goal of the formalization of business activities and further4examine ways to create harmonization between the Agency and the Company Act 2017 in such a way that the Agency does not come up against any barriers, geographical or otherwise in carrying out its4work.
3.4 The Administration of Company Intellectual Property LawZambia has taken strides to develop the Zambian intellectual property regime. This is evidenced by the4existing legislation on company law regarding intellectual property such as copyrights, patents, trademarks and industrial designs, dating back to the4pre-independence era. However, the above legislation has not been effectively applied for successful exploitation of intellectual property rights for4national development and economic prosperity.
An important challenge the Agency faces with regard to intellectual property protection in Zambia is low levels4of awareness among industrialists, business houses, researchers, scientists, artists, technocrats, policy makers and the general public. Intellectual Property in company law awareness is divided into the following three broad4categories
Those who are aware of intellectual property but not able to use it;
Those who are aware of intellectual property and able to use it and
Those not aware of the potential and benefits of intellectual property.
There has been obvious evidence of4intellectual business4property activities in Zambia, there are few formal records of the intellectual property situation in the country, other than the data kept by4PACRA. The major challenges that imped the effect use of Intellectual property for economic4development include lack of policy, inadequate legislative framework, insufficient awareness of the vital role played by Intellectual Property4in national development and limited capacity in terms of human resources and infrastructure to support development use and exploitation of Intellectual4Property
PACRA provides a legal system for the registration and protection of commercial4and industrial property rights and through this, provides a legal and public4depository of this information tendered for these4registrations. To this effect, it administers the acts laid out below as follows;
3.4.1 Patents Act Cap 400 of the Laws of ZambiaThe4Patents Act provides for the patent protection in Zambia. Under this law, the protection lasts sixteen years even though TRIPS4Agreement stipulates protection is for twenty years, international patent4protection is provided for by virtue of Zambia acceding to international treaties such as the Paris Convention, the a receiver is an agent of the company under receivership and is there to secure the interests of the debenture holder TRIPS Agreement, and the Harare Protocol4and procedural guidelines under the Patent Cooperation Treaty which provides a mechanism for international application for patent4protection.
The procedure for a patent application is4provided for in the Patents Act which in summary provides that once properly documented, a patent application should be lodged at the Zambia4Patents Office (which is a unit of PACRA) in all provincial headquarters in the Country or via their website. Again here one is faced with the challenge4of lack of decentralisation4of the Agency as offices are in few places that limiting access of their services from the majority Zambian’s living far from the4line of rail where one may file in a patent and adequate sensitization of their online services to the general public in the whole of Zambia including rural areas and as a result the number of registered patents is4low.
In addition, the registration of Patents is however of limited application. For instance a research4and development institutions in Zambia, do not as a matter of fact register4a patent on their indigenous innovative products or intellectual property rights under company law with4PACRA. Furthermore, the current Company Act of 2017 with regard to4patents and business registration does not have a provision for registering these indigenous innovation and intellectual property rights and its procedures and processes are not adapted for such4registration.
Given its primary purpose of distinguishing goods from different sources and considering that registration grants monopoly or exclusive rights (rights to exclude others from use4of that mark) it is a precondition that a symbol contemplated to be registered as a trademark should not be descriptive of4the product.
Further, a trademark should be distinctive and not confusingly similar4to an already registered trademark otherwise, competitors would ride on each other’s established reputation and goodwill. The distinctiveness of a4mark may either be inherent or acquired through use. The envisaged trademark should also not be contrary to4morality.
Trademark registration in Zambia has not faced any major challenges aside from the fact the confusion4of the distinction between the effect of the registration of a trademark4and a business name.
3.4.2 Registered Industrial Designs Act Chapter 402 of the Laws of ZambiaThe Registered Industrial4Designs Act provides for intellectual property rights that protect the visual design of objects or models that are not purely utilitarian and without4taking into account the technical features. The registration of a design under Zambian Law gives to the registered proprietor copyright protection in the4registered design for a period of five years from the date of registration after4which it can be renewed for another two five year periods.
Certain rights will arise as4a result of being registered designs owner. Registration gives the proprietor copyright in the registered design. The owner acquires an exclusive right to make or import4for sale or for use in trade and business and to sell any article in respect of which the design is registered4in Zambia.
Again here the major challenge faced in the administration of the Company Act 2017 aside4from limited outreach is the continued ambiguity of the distinction between registered design and a trademark.
3.5 CONCLUSIONThis chapter has attempted to shed light on the various statutes that the Agency has been given the authority to administer highlighting the task posed by each Act prior4to the Company Act 2017 and attempting to highlight some of the challenges faced under each Act before the Company Act 2017. It highlighted the importance of each of the various pieces of legislation and pointed out some4areas that maybe in need of more change. It is also clear from this chapter that the functions of the registrar are not consolidated under on Act but4are contained in various pieces of legislation.
CHAPTER 4THE PATENTS AND COMPANIES REGISTRATION IN SOUTHERN AND CENTRAL AFRICA; A COMPARATIVE ANALYSISIntroductionHaving attempted to dissect the PACRA Act and the Company Act 2017 in the preceding chapters, this chapter seeks to compare the Patents and Companies Registration Agency and the Company Act 2017 it enforces to similar4Agencies overseeing the registration of companies, business names and intellectual property of businesses in other jurisdiction of Southern Africa. The4aim is to reveal similarities and differences among the systems of select Southern African4countries regarding their laws relating to the above. The countries used for comparison currently have broadly similar economic policies which emphasis the role of the private sector in driving economic development, sustainability for their citizens, these being very important aspects when it comes to4legislation regarding4the same. Highlighting the agencies responsible for the administration of registration, their similarities will be examined and4thereafter their difference if any will be put into perspective.
The Institutions in Various JurisdictionsLike Zambia many countries have a version of PACRA, Botswana has4its version of PACRA in form of Registrar of Companies and Intellectual Property (ROCIP) which is a department in the Ministry of Trade and Industry of the Republic of Botswana. The4department is charged with responsibility of incorporating companies, registering business names and all company law intellectual property of business in4Botswana.
In Namibia, the Companies and Patents Registration Office oversees all matters incidental to the registration of business names, companies and patents. The mission of the division of4the Registration of Companies and Close Corporation in the Ministry of Trade and Industry is to manage, regulate and facilitate the formation of business entities and to encourage investment through an appropriate legal framework4and the existence of an environment conducive enough to ensure the flourishing4of businesses.
In South Africa the relevant Agency is the Companies4and Intellectual Property4Commission (CIPC). The new commission acts independently with a focus on the registration of companies and intellectual property of company law and businesses. The Commission is as a result of a merger4of two different branches in the Ministry of4Trade and Industry which has brought together the skills, knowledge and manpower from the Office of Companies and Intellectual Property4Enforcement (OCIPE) and the Companies and Intellectual Property Registration Office (CIPRO). Its functions are inter-alia, to carry out4the Registration of Companies, Cooperatives and intellectual property4rights (trademarks, 4patents, designs and copyright) and the maintenance4thereof. Furthermore, it oversees the disclosure of information on its business registers and also4seeks to promote education and awareness of Company and intellectual4property in company business law.
An examination of the4jurisdictions in question reveals the existence of a number of similarities among the legislation of the countries. In fact, there seem to be more likeness4in the makeup of the registries and requirements for registration than differences.
Registration of Business names in Southern and Central AfricaRegistration of Business names in most countries in Africa such as countries like Botswana, Namibia and South Africa have similar4legislation regarding the registration of business names4and to this effect persons who trade under a name which is different from their own true names are required to register a business4name. A typical requirement of such registration is that the business owner should keep a4proper record of all business transactions, so that an accurate income4tax return can be submitted each year.
The Registration of Business4Names Act of Botswana requires any person who operates a business under a name which is not his/her4own name to register the ‘business4name’. The procedure for registration4is straightforward. An application form must be completed and details to be entered in the form include the proposed business name, a statement of4the nature of the business, the address and postal address of the business, and personal details such as the business owner’s full name, nationality, place4of resident and4sex etc.
The application4for the name will be refused by Registrar if it is the same as a name already registered under the Registration of Business Names Act (or under the Companies Act), or very similar to such a name another4ground for refusal is if it gives the impression that the business is connected with the President or the Government of Botswana, or with4any government of any country or with the United Nations. In addition, registration of a name will be refused if it is likely to mislead the4public. The Registration of Business Names Act also requires that all trade circulars and business4letters showing the business name must also include the name(s) of the individual(s) or company that is carrying on the4business.
It can also be seen from Namibia which also applies similar4rules regarding the circumstance under which a ‘business name’ must be registered. The main guidelines like that of Botswana4are that; a name which in the opinion of the Registrar is undesirable will not be allowed as the name of a company or business. Equally, a name that is calculated to mislead4the public will not be allowed and in line with that, foreign words or phrases will not normally be allowed in the name. The Act goes on further to4stipulate that a shortened form of a name may not contain more than seven4letters.
Furthermore it can be seen that the registration of business4names in South Africa is regulated by the Business Name Act No. 27 of the41960. This contains provisions relating to disclosure of names and4business details, and also allows the Registrar to prohibit use of a name if it is undesirable or offensive, or if it is calculated to mislead the4public. Upon refusal of the application, the Registrar furnish in writing to4the person against whom an order under that subsection is sought, a4statement setting out the name of the applicant and the grounds on which the application is made and afford such person a reasonable opportunity of4replying thereto.
Southern and Central Africa Company Laws linking to Companies
In all jurisdictions examined, persons who wish to take advantage of incorporation and limited liability must4register a company. To this effect, each country has mainly two types of companies which have common characteristics, namely the private4company which can be limited by either shares or guarantee and the public company. Each of these company forms has changed very little in over 1004years and can be traced back to English Company law of the nineteenth4century. It must be noted that most of the countries in Southern and4Central Africa are pushing towards the reformation of company law to have it more ‘tailor made’ to suit each country’s needs as in the case of Zambia decentralizing PACRA offices across the country and make business registration easy for4everyone.
All these countries’ jurisdictions4host three mainly different types of companies which include company limited by guarantee, public companies and private companies. The incorporation procedures4for the companies in each country are generally the same. For example, there is a requirement to file a memorandum of association and articles of association which must contain the name of the company’s share4capital or if it’s limited by guarantee and a statement of the amount guaranteed by its members. Compliance division in each country is used4to which it takes of the incorporation of a company, payment of annual returns by the company post-incorporation and notification of changes4such4as change in address, Pursuant to this, every company registered must pay annual returns, these returns must be paid within the first eighteen4months of incorporation and then after should be submitted annually or the company may be deregistered and made to pay penalties for4re-registration.
Furthermore, countries in Southern and Central Africa allow for the formation of a foreign4company. In that, if a company is incorporated in another4country and is4seeking to do business in the host state. For example in between 2005 to42010 The Foschini Group a clothing Retail4Company a South African incorporated Company had to register as a ‘foreign company’ in countries like Zambia, Botswana in order to operate, this applies for all companies looking to go into the region to expand they must4incorporate as foreign Companies in the host countries and must follow the laws of Company Law in that Company however, each country has similar4registration rules which will apply to such foreign companies thus this makes it easy with the incorporation4process.
DifferencesThe first main difference that can be identified is that fact that in Botswana and Namibia4the responsibility of the4registration of business names and intellectual business property vests in a4department in their ministries of Trade and Industry whilst in4Zambia and South Africa statutory bodies have been established to oversee the same.
Registration of Business Names in the Selected Countries
The differences in the registration relation to registering business names among the countries are minute. As has been noted, the basic requirement is that an individual (or company) who trades under a name which is different from his/her/its own true name is required to register a business name in the country’s registry. The only major discrepancies arising are relating to the grounds on which a business name will be rejected. For instance in Botswana, the use of the name international is not allowed whilst the Zambian legislation on the same has no such requirement.
Company Laws Relating to Companies in Selected CountriesThe differences in company law include the fact that two out of the four countries have developed what has been deemed a modern corporate vehicle in the form of a closed corporation. Countries like South Africa and Namibia have developed a more modern corporate vehicle which is especially suited to meet the needs of the small business.
A closed corporation is a business that is set up using a corporate business structure, but in which all the shares are held by a select few individuals who are usually closely associated with the business. Participating in a closed corporation enables a partnership to benefit from liability protection without dramatically changing the way that the business operates. Closed corporations are not publicly traded on any stock exchanges and are, therefore, closed to investment from the general public. Shares are often held by the owners/managers of the business and sometimes even their families. When a shareholders dies or has a desire to liquidate his or her position, the business or remaining shareholders will buy back the shares.
To this effect, in South Africa any company or close corporation is required to reserve a name for itself with the Registrar of Companies or Close Corporation prior to registration. The name will only be approved by the Registrar if it (or a close approximation of it) is not already in use, and if it is not deemed undesirable or offensive for any reason.
Furthermore, another difference observed arises with regard to foreign companies. Zambian legislation provides that, a foreign company is obliged to appoint a least one and no more than nine individuals as local directors. The said local directors should be authorized to conduct and manage all the affairs, properties, business and other operations of the company in Zambia. At least one local director of the company shall be resident in Zambia and where the company has more than two local directors, more than half of them shall be residents of Zambia. Failure to comply with this requirement for more than two months would constitute a ground for winding up of the court on the application of the Registrar of Companies Botswana, Namibia and South Africa reports have no reference to similar rules regarding foreign companies.
Furthermore, another feature to Zambia only is that a foreign company may be wound-up in accordance with the provisions of the Companies Act whether or not the company has been dissolved or has otherwise ceased to exist according to the law of the country of its incorporation. For resolve of such winding up, a foreign company is treated as if it were a company incorporated in Zambia, it is required within twenty-eight days after so ceasing, to lodge a notice of that fact with the Registrar Companies.
Where the Registrar has reason to believe that a foreign company has ceased to have an established place of business in Zambia, he or she shall serve a notice on the company of that fact and if after three months of the notice the Registrar is not satisfied that the foreign company is maintaining an established place of business in Zambia, the company shall be deemed to have lodged a notice of cessation of business on that day.
Having said that, a winding up in the host state will not affect the affairs of the company in the state of incorporation. However, case law stemming from South Africa shows that South African courts have the jurisdiction to grant a winding-up order of a branch of an external company even though the foreign company was subject to winding-up in its country of incorporation.
ConclusionThis chapter endeavored to answer and expression that there is more comparisons than discrepancies in the regulatory context of the countries used for the study. It has been observed that the regulatory context has an important role to play in the development of a more integrated market in Southern Africa. It would be advantageous to the region to develop a unified regulatory environment regionally in a bid to promote a good investment climate for the region and ultimately leading to the improved desire of foreigners to do business in Southern Africa.
CHAPTER 5CONCLUSIONS AND RECOMMENDATIONSIntroductionCompany Law in Zambia is severely constrained due to a number of challenges in the legal and Institutional frameworks. There is need to continue to have an efficient and effective legal and workable system within the Ministry to promote people’s access to company registration in their communities or at least at district level nationwide.
The aim of this paper as a whole has attempted to render a critical analysis of the Patents and Companies Registration Act. Having endeavored to do so by firstly, giving a background outlining the statement of the problem, examining the act in its entirety and highlighting the innovations and weakness, taking an in depth examination into the pieces of legislation administered by the registrar and finally attempting to render a comparative analysis, it is time to take stock. The Chapter endeavors to firstly to outline the findings of the preceding chapters and findings suggest remedies to the imperfections in the law in question. In each of the chapters this research has attempted to give solutions to issues identified as problematic. The aim of this chapter is to consolidate the issues and solutions identified and thereafter to draw an overall conclusion.
OutcomesIt is clear from the preceding chapters that a business licensing and regulatory system needs to be governed by comprehensive regulatory laws that will ensure that the regulated entities comply with set requirements. The question which was set out to be answered was whether the Company Act 2017 was adequate enough in order for the Agency to effectively carry out its duties. The findings can be listed as follows;
An analysis of the Company Act 2017 revels that there have been both innovations and challenges brought about as a result of the said enactment. However, upon investigation, it became apparent that the legislation governing the Agency is simply a constitutive Act with not much regard having been given to the peculiarity of the needs of the Agency. It is also clear that in-spite of the strides made by legislation on the regulation of Companies business entities and intellectual property law there is more that can be done to ensure the smooth running of the Agency that is both legally in terms of the enactment and review of legislation and by the policy makers.
The Agency is endowed with the responsibility of governing various statutes, each statute posing a different challenges. Subsequent to an examination of the statutes administered by the Agency, it has been found that certain statutes are lacking in various areas and there is a need for improvement. In addition, a major problem faced by the agency is compliance with the law and regulations set out in the Company Act 2017 and other legislation.
Another finding is the fact that the Agency is not decentralized across Zambia and is in only a few parts of the country (for example like Kasama, Mansa and Solwezi and its regional offices in provincial headquarters across Zambia such as in Chipata, Livingstone, Mongu, etc.) thus lacks the much needed outreach to other areas of the country and in addition there exists an issue of ignorance from the masses on certain issues (mostly those of compliance) cardinal to the regulation of companies and business names.
Furthermore, there seems to be wide vesting of discretionary powers in the Minister (for example the removal of a member from the board of directors) which could in the future be problematic for the Agency. That and also the seemingly lack of adherence to the rules of corporate governance by the Board of the Agency.
RecommendationsFrom the findings discussed above the following are the recommendations that have been identified in this study;
The Decentralization of the agency and sensitization of the massesThere is need for PACRA to decentralize its operations to all the districts country wide in order to enable persons have easy access to registration services; in this regard it may use existing local or central government structures and institutions in the districts engaging these institutions as its agents under properly set out agency agreements. This is at the moment been conducted with the aid of the Zambia Development Agency (ZDA) and The Citizen Economic Empowerment Commission (CEEC). Nevertheless, there needs to be offices established for the Agency in order for it to carry out its mandate.
The issue of sensitization to the masses is the first thing that can be done for ease of access to information is the opening and maintenance of an Agency library that can provide access to all published material in a single convenient easily accessible location. The information to be included can include; corporate information- containing information on annual accounts and business plans for PACRA not only on their website www.pacra.org.zm but also in their offices, policy documents and also information on guidance as regards the workings and functions of the Agency. Moreover, pursuant to this, there is need to streamline administrative procedures and strengthen the role of the registry in ensuring an up-to-date and reliable database of business information for everyone not only at the head office in Lusaka.
Furthermore, customer satisfaction surveys can be carried out by the Agency to get public opinion on their performance, duties and on the products and service offered by the Agency. However, it should not stop there, the surveys should monitor the performance against a number of key areas providing the public with an opportunity to render feedback whether positive or negative about the functioning of the Agency. In a bid to sensitize the public on the issue of compliance, certain events may be organized by the Agency to support and advice businesses on certain issues regarding the legislation governed by the Agency. There is need to capitalize on both print and electronic media in order to educate the public on the workings of the Agency. The Sensitization can be targeted at smaller towns like Choma, Mbala, Chongwe, Munali etc. where and not only the towns along the line of rail. Sensitization can be viewed as an alternative to prosecution and punishment to ensure compliance and it does go a long way with the public to educate them on somethings they did not know rather than punish them for their ignorance. Their issues that may be put under consideration to provide for a smooth running of the Agency, they can include the provision of better guidance and information of its services by developing better and accessible guidance for example by making guidance available on the internet; rewriting some guidelines in a more simpler language; separating compulsory from voluntary requirements in making regulation available on-line, potentially through a joint public sector portal administrative procedures and strengthen the role of the registry in ensuring an up-to-date and reliable database of business information.
The Compliance and Regulation of Business ActivitiesAs has been pointed out, one of the major problems faced by the PACRA Agency in carrying out its mandate is lack of compliance by the business community. Not all companies and business names comply with the requirement of annual returns. In addition, there is a tendency by companies to delay in the filing of change of particulars.
In order to ensure compliance, it is the opinion of this paper that there is need to subject business activities to effective inspections on a regular basis and not only once a year when an application for a license is received. In this regard, the Government should therefore ensure that there are adequate financial and human resources to support the setting up and operations of strong inspectorates in each regulatory authority. Notwithstanding the need for regular inspections, regulatory authorities should encourage self-assessment and inspect businesses that are of high risk to the public or are habitual non compliers with regulations. This will cut down on compliance costs for business and administrative costs for the regulatory authority. There are two key outcomes of effective regulation and enforcement are; high levels of compliance which makes the law effective in delivering its intended benefits and the other key out is the certainty for businesses which means less risk for business investment decisions.
It will help the Agency in the delivery of their services if, an establishment of an inspectorate and an independent prosecution department at the agency and seemingly expedient as opposed to the situation prevailing under the Company Act. This ensures that the body is independent of the Agency and abides by the rules of natural justice
The Repeal and Assessment of LawsOne other issue arising is the fact that the laws in question are somewhat outdated and not a true reflection of the situation prevailing in the country at the moment and therefore in light of this a major over haul of the countries Legislation will be required. There is a need for a review and repeal and replacement of the Patents Act to a more friendly structure so that Zambian or those doing research in Zambia using cultural or indigenous knowledge can easily patent their indigenous knowledge or innovations. The recurrently enact Company Act 2017 does not explicitly provide for the protection of traditional knowledge and thus the need for the repeal. Other laws that also need to amended in the near to copy with the international market include the Registered Designs Act and the Trade Marks Act in particular with reference to the duration of protection of registered design and the trade mark. In as much as the laws need to be in compliance with the WIPO Copyright Treaty to which Zambia is part of, they must also reflect the intellectual property needs of the country. It imperative to note that with regards to intellectual business property in Zambia and achieve set objectives which include the need to encourage the use and development of appropriate intellectual property protection systems for business and innovation in Zambia, facilitate reform of local legislation and domestication of relevant international agreements that relate to intellectual property.
This will encourage research, development and collaboration between research institutions and industry and provide support and guidance from the point of developing and conceptualizing ideas to production and commercialization of goods and services. There is need Policy for Intellectual Business Property because not have a National Intellectual Property Policy has caused major constraints in the appreciation of the importance of the role of intellectual property plays in the sustainable socio-economic, cultural and industrial development of Zambia. A National Intellectual Property Policy’s goal is so that the policy facilitates the revision of intellectual property laws in order to make them relevant to issues of protection and management of business intellectual property benefits, provide a favorable investment climate for both local and foreign companies, encourage innovation and creativity for purposes of boosting social, cultural, industrial and economic development, ensure adequate and appropriate protection, recognition and respect and enforcement of Intellectual Property rights.
With regard to regulation of Companies, the process of enacting the Company Act 2017 was hastened in order to bring it in line with modern Company Law, especially in relation to director’s duties and responsibilities, corporate governance and social corporate obligations, and to bring it in harmony with the Citizens Economic Empowerment Act. In addition the Company Act 2017 is somewhat intricate and complex that without knowledge of the law one may not be able to read past the first page of the Company Act 2017 with being confused or wrongly interpreting the Act. Thus Parliament should continue to at enacting a legislation that will deal with companies below a certain threshold, the company Act 2017 can be couched in clear and concise English not too complex that one requires the retention of a legal counsel in order to understand the jargon used in the legislation.
The financial monitoring of Companies can be done by expanding the functions of the Registry. This is because as one of the first contacts that companies have, the registry should at least be the starting point of ascertaining the financial characters of companies by having readily available updated financial reports of the companies. This can be done by way of making it mandatory for public companies to submit in addition annual balance sheets, quarterly trial balances to the Registrar, which can be compared with for instance what the companies declare on the Lusaka Stock Exchange and what exists in the audit report of financial companies. This would prevent the formation of dubious companies formed for the sake of defrauding the public. They must be hefty penalties should be levied for late or non-submission of the same so as to ensure compliance from the business community.
Furthermore, the functions of the Agency and the Registrar should have been consolidated in the Company Act 2017 to make it easy for anyone who seeks to know the confines of the powers of the Agency and the Registrar; they don’t need to go to more than one Act to find out. For instance if one wants to know his or her functions the area of the law they are examining must act as a guide and therefore if one seeks to identify his or her functions in relation to company law, they must look to the Company Act 2017, it is in relation to patents, they must look to the Patents Act and so on and forth, which it a waste of time and confidence in the quest for information that should be at the tip of every individual in business or looking to get into business.
The Composition of the Board and Discretionary Powers
The Patents and Companies Registration Agency (PACRA) is the institution that makes decisions on behalf of a third party which in this case is the Government and the Zambia people it is for this reason that it needs to ensure that the composition of the board, the appointments thereto and the execution of functions thereof are in adherence to the rules of corporate governance. There is need for a mechanism to ensure more accountability of the board to their stakeholders regarding the exercise of the powers vested in them.
There is need to amend certain sections of the Company Act 2017 in order to ensure that there is a limitation on the use of discretionary power. In as much as there seems to not be a problem presently, however abuse of discretion if not curtailed is something that could happen in the future and as such should be addressed now and prepared for.
ConclusionIt can be concluded that it is a trite fact that western world has prospered through the liberal market economy; the economy is driven by the private sector for example in the United States the entrainment industry is ran by the private sector however regulated by the Government. The contribution and role played by the Agency in Zambia is a critical factor to the stability and the steady growth of the private sector and in turn to national development. Due to lack of sufficient information or as a result of ignorance and lack of understanding the laws of the Republic of Zambia has led to alienated citizen who are not contributing to the growth of the Zambian economy. This is a matter that must and should be fixed through massive sensitization and the simplification of certain pieces of legislation so that every business person in Zambia can be part put in the Agencies database and so that the country through ZRA can generate revenue through the compliance through PACRA.
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