The main types of companies that can be formed in Zimbabwe are:

• private liability companies;
• public limited companies;
• co-operative companies;
• foreign companies;
• private business corporations; and
• statutory entities.

Foreign investors generally prefer to incorporate private limited companies (PLCs) for the following reasons:

• Limited liability: The liability of the investor(s) is limited to their shareholding and they are generally shielded from personal liability for the company’s debts and obligations.
• Ownership structure: PLCs allow foreign investors to maintain majority ownership and strategic control over the company.
• Ease of formation: Establishing a PLC in Zimbabwe is relatively quicker and less cumbersome compared to public entities.
• Fundraising: The company can quickly raise additional capital through the share subscription or sale of shares with fewer procedural and regulatory hurdles.

The main types or classes of shares issued by companies formed in Zimbabwe are:

• Ordinary/common shares: These are the basic, most common type of shares. Ordinary shareholders have voting rights and are entitled to a proportionate share of the company’s residue upon liquidation. Under the law, every company should have ordinary shares.
• Preference shares: These are shares that have been accorded priority over ordinary shares in respect of voting and financial rights.
• Redeemable shares: These are shares that can be bought back by the company at a predetermined price and time. Redeemable shares may be ordinary or preference shares.
• Convertible shares: These are shares that can be converted back into ordinary shares at a particular period of time.

The rights and preferences attached to each class of shares are generally set out in the company’s memorandum of association.

The rights of shareholders include but are not limited to the following:

• the right to participate in general meetings and vote on their shares;
• the right to receive dividends as and when they are declared;
• the right to share in the residue of a company on liquidation;
• the right to participate in rights issues in proportion to the number of their shares (pre-emption rights); and
• the right to receive information on the company’s performance and material updates.

Shareholders’ rights may be varied in one or more of the following ways:

• in accordance with the company’s constitutive documents;
• issuance of new shares;
• through share conversions;
• special resolution adopted in general meetings; or
• through shareholder agreements.

There are generally no statutory minimum share capital requirements for the incorporation of companies in Zimbabwe.

However, the share capital requirements that apply to companies seeking a listing, including compliance with shareholder spread obligations, are regulated by securities exchanges, such as the Zimbabwe Stock Exchange or the Victoria Falls Stock Exchange. Further, financial institutions such as banks and insurance companies are required to comply with minimum capital requirements as may be prescribed from time to time.

The minimum number of shareholders for the companies listed in 1.1 Types of Company is generally one. However, the requirements may vary in some regulated sectors, for example banking and insurance sectors. In addition, listed entities have more than one shareholder as they are required to comply with shareholder spread requirements.

Apart from the reserved sectors under indigenisation laws, there is no requirement for any shareholder to be resident in Zimbabwe.

Shareholders’ agreements and joint venture agreements are commonly used in private limited companies. Both are used to ensure sound and effective business management, regulate the rights and duties of shareholders and manage conflicts.

The typical provisions included in shareholders’ agreements and joint venture agreements are as follows:

Shareholders’ agreements:

• share transfer provisions (eg, pre-emptive rights);
• drag-along and tag-along rights;
• voting rights and decision-making procedures;
• dividend policies;
• regulation of conflict of interest and insider dealings;
• dispute resolution mechanisms;
• exit and buyout provisions; and
• confidentiality and non-disclosure clauses.

Joint venture agreements:

• ownership structure and equity contributions;
• participating interests of the joint venture partners;
• management and operational control;
• funding and financing arrangements;
• risk and profit/loss sharing arrangements;
• decision-making processes and deadlock resolution;
• intellectual property rights and licensing;
• term of the joint venture and exit/termination provisions; and
• dispute resolution procedures.

Shareholders’ agreements and joint venture agreements are generally legally enforceable contracts in Zimbabwe provided that the provisions thereof do not contravene any statute or applicable law. In most instances, these agreements contain a severability clause which specifies that an illegal or unenforceable provision shall be severed from the rest of the agreement and the validity, legality and enforceability of the remaining provisions of the agreement shall not be impaired or affected in any way by such illegality or unenforceability.

Shareholders’ agreements and joint venture agreements are typically private and confidential documents. They are not required to be filed with or made public in any registry. The contents of these agreements are not publicly accessible unless the parties choose to disclose the information or a dispute arises that leads to court proceedings.

All companies are required to hold an annual general meeting (AGM) at least once every 12 months.

The notice period for an AGM is a period of at least 21 days of written notice to shareholders. The notice period can be shortened if all the members entitled to attend and vote thereat agree.

The following issues are normally discussed and approved at an AGM:

• election or re-election of directors;
• setting or approval of directors’ fees and emoluments;
• appointment of the auditor and fixing their remuneration
• consideration of the board and board committees’ reports;
• consideration of the external auditor’s report;
• presentation and approval of the company’s annual financial statements;
• declaration of dividends;
• approval of major transactions; and
• any other matter that requires shareholder approval in accordance with the company’s Articles of Association or the Companies and Other Business Entities Act [Chapter 24:31].

Apart from AGMs, companies can hold other general meetings as and when necessary. Such meetings are called extraordinary general meetings (EGMs).

The notice period for an EGM is typically 14 days written notice (for public companies) or seven days (for private companies), unless a special resolution is required to be passed in which case the notice period is generally 21 days. An EGM may be called by shorter notice if the majority in number of the members holding not less than 95% in nominal value of the company’s shares agrees to do so.

Generally, general meetings are called by the board of directors through the board chairperson.

However, members with 5% or more of the voting rights of paid-up capital of the company are entitled to request the company to hold an EGM. Members can exercise this power by submitting a requisition to the directors which is signed by one or more of the requisitionists. The requisition must specify the objects of the meeting. On receipt of the requisition, the directors must issue a notice of an EGM within 21 days from the date of the requisition, failing which the requisitionists themselves will be entitled to convene the EGM.

All shareholders of the company are entitled to receive notice of a general meeting in the manner prescribed by the company’s constitutive documents. Notices may be served physically, electronically or through publication in a newspaper.

A notice of a meeting must generally specify the date, time, place and agenda of the meeting, as well as the resolutions proposed to be adopted at the said meeting. Directors are also required to disclose the following to the shareholders:

• financial statements of the company;
• external auditor’s report;

• board reports;
• report on the company’s compliance with the National Code on Corporate Governance; and
• any material information about the company’s affairs that may affect the shareholders’ interests.

Shareholders can request the following information from the company:

• copies of the company’s constitutive documents and registers; and
• the company’s accounting records.

Shareholders have the legal right to inspect and obtain copies of the company’s statutory registers, such as, register of members (shareholders), register of directors and secretaries, subject to payment of fees as may be prescribed by the company.

A private company may hold a virtual as opposed to a physical meeting through electronic means if so authorised by a company’s articles of association or by a shareholders’ resolution. However, a public company may permit the participation of members who are not physically present at the meeting, but can be heard and seen by the other members by electronic means if so authorised by a company’s articles of association or by a shareholders’ resolution.

A majority of the total number of votes entitled to vote on a matter shall constitute a quorum for decision of a general meeting unless the company’s memorandum and articles of association provide for a greater or lesser quorum but not less than one-third of the votes of the shares entitled to so vote.

There are three types of resolutions which can be passed by shareholders, namely, ordinary resolutions, special resolutions and written resolutions.

Ordinary resolutions are those which are passed by a simple majority (more than 50%) of the votes cast by the shareholders present and voting, either in person or by proxy.

Special resolutions are those which are passed by a majority of not less than 75% of such members entitled to vote as are present in person or by proxy at the meeting.

A written resolution is a type of special resolution signed by all the members of a private company entitled to attend and vote on such resolution at a general meeting and such a resolution is valid for all purposes as if same had been passed at a general meeting of the company duly convened and held.

A special resolution is required where the statutes and the company’s constitutive documents specifically state so. In all other circumstances, all other resolutions shall be ordinary resolutions. For instance, under the Companies and Other Business Entities Act [Chapter 24:31] (hereinafter referred to as the “COBE Act”), a special resolution is required in any of the following circumstances:

• whenever so stated in the memorandum of association;
• for adoption of an amendment to the memorandum;
• for adoption of a plan and contract for merger;
• for approval of a major transaction; or
• for a decision to dissolve the company.

Generally, matters which are reserved for shareholders in accordance with the constitutive documents and the statutes must be approved accordingly by the shareholders. Such matters include but are not limited to the following:

• adoption of the annual financial statements;
• declaration of dividends;
• appointment and remuneration of directors;
• appointment of auditors;
• granting of financial assistance to directors or related parties;
• amendments to the company’s constitutive documents;
• change of the company’s name;
• placement of the company under voluntary liquidation or corporate rescue proceedings;
• alteration of the company’s share capital;
• conversion of shares from one class to another; and
• amalgamation or merger with another company.

The following voting requirements apply for passing resolutions:

• Any member of a company is entitled to attend and vote at a meeting of the company in person or by proxy and a proxy appointed to attend and vote instead of a member shall also have the same right as the member to speak at the meeting.
• Voting can be conducted either by a show of hands or by a poll.
• A member or their proxy is entitled to demand or join in demanding a poll.
• On a poll taken at a meeting of a company, a member entitled to more than one vote need not, if he or she votes, use all his or her votes or cast all the votes he or she uses in the same way.
• A director or officer of a company may not act as a proxy for a shareholder.
• No proxy appointment shall be valid for longer than six months unless otherwise provided in the proxy appointment or the articles of association.
• If a quorum is present, the affirmative vote of a majority of the shares present and entitled to vote on the matter shall be the decision of the meeting, unless a greater number of votes are required by the COBE Act or the company’s memorandum.
• At any meeting at which a special resolution is submitted to be passed, a declaration of the chairperson that the resolution is carried shall, unless a poll is demanded, be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against the resolution.
• When a poll is demanded, regard shall be had in computing the majority on the poll to the number of votes cast for and against the resolution.

Generally, every member of a company has one vote in respect of each share. Weighted voting rights (which grant some voters greater rights than others) apply where the articles of association or shareholders’ agreement provide so.

Shareholders can cast their votes electronically subject to the company’s articles of association or by a shareholders’ resolution. See 2.5 Format of Meeting.

Members with 5% or more of the voting rights of paid-up capital of the company are entitled to place issues on the agenda of a general meeting and to propose a resolution for voting. In order to propose matters for a vote, the authorised members specified hereinabove may submit a requisition to the directors requesting for circulation of proposed resolutions to members entitled to receive notice of a general meeting.

A shareholder can challenge a resolution passed at a general meeting if it is null and void. A resolution can be null and void for the following reasons:

• if it was not properly circulated and placed on the agenda as required by the COBE Act;
• if the meeting did not have a proper quorum; or
• if the resolution was passed as an ordinary resolution when it ought to have been passed as a special resolution.

A shareholder may challenge a resolution passed at a general meeting in one of the following ways:

• A shareholder can bring a derivative action at the court of competent jurisdiction (typically the High Court of Zimbabwe), on behalf of the company to recover damages caused to the company.
• A shareholder can apply to the court to declare a resolution invalid if it was passed in a manner that violates the company’s articles of association or the COBE Act.

• A shareholder can submit a written notice of objection to a proposed resolution and demand payment of fair value for their shares (dissenting shareholders’ appraisal rights).

Institutional investors and other shareholder groups may influence and monitor a company’s actions through the following means:

• exercise voting power in favour of or against certain proposals, including, election of directors, director emoluments, major asset transactions and mergers and acquisitions;
• voter pooling arrangements;
• engaging in constructive dialogue with the board of directors to advocate for better corporate practices and responsible behaviour;
• proposing shareholder resolutions addressing governance, social and environmental issues;
• encouraging the adoption of policies and practices that improve corporate ethics and performance standards;
• divesting from companies that engage in unethical and unsustainable practices; and
• closely monitoring the company’s financial, operational, and governance performance and often sharing their assessments and recommendations with other shareholders and the broader investment community, with the aim of improving corporate governance and accountability.

The rights of shareholders holding their shares through nominees are the same as those of any other shareholder in respect of matters being voted on and voting rights, provided that the nominee shares have been lawfully allotted, issued or transferred to the nominee. Nominee shares are deemed to have been lawfully allotted, issued or transferred in the following circumstances:

• if the nominee shares are less than 20% of the shares or interests in the company;
• if the nominee shares are held by a manager or trustee of a collective investment scheme registered under the Collective Investment Schemes Act [Chapter 24:19];
• if the nominee shares are held by an executor of a deceased estate, a trustee of an insolvent estate or the liquidator of a company in liquidation;
• if the nominee shares are held by a curator or guardian of a person under a disability;
• if the nominee shares are held by a holder of a licence issued in accordance with Part V of the Securities and Exchange Act [Chapter 24:25];
• if the nominee shares are held by a central securities depository established in accordance with Part IX of the Securities and Exchange Act [Chapter 24:25]; or
• if the nominee shares are held by such other persons as may be prescribed.

In the event that the nominee shares are not lawfully held:

• no nominee shall, either personally or by proxy, cast a vote attached to the share or interest;
• the nominee or beneficial owner shall not receive a dividend payable on the share or interest; and
• the Registrar may serve a category 2 civil penalty order upon the alleged nominee, in which:
1. the remediation clause shall require the nominee to divest himself or herself of the share or interest within a specified period; and
2. it is declared that the failure or refusal of the nominee to divest himself or herself of a share or interest within the specified period will result in every share or interest concerned becoming bona vacantia and vesting in the State, which may thereafter dispose of it.

Shareholders of a private company can pass or adopt a written resolution without holding a meeting. A written resolution must be signed by all the members of the company entitled to attend and vote on such resolution at a general meeting and such a resolution is valid for all purposes as if same had been passed at a general meeting of the company duly convened and held. However, this type of resolution does not apply for the removal of an auditor or a director.

Existing shareholders of a company have pre-emptive rights to acquire newly issued shares pro rata in proportion to the number of shares already held by such existing shareholders, at a price no less favourable than that offered to other persons. The pre-emptive rights do not extend to options to acquire shares or non-share securities convertible into shares. The pre-emptive rights are generally exercised for a period of three months, unless the company’s articles of association provide otherwise.

The following legal or regulatory restrictions apply to the transfer or disposal of shares:

• Under the COBE Act, a company is not permitted to register a transfer of shares of the company unless a proper instrument of transfer has been delivered to the company except where the right to any shares in the company has been transmitted by operation of law.
• No shares may be transferred to a foreign person in the absence of an exchange control approval issued by the exchange authorities.
• No shares may be transferred to a foreign resident in a reserved sector under indigenisation laws unless authorised by the relevant authorities.
• Disposal of shares in certain sectors must comply with the sector regulations, for example:
1. in the banking and insurance sector, the new shareholder must pass the fitness and probity tests; and
2. in the telecommunications industry, the controlling shareholder must be ordinarily resident in Zimbabwe.

It is important to note that a shareholders’ agreement, company’s articles of association or rules of a securities exchange may contain further restrictions on the transfer or disposal of shares. These could include, but are not limited to, the exercise of pre-emptive rights.

Shareholders are entitled to grant security interests over their shares, for example, through pledges, mortgages, or liens, provided that they follow the necessary legal formalities and any restrictions in the company’s articles of association or applicable laws and regulations, including obtaining approvals from the existing shareholders.

Shareholders are required to disclose their beneficial interests in a company to the directors of the company. There is no prescribed format for disclosing such interests. Apart from this, shareholders of private companies are generally not obliged by any law to disclose their interests to any other person.

All companies are required to regularly file with the Registrar of Companies up-to-date information regarding the ultimate beneficial owners of a company. Thus, companies may require shareholders to disclose their interests. This information, which is kept and maintained by the Companies Registry, shall be made available for inspection by the following:

• the public by consent of a nominee or by virtue of a court order;
• the Financial Intelligence Unit; or
• by a law enforcement agency or designated financial institution referred to in the Money Laundering and Proceeds of Crime Act [Chapter 9:24].

In addition, publicly listed companies are required to publish the beneficial interests of directors and major shareholders in their annual financial statements as required by Part IX of the ZSE Listing Rules.

Shareholders of publicly traded companies have certain disclosure obligations, which include the following:

• If a shareholder acquires more than 20% of the ordinary shares of a public company, they shall send written notice of the acquisition to the company within 15 days (Section 235(1) of the COBE Act).
• If a shareholder intends to acquire a control block of shares in a public company (35% or more), they must within 30 days prior to the date of acquisition send written notice to the company stating their intention to acquire a control block of shares (Section 236(1) of the COBE Act).
• If a shareholder has acquired a control block of shares in a public company (35% or more), they must on the date of acquisition give notice to other shareholders of the acquisition (Section 237(1) of the COBE Act).
• If a shareholder has acquired a control block of shares in a public company (35% or more), they must within 60 days of the acquisition offer to purchase all the company’s shares at a price not less than the weighted average price of the shares (Section 237(1) and (2) of the COBE Act).
• A shareholder that intends to acquire a significant interest in a banking institution (5% or more) must disclose their intention to the banking institution and first obtain approval from the Registrar of Banking Institutions (Section 15B of the Banking Act [Chapter 24:20]).

Generally, there is no regulatory filing which is made with the Companies Registry following a change of shareholding. That said, in specific industries, such as banking or securities trading, shareholders may be required to notify the regulatory authorities when acquiring or divesting a significant shareholding.

In certain circumstances, shares can be cancelled after issue. The circumstances include but are not limited to the following:

• redemption;
• buyback by the company;
• failure by a subscriber to pay the subscription price;
• surrender by a shareholder to the company in the exercise of dissenting shareholder appraisal rights;
• court order; and
• as provided in the articles of association or shareholders’ agreement.

A company can purchase its own shares provided that the purchase was authorised in advance by the company in a general meeting. The authority to buy back the shares:

• must specify:
1. the price, or the maximum and minimum prices, at which the shares may be acquired;
2. the maximum number of shares which may be acquired and the class thereof; and
3. the date on which the authority will expire;
• shall not be valid where the shares are to be purchased otherwise than on a securities exchange registered under the Securities and Exchange Act [Chapter 24:25], if any person holding shares to which the authority relates has voted for the resolution conferring the authority.

In the case of a private company or public company, the authority for a buyback is not required when a class of shares are all to be purchased or are to be purchased pro rata from all the shareholders who hold shares of the class concerned.

In the case of publicly listed companies, a share buyback must be specifically approved by shareholders in a general meeting, and the repurchase by a company of its own securities in any one financial year must not exceed 40% of the company’s issued share capital of the class of shares concerned.

Dividends are paid to shareholders as and when same are declared by the board of directors and approved by shareholders. In accordance with Section 218(2)(e) of the COBE Act, the board of directors is responsible for setting the amounts and the record dates of, and payment dates for, and procedures in connection with, the payment of dividends and other distributions.

Further, in accordance with Section 62(2)(h) of the COBE Act, the court may order payment of a dividend following a legal action by a member.

Dividends are paid out of the profits or reserves of a company. Before declaring a dividend, the company must have sufficient distributable reserves, meaning accumulated profits and reserves available for distribution. The company’s board of directors determines the timing and amount of dividend payments, considering factors like profitability, cash flow, growth prospects, and future capital requirements. Dividend payments must also adhere to legal requirements, such as ensuring the company remains solvent and has positive retained earnings.

A private business corporation is not required directly or indirectly to pay any dividend to any member by reason only of his or her membership unless, immediately after the payment or transfer, the private business corporation’s assets, fairly valued, will exceed its liabilities and it will be able to pay its debts as they become due in the ordinary course of its business.

A dividend may also be paid in any other form other than cash, for example assets or shares (dividend in specie).

Shareholders can appoint and remove directors from the board of the company, subject to the rights and powers specified by the law, the constitutive documents of a company, shareholders’ agreements and applicable securities exchange rules. Appointment of directors can be done as follows:

• proposing a resolution for addition to the agenda of a general meeting; or
• direct appointments authorised by the company’s articles of association or shareholders’ agreement.

In the banking and insurance sector, any director appointments by shareholders are subject to fitness and probity tests and approval by the regulators.

Shareholders can challenge a decision that has been taken by the directors or require directors to take any action in favour of the company.

In accordance with Sections 60 and 61 of the COBE Act, members may bring direct or derivative actions against directors for their failure to observe their fiduciary duties, especially where there is fraud or misappropriation. Shareholders may bring an action in court against any manager, officer, or director of the entity in two ways:

• Direct action: A member or members may bring a direct action in court in their name to enforce or recover damages caused to them by violation of a duty incumbent upon such an officer, manager, or director. Members may also bring a direct action against the entity seeking any relief that is not prohibited by the law.
• Derivate action: A member or members may bring an action in court in their names and on the entity’s behalf against any manager, officer, or director to enforce or recover damages caused to the company by violation of the duties owed by that manager, officer, or director to the company.

In addition to the above, the other ways in which shareholders can challenge or influence directors’ decisions are as follows:

• instituting criminal proceedings against the company or its directors and officers;
• Section 223 as read with Section 225 of the COBE Act permits a shareholder to apply to court for an appropriate order against another shareholder on the grounds that the company’s affairs are being or have been conducted in a manner which is oppressive or unfairly prejudicial to the interests of some members;
• Section 233 of the COBE Act provides an exit remedy to minority shareholders who may be against some major corporate actions; and
• enforcement of certain disclosure and transparency requirements.

Shareholders have rights or powers to require the appointment/removal of the company’s auditors. According to Section 191(2) of the COBE Act, every company shall, at each annual general meeting, appoint an auditor to hold office from the conclusion of that annual general meeting until the conclusion of the next annual general meeting. The removal of an auditor, prior to expiration of the term, is subject to the provisions of the auditor’s contract.

Directors of public companies have an obligation to report to shareholders on the company’s corporate governance arrangements. According to Section 220(3) as read with Section 167(5)(e) of the COBE Act, at each annual general meeting of a public company, the board of directors shall report to the meeting on the company’s compliance with its corporate governance guidelines and their conformity to the principles set forth in the National Code on Corporate Governance, and explain the extent, if any, to which it has varied them or believes that any non-compliance therewith is justified. This is known as the board’s “comply or explain” report. There is no such positive obligation for other companies unless the company’s constitutive documents provide otherwise.

There are no prescribed duties and liabilities of controlling companies to the shareholders of the company they control. That said, like any other shareholder, a controlling company has a duty to act fairly, lawfully, and in the best interests of the company.

The rights of shareholders if the company is insolvent are specified in the Insolvency Act [Chapter 6:07] (“Insolvency Act”). They are as follows:

• the right to initiate corporate rescue or liquidation proceedings (Sections 5(7) and 122 of the Insolvency Act);
• the right to provide directions in a general meeting to the liquidator in accordance with the limits of their powers (Sections 10(7) and 16 of the Insolvency Act);
• the right to share in the distribution of the company’s residue or surplus pro rata their shareholding and interests (Section 103(4) of the Insolvency Act);
• the right to consider and approve a corporate rescue plan, especially where it affects their security rights (Section 144 of the Insolvency Act); and
• generally, the right to follow and be informed about the insolvency proceedings.

Shareholders have legal remedies against the company primarily as follows:

• the remedies available to challenge the validity of resolution as established in 2.11 Challenging a Resolution; and
• the exercise of dissenting shareholders’ appraisal rights, in which case the shareholders may demand that the company pay them the fair value for all of their shares in the company (Section 233 of the COBE Act).

Shareholders have several legal remedies against the company’s directors/officers as established in 6.2 Challenging a Decision Taken by Directors.

Section 61 of the COBE Act permits shareholders to bring a derivative action on behalf of the company. In such case, a member or members (acting in concert) may bring an action in court in their names and on the entity’s behalf against any manager, officer, or director to enforce or recover damages caused to the company by violation of the duties owed by that manager, officer, or director to the company.

The key legal and regulatory provisions that govern/restrict shareholder activism in Zimbabwe include the following:

• Section 62 of the COBE Act: This provision entitles shareholders to institute legal proceedings challenging particular decisions of a company or in the event of a deadlock, fraud, oppression or other situations. A notable example is the recent case of Thomas Mabuzwe & 6 Others vs Securities and Exchange Commission of Zimbabwe & 12 Others HC 5923-21, where seven shareholders instituted legal proceedings against publicly listed companies for migrating their shares from one central securities depository (CSD) to another without their consent. As at the date of this article, the matter is still pending final determination by the High Court of Zimbabwe.
• Section 60 of the COBE Act: Direct actions by members against directors.
• Section 61 of the COBE Act: Derivative actions.
• Sections 223 and 225 of the COBE Act: This provision permits a shareholder to apply to court for an appropriate order against another shareholder on the grounds that the company’s affairs are being or have been conducted in a manner which is oppressive or unfairly prejudicial to the interests of some members.
• Section 233 of the COBE Act: This provision provides an exit remedy to minority shareholders who may be against some major corporate actions through the exercise of dissenting shareholder appraisal rights.
• Section 167(3) of the COBE Act: This gives the shareholders the right to vote and present their concerns at a general meeting.
• The National Code on Corporate Governance: This empowers shareholder activists to promote good corporate governance practices by selling their shares, exercising their right to vote at general meetings and enforcing certain disclosure and transparency requirements.
• The Listing Rules: These empower the shareholders to enforce certain disclosure and transparency requirements.

Considering the above, the legal and regulatory tools available to activist shareholders are judicial remedies, statutory provisions, voting power, and regulatory oversight.

The key aims of the activist shareholders include:

• to promote good corporate governance practices;
• to voice shareholders’ concerns to the directors or other shareholders;
• to improve the company’s financial performance;
• to influence the company’s strategic policies and decisions; and
• to push for operational improvements.

The following strategies are commonly employed by activist shareholders:

• voter pooling arrangements whereby shareholders combine their voting rights to vote for or against certain resolutions;
• hostile takeovers;
• increasing shareholding in the company;
• influencing the appointment of directors;
• influencing employees, customers and other stakeholders of the company;
• negotiations with directors and other shareholders;
• litigation; and
• press and media campaigns.

The typical agendas of the activist shareholders are outlined in 11.2 Aims of Shareholder Activism.

There are no empirical statistics available regarding particular industries/sectors being targeted by activist behaviour. Activist shareholders are those that respond to specific issues relating to the companies in which they hold shares.

There are no empirical statistics available to support the view that particular groups/types of shareholders are more active than others. Be that as it may, it is normally the minority groups of shareholders which engage in shareholder activism to protect themselves. Major shareholders do not need to engage in activism as they have a plethora of avenues for controlling the affairs of the company.

As established in 11.4 Recent Trends and 11.5 Most Active Shareholder Groups, there are no empirical statistics available on the success of activist crusades or campaigns.

A company may adopt the following strategies in responding to an activist shareholder:

• acknowledge and respect the concerns raised;
• initiate negotiations;
• adopt and implement the proposals raised;
• provide clear and credible responses backed with data; and
• seek professional advice from legal, financial and public relations advisers.

A company can take the following practical steps to minimise the risk of shareholder activism:

• open and regular shareholder and stakeholder engagement;
• regular declaration of dividends;
• engage in corporate social responsibility; and
• constantly implementing good corporate governance changes.