A critical analysis of the dissenting shareholders’ appraisal rights remedy under the companies and other business entities act [chapter 24:31]

Abstract

The appraisal remedy in Zimbabwean corporate law allows a shareholder who has voted against a company`s decision to alter rights attaching to a particular class of shares, to approve a major asset transaction and to merge with another company to exit the company through receiving a fair of their shareholding. This remedy is fairly novel in Zimbabwe having been introduced in 2019 through the Companies and Other Business Entities Act [Chapter 24:31]. Its introduction has been informed by the need to strengthen minority shareholder protection. This thesis discusses the content of the appraisal remedy as provided for in the Companies and Other Business Entities Act [Chapter 24:31]. It goes on to assess the effectiveness of the remedy as a mechanism for the protection of the minority shareholder. It argues that there are a number of procedural challenges that may see the remedy unpopular within the Zimbabwean Context. Further, the thesis caries a comparative analysis of the Zimbabwean, South African and Canadian jurisdictions on the position of the remedy in corporate law. The analysis reveals that of the three jurisdictions, the Canadian jurisdiction is the first to introduce the remedy in its legislation. South Africa introduced the remedy into its company law in 2008. Of the three jurisdictions, the thesis argues that the Canadian provisions on the subject are clearer and simple. The thesis concludes by making recommendations aimed at ensuring that the remedy serves its purpose in an effective manner. Among other things, it recommends that there is need for a number of amendments of the provisions in the Act to ensure that the provisions become clear to the shareholders who might elect to rely on them.