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PUBLIC ENTITIES CORPORATE GOVERNANCE BILL, 2017
This Bill will provide for the corporate governance of public entities, that is to say statutory bodies (parastatals), certain constitutional Commissions, and commercial entities that are owned or controlled by the Government.
In this context, “corporate governance” means the rules, practices and processes by which an organisation is directed and controlled. Corporate governance essentially involves achieving a fair balance between the interests of the various stakeholders in an organisation, including its shareholders, management, customers, suppliers, financiers and the general community. Corporate governance encompasses most aspects of the organisation’s management, from action plans and internal controls to performance measurement and corporate disclosure. It is not directly concerned with the quality of an organisation’s services, but it has an indirect effect on them because the more efficient an organisation’s management is, the more likely it is that the organisation will deliver good services. Hence this Bill, by improving the internal management structures of parastatals and other public entities, should lead to an improvement in their performance.
The Bill will apply only to public entities, not to organisations in the private sector. The management of private companies, which are usually small organisations, is the concern of their shareholders. Public companies, which are listed on exchanges such as the Zimbabwe Stock Exchange, are governed by exchange listing rules and by codes of corporate governance laid down by the Securities and Exchange Commission of Zimbabwe. Any changes to the current rules of corporate governance applicable to companies (other than government-owned companies) will be done by amendments to the Companies Act and the Securities and Exchange Act, not through this Bill.
In summary, the Bill will do the following:
- It will underline the responsibility of line Ministries (those Ministries whose Minister is responsible for any public entity) to more effectively monitor, supervise and oversee the management operations of public entities to ensure strict compliance by them with the provisions of this Bill, without, however, infringing on the autonomy of public entities.
- It outlines the role and functions of the Corporate Governance Unit within the Office of the President and Cabinet (OPC) as a centralised advisory, oversight and support system for line Ministries with regard to the implementation of this Bill.
- It will introduce some consistency in the conditions of service of members of boards of public entities. In particular, it will require members to enter into performance contracts with the Government and will allow their salaries and allowances to be limited.
- Similarly, it will regulate the conditions of service of chief executive officers and other senior staff members of public entities and will allow their remuneration to be limited.
- It will give effect to the National Code on Corporate Governance Zimbabwe (Zimcode) to the extent that it applies to public entities.In more detail, the provisions of the Bill are as follows:
Public EntitiEs corporatE GovErnancE This Part deals with preliminary matters.
Part I (Preliminary)
Clause 1 sets out the Bill’s short title and will provide for the Bill to come into
operation on a date to be notified by the President in the Gazette.
Clause 2 defines terms that are used in the Bill. The term “public entity” is defined widely to include organisations of all kinds that are owned or controlled by the Government: constitutional Commissions, parastatals, companies and firms. The word“Minister” is defined to mean the Vice-President or Minister to whom the President may assign the Bill; the term “line Minister” means the Minister invested by the President or an enabling instrument with the responsibility for administering a public entity.
Clause 3 will exclude government Ministries and departments from the application of the Bill. Subject to that, the Bill will override anything to the contrary in any other Act or legal instrument that establishes or regulates public entities.