1. N E W S L E T T E R
w w w . k a n t o r i m m e r m a n . c o . z w
V o l u m e 1 | I s s u e 4
KANTOR&IMMERMAN
The Obiter Dicta

2. In this issue:
COMPANY LIQUIDATIONS –
IS THIS THE WAY TO GO?
.
CABINET DIRECTIVE ON SALARY
CUTS - LEGAL ISSUES ARISING
THEREFROM.
PROTECTION OF BORROWERS
UNDER THE MICROFINANCE ACT.
.
T h e O b i t e r D i c t a | V o l u m e 1 | I s s u e 4 1
2
2
2
KANTOR&IMMERMAN

3. COMPANY LIQUIDATIONS – Is this
the way to go?
The economic decline in Zimbabwe has brought serious
challenges to the survival of companies. Since the introduction
of multi-currency in Zimbabwe in February 2009, companies in
Zimbabwe and of necessity have conducted business on heavy
borrowing and credit facilities. Unfortunately, such borrowings
and credit facilities are mostly short term and not sustainable in
the long run as the economy has been very slow in its turn
around.
As a consequence of the above, there has been a plethora of
company failures leading to either liquidation or the half way
house measure of judicial management both voluntary and at
the instance of creditors. Indeed the High Court Roll is now
littered every week with liquidation and judicial set downs. But
the High Court recently reaffirmed the principle that liquidation
proceedings should not be used as a primary means of debt
collection.
In DOMINION TRADING FZ-LLC v VICTORIA FOODS
(PRIVATE) LIMITED HH324/13 the High Court found that
the debt which was the cause for the liquidation was in dispute
and the subject of determination through an arbitration process
agreed to by the parties. In dismissing the application for
liquidation the High Court remarked:
“It occurs to me that the insistence of the applicant on a winding
up, against this background is indicative of an abuse of process,
the employment of the judicial process for a purpose other than
that for which it was intended.
To my mind, the applicant is aware that arbitration which was
agreed by the parties would not yield positive results and has
therefore elected to employ the procedure for winding up in
order to enforce payment of a disputed debt. This is
unacceptable as it amounts to harassment or oppression of the
respondent.”
The matter was taken on appeal and the Supreme Court upheld
the Judgment.
Agmos Moyo agmos@kantorimmerman.co.zw
CABINET DIRECTIVE ON SALARY
CUTS - LEGAL ISSUES ARISING
THEREFROM
Government resolved as an interim measure that chief executive
officers (CEOs) of state owned enterprises, parastatals and local
authorities should receive a total pay package of not more than
US$6000 per month while the lowest paid employee should not
fall below the poverty datum line, which stands at about
US$515, effective 18 March 2014. This directive was announced
by a cabinet minister.
The Comptroller and Auditor-General is to conduct intensive
audits for the period February 2009 to date, to establish what
the State was prejudiced of through unauthorized and or
excessive salaries. In cases where illegal and unjustified salary
increases are unearthed, measures will be taken to recover the
money. The Government threatened “serious penalties” in the
event of failure to observe the new salary structure.
State employees serve their employer in terms of contracts of
employment. There is an employer-employee relationship. This
contract gives the parties rights and obligations. One of the key
obligations of the employer is to pay the agreed salary and
benefits. Under the common law and as confirmed by the
Labour Act, the employer cannot unilaterally vary the terms of
employment.
The following legal issues arise from the move by the
government;
did?
disobedience to a lawful order or any other form of misconduct.
Put differently does failure to abide by the government directive
constitute a basis for dismissal?
such as top management are going to be prejudiced, the low
ranking employees may actually benefit as their salaries have to
be increased to at least the poverty datum line.
years ago, can the employees invoke the defense of prescription
in the event that the government wants to recover any money it
might have been allegedley prejudiced of?
to have been paid tax free?
These are some of the legal issues that may arise from the
commendable, the government has to follow due process. The
government should set out a legal framework which empowers
it to make the decisions it has made. Hopefully the employer
will engage its employees to avoid unnecessary litigation.
Bernard Chidziva bc@kantorimmerman.co.zw
PROTECTION OF BORROWERS
UNDER THE MICROFINANCE ACT.
The Microfinance Act [Chapter 24:29] was promulgated on the
30th of September 2013. The Act is customer centric and was
specifically tailored to address the irregularities in the
microfinance sector. The Act brought uniformity and sanity in the
sector by setting new registration requirements and procedures;
supervision and regulatory mechanisms for Microfinanciers. The
Act caters for various types of microfinance businesses, which
include moneylenders, microfinance institutions and corporate
Microfinanciers; which are all coined, Microfinanciers.
Microfinanciers were previously regulated by the Money lending
and Rates of Interest Act [Chapter 14:14] and the Banking Act
T h e O b i t e r D i c t a | V o l u m e 1 | I s s u e 4 2
KANTOR&IMMERMAN

4. [Chapter 24:20]; and were not allowed to take deposits from the
public. In an effort to provide full financial services to the
unbanked, under-banked households and small to medium
enterprises, the Act provides for deposit-taking microfinance
businesses.
Borrowers and potential borrowers are protected under the Act
because;
(i) Public notice is required when a Microfinancier is registering
or canceling its registration. As such, it is easy to ascertain
whether a Microfinancier is in business or not.
(ii) Microfinanciers are supposed to display conspicuously in
easily legible letters information regarding their business such
as, interest rates, all charges, rights and responsibility of
borrowers at the entrance of its place of business. This amongst
other things enables a potential borrower to make an informed
decision on whether or not to engage the Microfinancier.
(iii) Loan agreements have to comply with the requirements of
Section 16 of the Act, which prescribes that a Loan agreement
has to be in writing and has to clearly set out the terms and
conditions. If a Microfinancier fails to comply with section 16 it
cannot claim interest, charges or fees in connection with the
loan.
(iv) Further, a loan agreement will be void if it includes the
following clauses;
a. A clause disallowing the borrower from making part payments
or total pre-payments of any amount owed or;
b. A clause permitting the Microfinancier to unilaterally alter the
rate of interest payable by the borrower.
(v) The Act enjoins Microfinanciers to investigate the
creditworthiness of a potential borrower before entering into a
loan agreement.
(vi) Code of conduct
a. The code also emphasizes on the maintenance of Privacy of
clients information.
b. Microfinanciers are implored to inform or educate clients or
potential clients about their business. They also have to put in
place grievance and feedback mechanisms and keep record of
the complaints raised.
c. According to section 44 (1) of the Act, a person who is
aggrieved by any conduct of a Microfinancier that can constitute
an undesirable method of conducting business, may within a
reasonable time after the conduct giving rise to the complaint,
lodge his or her complaint in writing with the Registrar.
d. After a Complaint has been made, investigations are carried
out followed by a hearing and if necessary, punishment.
Committee which is constituted by the Registrar or his delegate,
representative appointed by the Minister and a representative of
the Reserve Bank appointed by the Governor of the Reserve
Bank.
(vii) The Reserve Bank of Zimbabwe supervises and monitors
microfinance institutions. It is empowered to appoint inspectors
and supervisors who carry out spot-checks, inspection of records
and investigations.
Clearly, the Act gives the Borrower enough protection of the law.
Tatenda Uchena uchenat@kantorimmerman.co.zw
Joke
" I am a trial lawyer".... the lawyer says at a
dinner, "on a good day I sound like an
affidavit".
Disclaimer
This document is produced for you and you only as a client of
Kantor & Immerman for your general information. It is not
intended to be comprehensive legal advice. Every situation
depends on its own facts and circumstances. Only specific legal
advice regarding your situation should sought and be relied
upon. Kantor & Immerman is not liable for any loss or damages
whatsoever based on the act or ommission not taken or taken by
any reader on the basis of the contents of this newsletter.
Contact Us
MacDonald House, 10 Selous Ave
P.O. Box 19 Harare, Zimbabwe
Tel: +263 4 793626 - 9
Fax: +263 4 704438
Email: office@kantorimmerman.co.zw
Website: www.kantorimmerman.co.zw
3T h e O b i t e r D i c t a | V o l u m e 1 | I s s u e 4
KANTOR&IMMERMAN