Statutory Instrument Number 41 of 2015 (“S.I. 41”) was enacted on 19 June 2015, increasing the fees payable to many government ministries, including fees relating to corporate transactions and governance. S.I. 41 will increase some costs of doing business in Zambia, but will also have the effect of exempting some corporate transactions from approval of the Competition and Consumer Protection Commission (the “CCPC”).
Many fees and fines payable to Zambian government ministries are denominated in statutes and regulations as “fee units” or “penalty units.” The kwacha value of the units is set pursuant to the Fees and Fines Act, Cap. 45 of the Laws of Zambia, and are varied by statutory instruments. S.I. 41 increases the value of a fee unit or penalty unit from 0.20 kwacha to 0.30 kwacha, an increase of 50 percent.
Many payments to government ministries will be affected by this change, including payments to the companies and land registries for the registration of mortgages, charges and other security interests. With respect to the registration of securities and the related documentary approvals from the Securities and Exchange Commission (the “SEC”), fees will also increase. The amounts of these increases are set forth in Schedule 1 to this briefing.
Also affected will be corporate transactions (mergers) that require the authorisation of the Competition and Consumer Protection Commission (the “CCPC”).1 The maximum fee payable to the CCPC in connection with a merger authorisation will increase from approximately US$426,257 to US$639,386. However, S.I. 41 will also have the effect of increasing the minimum threshold of a company’s turnover or assets that trigger the requirement of CCPC merger approval, because the threshold is also denominated in fee units. The effect will be to exempt some transactions involving companies with turnover and assets that fall below the threshold, that would have previously been captured.
Some fees will remain unchanged by S.I. 41, because they are not assessed in terms of fee units. For example, the fee payable to the SEC in respect of an initial public offering will remain 0.25% of the share capital and revenue reserve of the company (although the fees for reviewing a prospectus and other documents are denominated in fee units and will increase). Similarly, the fees payable in respect of authorisation of a takeover or merger (a power the SEC asserts pursuant to the Securities Act) remains 0.25% of the value of the transaction.