Law and regulations on investments
- Zambia’s judicial system is based on the British common law system.
- Besides the Zambian Constitution Act, the Zambia Development Agency Act (2006, as amended) is the main law governing investments.
- Other texts are: the Companies Act (Chapter 388), the Investment Act (388) and the Public-Private Partnership Act (2009).
100% foreign ownership
- Foreign investors can own 100 per cent of an enterprise registered in Zambia.
- Nevertheless, it is worth mentioning that international firms operating a domestic cellular telephone network have to offer ten percent of shares on the Lusaka Stock Exchange.
- Investors are allowed to invest in any sector open to the private sector. Only the production of arms, coins, dangerous substances and security documents require specific approvals.
- In order to be able to take advantage of benefits provided by the ZDA Act, the foreign investor has to obtain an investment certificate.
- The certificate is valid for ten years from the date of issue, and may be renewed.
- Subject to an investment board approval, it is possible to transfer an investment certificate from a given company to a new owner.
Expropriation and compensation
The policy guarantee provides a solid foundation for China to expand its investment in Zambia”H.E. Li Jie, Chinese Ambassador to Zambia (September 2018).
- The ZDA certificate of registration provides investment guarantees and protection against expropriation.
- No investor may be expropriated except in extreme circumstances and if the Zambian Parliament has passed an Act relating to the compulsory acquisition of the property.
- The ZDA Act (article 19) notably stipulates that
- An investor’s property shall not be compulsorily acquired nor shall any interest in or right over such property be compulsorily acquired except for public purposes under an Act of Parliament relating to the compulsory acquisition of property which provides for payment of compensation for such acquisition; and
- Any compensation payable under this section shall be made promptly at the market value and shall be fully transferable at the applicable exchange rate in the currency in which the investment was originally made, without deductions for taxes, levies and other duties, except where those are due.
- Investments made by foreign investors benefit from extra protection
- In case of dispute, the investor has different options. He may notably turn to the court or start an arbitration procedure. Domestic arbitration is governed by the Arbitration Act (2000).
- Decisions of domestic arbitration are legally binding.
- Foreign investors may also use international arbitration.