ZAMBIA: An Introduction to General Business Law

General Business Environment

The business operating environment in Zambia balances court-controlled principles, largely influenced by English Common Law, with interventions by the Constitution, principal legislation, and subordinate legislation. Several key laws affect business operations.

Companies Act of 2017 and Insolvency Act 2017

The Companies Act No 10 of 2017 aligns with the English Companies Act and recognises four company types in Zambia: public limited, private limited, private unlimited, and companies limited by guarantee. Registering a limited liability company takes about 48 hours.

Key features include the surrender of shares to relinquish ownership, allowing companies to buy back shares or hold them as treasury shares to benefit shareholders. The Act also mandates beneficial ownership disclosure to identify ultimate beneficiaries, helping to uncover undesirable individuals, such as sanctioned persons or terrorists.

The Corporate Insolvency Act No 10 of 2017, previously part of the Companies Act, enhances regulation of distressed companies by formally recognising insolvency practitioners and introducing tools such as business rescue and structured schemes of arrangement.

Employment Code Act 2019

The Employment Code Act No 3 of 2019 (ECA), effective 9 May 2019, addresses contracts, entitlements, wage protection, and anti-discrimination measures. It replaces prior employment-related Acts, including the Employment Act and Minimum Wages and Conditions of Employment Act, offering more robust employee protections.

The ECA introduces special statutory instruments to protect vulnerable employees, such as general workers, shopkeepers, security guards, and bus drivers, by mandating minimum allowances for transport, lunch, and other conditions.

Competition and Consumer Protection Act

The Competition and Consumer Protection Act of 2010 governs anti-competitive conduct, merger control, restrictive practices (eg, cartels, abuse of dominance), and consumer protection.

Zambia’s merger regime is suspensory, requiring approval before implementation. A merger is notifiable if it meets prescribed thresholds, with assessments typically completed in 90 days (extendable by 30 days). Unapproved mergers are void, with fines of up to 10% of annual turnover.

Since December 2023, Zambia has domesticated COMESA Competition Commission (CCC) regulations. This eliminates dual merger filings for mergers with a regional dimension, leaving CCC as the sole authority for such cases.

Restrictive practices, such as cartel conduct and resale price maintenance, are prohibited per se and attract administrative fines and prosecution without a rule-of-reason defence.

An enterprise is dominant if it holds a 30% or greater market share. Abuse of dominance is prohibited, with fines of up to 10% of annual turnover for violations.

Mining Regulation

There are currently three potential changes to the mining sector regulation regime. Firstly, the 2015 Act is expected to be repealed by the Geological and Mineral Development Bill of 2023. The focus of the Geological and Mineral Development Bill is the regulation and development of artisanal and small-scale exploration and mining, which are mainly targeted at citizens or joint ventures with citizens. Most of the regulatory provisions in this respect have been extracted from the 2015 Act, and this Bill is still undergoing legislative assembly debate.

Secondly, there is proposed to be introduced the Minerals Regulation Commission Bill of 2023 which essentially takes over regulation of large-scale exploration and mining by largely adopting the relevant provisions of the 2015 Act. There are, however, some important proposed new introductions. One of these is the introduction of a new autonomous regulator with its own corporate existence to be called the Minerals Regulation Commission. Apart from reigning in regulation, the commission is also proposed to regulate and monitor marketing of minerals as well as the trade and export of minerals produced in Zambia. In 2024, several stakeholders, including the Zambia Chamber of Mines, expressed concerns about the proposed mining policy outlined in the Bill. As a result, the Bill was withdrawn from the legislative assembly's debate. It is now anticipated that a revised version of the Bill will be presented for debate in the legislative assembly in 2025.

Thirdly, there is proposed to be introduced the Mines and Minerals Development (Local Content) Regulations. The initial draft of this law was circulated in 2020 with the major objective of preferring the procurement of local goods and services as well as the employment of local professionals by mining companies. The main instrument of regulation would be a mandatory local content plan required to be submitted by mining right holders whose implementation would be supervised by a Local Content Unit within the Ministry of Mines. This potential law is still under consideration but unlike the two Bills does not require to be passed by the legislative assembly. As subordinate legislation, it is only required to be signed off by the Minister responsible for Mines and this is likely to happen once the two Bills are passed into law.

Energy Regulation

The sector is regulated by two principal statutes known as the Electricity Act and the Energy Regulation Act, both of 2019. The legislative framework is largely facilitative, and key development incudes the creation of a framework for power trading and access to the national grid. Notably, on 5 July 2024, the Minister of Energy published the Electricity (Net Metering) Regulations, 2024 to allow customers or consumers of electricity from the grid who also generate renewable electricity for their own consumption to export any excess electricity into the grid.

The introduction of this further facilitative legislation is timely in view of the massive expansion of the mining sector, which requires commensurate increase in the energy generation capacity of the country. Some of the chief benefits of this new legislation in the electricity sub-sector of the energy sector in Zambia is the decentralisation of electricity supply to supplement grid scale supply but to also provide a ready market for excess power whether internationally or domestically available and a quick return on investment in generating equipment even at the micro level.

Telecommunications, Media and Technology Regulation

Zambia has enacted various pieces of legislation to create a secure and efficient environment for data protection, validity of electronic communications as well as cyber security. Key legislative acts include the following.

• Electronic Communications and Transactions Act No 4 of 2021.
• Data Protection Act No 3 of 2021.
• Cyber Security and Cyber Crimes Act No 2 of 2021.
• Information and Communications Technologies Act No 15 of 2009.

The key challenges under these statutes are mainly the novelty of the concept of data protection and the requirement on businesses to localise the storage of data in a country which may, in turn, require the deployment of significant initial capital to achieve compliance.

Banking and Finance Regulation

Banking and Financial Services Act No 7 of 2017, as amended by Act No 7 of 2020

The Banking and Financial Services Act No 7 of 2017 as amended by Act No 7 of 2020 is a comprehensive piece of legislation enacted to regulate and supervise banking and financial services in Zambia. International capital in debt form, however, is mainly regulated under general court made commercial law. International financial institutions are generally not required to obtain local licencing unless they perform intermediation functions or operate a payment system.

Securities Act No 41 of 2016, as amended by Act No 21 of 2022

The Securities Act of 2016 in Zambia establishes a regulatory framework for the securities market, promoting transparency, fairness, and investor protection. Private placement of securities with sophisticated investors is generally not regulated under this statute unless the securities are offered to the public through a primary or secondary marketing platform in Zambia.

Proposed Bank of Zambia Currency Regulations, 2024

These represent a second attempt by the central bank to tighten currency regulation against use of forex for domestic transactions and currently still under discussion. There are proposed important exemptions allowing for cross-border transactions and certain transactions in the mining and energy sectors.

Naturally, however, most local companies with foreign currency obligations might face currency mismatches given that their revenues will primarily be in Kwacha, but strategies such as hedging should help mitigate potential losses arising from fluctuations in exchange rates should these regulations be introduced.

Tourism regulations and dispute resolution

Zambia, home to the Victoria Falls and a leading safari destination, regulates its tourism sector under the Tourism and Hospitality Act, 2015. The operationalisation of the Business Regulatory Act simplifies investment through a consolidated digital licensing platform.

Dispute resolution options

Investors can resolve disputes via the fast-track Commercial Court or arbitration. Arbitration in Zambia is governed by the Arbitration Act of 2000, incorporating the UNCITRAL Model Law with amendments. Zambia is also a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, enabling recognition and enforcement of foreign awards as if they were judgments of Zambian courts.

This streamlined regulatory and dispute resolution framework supports investment and legal certainty in Zambia’s growing tourism sector.