LEGAL ISSUES a company’s shares at the time the alleged misconduct took place. This makes the system for derivative action in Zimbabwe one of the most restrictive in the world. In South Africa, virtually any stakeholder has the right to pursue derivative action. Existing share ownership patterns in Zimbabwe mean that the 10% threshold is difficult to achieve. According to Professor Osode and Dr Hamadziripi, this means that the COBE Act runs the risk of limiting shareholders’ access to justice and, thus, fails in promoting the accountability of directors and managers. A strike suit is a lawsuit of In order to institute a derivative Zimbabwe leads both researchers to questionable merit brought in order suit, complainants must demand recommend that the Act should be to arrive at a private settlement that a board of directors reverse a reviewed and amended. before a case reaches court, possibly course of action being disputed or because settling out of court would show that making such a demand This publication in a prestigious cost less than a defendant’s legal of the board would have been futile. journal shows how careful analysis costs. At the time the COBE Act was This rule is known as the ‘demand of a law, in this case one enacted in adopted, the threat of strike suits requirement’. Another criticism of a neighbouring country, could have was relatively high. According to the COBE Act identified by Professor the potential to impact on the lives Professor Osode and Dr Hamadziripi, Osode and Dr Hamadziripi relates to of millions of people if it succeeds in this is no longer the case in spite the expectation that the Zimbabwean promoting a review of legislation to of the fact that some incentives legislature should have provided ensure sound corporate governance for mischievous shareholders to more guidance about the response a and enhance investor confidence engage in litigation with the hope of company can make to a demand from and is yet another instance of UFH concluding a settlement still remain. shareholders to reverse a course research making a difference at an Although the threat of strike suits of action. In the opinion of the two international level. could provide a reason for the rule researchers, the new Act falls short requiring potential litigants to have Reference: a minimum shareholding of 10%, the on detail and needs to be amended threat of strike suits is no longer high immediately to address this problem. Hamadziripi, F. & Osode. P. making the rule itself questionable in One aspect identified as lacking more 2022. ‘A critical assessment of the researchers’ eyes. specifically is guidance as to whether, pertinent locus standi features upon receipt of the demand, a of the derivative remedy under In addition, the new COBE Act does not company can apply to a court to set Zimbabwe’s new Companies and cover cases of directorial negligence, the demand aside if it lacks merit. Other Business Entities Act.’ Journal proposed acts or omissions by of African Law, 66(2):315-338. management and litigation against The points described above are just third parties. It can only be hoped that some of the problems identified in the Zimbabwean courts will adopt a the COBE Act by Professor Osode flexible approach to interpreting the and Dr Hamadziripi. Analysis of the Act to cover such cases. provisions for derivative action in Research Report 2021/2022 | 64