The Companies Act (the “Act”) has recently undergone significant amendments, which took effect on 24 January 2025 (“Commencement Date”). These changes aim to enhance corporate governance, transparency, and regulatory compliance.
Below, we outline the key amendments:
Mandatory Company Constitutions
The Act now requires all companies to have a constitution in a prescribed form. Previously, companies could operate without a constitution and would be governed solely by the Companies Act. The amendment suggests that companies without a constitution must adopt the prescribed version set out in the Schedule to the Act. Companies have been given 12 (Twelve) months from the Commencement Date, to comply with this requirement.
Private Companies to File Financial Statements
Private companies are now required to file financial statements with the Registrar of Companies.
Exempt private companies (those with (i) total assets of less than P5,000,000 and (ii) annual turnover of less than P10,000,000 in the preceding financial year) must file financial statements in a prescribed form.
Non-exempt private companies (those with (i) total assets exceeding P5,000,000 and (ii) annual turnover exceeding P10,000,000, in the preceding year) must file financial statements, any group financial statements (in the form prescribed for public companies under the Act), and an auditor’s report.
Previously, this requirement only applied to public companies, companies in which a public company holds more than 25% of the share capital, or companies required by law to submit financial statements to the Registrar.
Licensing of Company Secretaries
Company secretaries must now be licensed by the Registrar of Companies (in a manner to be prescribed) before being appointed. Previously, a company secretary only needed to meet the qualification requirements set out in the Act and consent to the appointment. Companies have 24 (Twenty-Four) months from the Commencement Date, to comply with this requirement.
New Provisions Relating to Nominee Directors and Shareholders
The amendment introduces new definitions for the terms “Nominee” and “Nominator”:
A nominee is defined as an individual or legal entity instructed by another to act on their behalf in relation to a company.
A nominator is defined as an individual, group, or legal entity issuing instructions (directly or indirectly) to a nominee to act as a director or shareholder. This includes shadow directors and silent partners.
Nominee shareholders and directors must disclose their nominee status and the identity of their nominator to the Registrar, which will be recorded in the register. Additionally, nominees must disclose their status to any competent authority upon request, and any changes to this information must be reported to the Registrar within 10 (ten) days.
Registrar Empowered to Exchange Company Information
The Registrar of Companies is now authorized to exchange company information including basic details, beneficial ownership records, and nominee-nominator information, with foreign corporate registries or competent authorities.
Maintenance of Beneficial Ownership Records
All companies must now maintain an up-to-date record of beneficial ownership information, including details of any shareholder companies registered outside Botswana. Companies must update this record and notify the Registrar within 10 (Ten) days of any changes. Failure to comply is an offence punishable under the Act.
Trading After Removal from the Company Register
The amendment makes it an offence for a company that has been removed from the register to continue trading.
Other Key Changes
The threshold for substantial shareholders under Section 329 of the Act has increased from 5% to 10%.
Companies that have been removed from the register for more than five years may not be restored.
Companies removed from the register for failing to pay annual returns may be restored within seven days of payment.
Conclusion
These amendments are designed to strengthen Botswana’s corporate regulatory framework and promote greater transparency and compliance among companies in Botswana. However, there will be no doubt that the amendment will increase the administrative burden associated wtih regulating companies in Botswana.
For more information on these changes and general company law in Botswana, please contact:
The African Continental Free Trade Area (“AfCFTA”) represents monumental shift in Africa’s economic land scape, in that it is by number the largest free trade area in the world after the World Trade Organization and the largest and population in geographical size (1.5 billion people across the world second largest continent).
AfCFTA connects 54 of the continents’ 55 countries and creates a single market of over with combined GDP of over USD 3 trillion and has been established on the premise of promising the boost of intra-African trade, economic growth and reginal integration and corporation.
Botswana as a member state of AfCFTA has positioned itself to benefit from these opportunities driving its key economic growth goals of foreign direct investment attraction and economic diversification.
AfCFTA aims to expand intra-African trade through better harmonization and coordination of trade liberalization and facilitation, as well as instruments across the Regional Economic Communities (RECs) and Africa. AfCFTA aims to not only resolve the challenges of multiple and overlapping memberships but also expedite the regional and continental integration processes, and finally, the AfCFTA is expected to enhance competitiveness at the industry and enterprise level through exploitation of opportunities for scale production, continental market access, and better reallocation of resources.
Due to the challenges and risks faced by Botswana’s economy largely because of its small domestic market and its apparent over reliance on its mineral (largely diamonds) trade, Botswana continues to promote trade by pursuing free trade agreements with its neighbors as well as other developed and developing countries.
The bottlenecks faced by the AfCFTA fall into several key areas: policy and structure, implementation, distributional effects, and potential adverse impacts on certain sectors and countries.
One of the most immediate impacts Botswana faces following its ratification of AfCFTA is the need to reform its laws and regulations. Among other things AfCFTA seeks to reduce tariffs and eliminate non-tariff barriers therefore Botswana will need to revise relevant laws and regulations to accommodate new trading arrangements, especially with countries that have previously been subject to higher tariff rates. This might involve the establishment of a new tariff schedule, adjustments to trade facilitation procedures, and the implementation of more efficient customs clearance processes.
Additionally, Botswana will need to strengthen its border control systems and streamline customs procedures to meet the AfCFTA’s standards for efficient trade. Legal provisions related to customs duties, value-added tax on imports, and export regulations will require extensive amendments to ensure compliance with the bloc’s collective rules and obligations.
The AfCFTA encourages greater cross-border investment, and Botswana stands to benefit significantly, given its relatively stable economy and attractive investment climate. However, to tap into these opportunities, Botswana’s investment laws will need to adapt to a more integrated regional marketplace.
AfCFTA provisions on investment seek to create a more predictable, transparent, and investor-friendly environment. Botswana may need to revise its existing investor attraction policies to ensure that they are consistent with AfCFTA’s investment protocols, which promote equitable treatment of investors, dispute resolution mechanisms, and the protection of intellectual property rights. There may also be a need for new regulations or incentives to attract regional investors and facilitate easier investment flows within the continent.
The legal system in Botswana may need to train judges and lawyers in handling disputes within the context of AfCFTA’s trade and investment laws, as well as in applying international arbitration practices for resolving cross-border disputes. The alignment of Botswana’s judicial and legal system with AfCFTA’s dispute resolution mechanisms is key to ensuring that businesses and governments can resolve conflicts in an efficient, fair, and transparent manner.
The African Continental Free Trade Area is an exciting prospect for Botswana, bringing with it the promise of economic growth, increased regional integration, and enhanced trade opportunities. However, in order to fully benefit from the AfCFTA, Botswana must carefully align its legal and regulatory framework with the objectives of the trade agreement.
This alignment will require reforms across several areas, including customs and trade law, investment laws, services sector regulations, competition law, and dispute resolution mechanisms. While these reforms may present challenges, they also provide an opportunity for Botswana to modernize its legal system, streamline business processes, and become an even more attractive destination for investment in the heart of Africa.
As Botswana moves forward in this new era of regional integration, its legal system will play a central role in ensuring that the country not only meets the demands of the AfCFTA but also leverages its position for sustainable economic growth and development.
The AfCFTA is not just a trade agreement; it is an opportunity for Botswana to strengthen its position as a regional leader in Africa’s economic transformation.
Are you planning to invest in an existing business? If so, you need to know some legal gymnastics you must navigate in your journey.
1. As a new year starts, plans take off and it is typically all excitement for those investing their money in existing businesses. The truth is, the excitement breeds inclination to rush investment decisions and the critical steps you need to take before you invest are often overlooked or trivialized.
2. In this article, we briefly take you through the legal dynamics you need to know at a high level, if you are seeking to make an informed business decision which you will give you peace of mind.
3. There are a few agreements which you will need from your commercial lawyer, which you can share with the prospective seller of the of the business you want (as part of the negotiation process), and this would be a sale of shares agreement and also a shareholders agreement, if you are acquiring the business with other investors. In some cases, your lawyer may have to draft a sale of business agreement , if you are acquiring a business segment from the existing company.
4. It is very critical to highlight that the magic lies in what the sale agreement contain, and they should contain provisions not only protect you as an investor but enable you to have recourse if you discover hidden issues along the way after buying the business. We do this by ensuring that the sale agreement contains a condition precedent clause (or a clause which suspends operation of the whole agreement while certain things are being ticked off) which has important clauses, which are typically tailed based on the uniqueness of each deal and it is thus important that you appoint a lawyer who knows what they are doing.
5. The condition precedent clause will usually include a due diligence sub-clause which allows the investor to conduct an investigation on the affairs of the business by mainly looking (through third party professionals which the investor has to appoint) at mainly the financial and legal affairs. The financial affairs are typically assessed by accountants appointed by the investor and they look at financial documents and tax related documents. For the legal affairs a lawyer will have to be also appointed to look into legal matters arising from existing contracts with customers or clients or with landlords or suppliers, litigation issues, environmental issues and also the corporate structure of the business you are acquiring.
6. The other important condition is to provide for obtaining of all the legal or regulatory approvals necessary for the lawful implementation of the sale. The typical approvals include Competition and Consumer Authority merger approval (if the transaction meet the relevant thresholds), approval from NBFIRA if you are investing in a non bank financial institution, notification to Botswana Energy Regulator Authority if you are investing in an energy company.
7. The agreement also needs to be clear when risk and benefits will shift to the investor because issues typically arise relating to at what point does the investor enjoy the fruits of the business they are investing in, and this is a negotiation point however the cut off typically depends on receipt of payment of purchase price.
8. Another important consideration particularly where the entity being acquired is a large scale business, is to provide for reservation of a nominal percentage of the purchase price in a trust account for an agreed period, in order for price adjudgments to be made after the accounting books are checked by the investors accountants and also to cater for any undisclosed liabilities which are discovered during an agreed window period.
9. The other important clauses would be warranties and indemnity clauses where the sellers would be making representations and also guaranteeing the investor that they will compensate, in the event some of the representations turn out to be false after the sale. The agreement should also always contain the normal boiler plate clauses such as breach clause, non-waiver, governing law, non-variation, exclusion of representations not recorded, addresses for purposes of correspondence and litigation.
10. Once the terms are finalized, the agreement is signed and the investor commences the due diligence exercise and also obtaining the relevant regulatory approvals (both of which the costs should be clearly accounted for in the agreement). Upon fulfilment of the conditions and usually to the satisfaction of the investor the agreement becomes effective and the sale takes place, where the shares or business can be exchanged and the sellers being paid the agreed purchase price at a closing or completion meeting.
11. If these conditions are not fulfilled, such as if the due diligence uncovers a rot which was hidden from you or you could not see while walking around the establishment, you are free to walk away from the deal without having spent a single cent in paying the sellers.
12. As stated above in the case of investors investing as a consortium (in a form of a company), have to ensure that between themselves they have a shareholders agreement which records their rights and obligations which should be able to minimize room for conflict and having appropriate dispute resolution and deadlock breaking mechanisms.
13. With the above in mind, you may want to ensure that before you spend your hard earned money in an investment, you make a wise decision to set up an appointment with Armstrongs so that we can advise on all the necessary steps and appropriate agreements and most importantly terms which will give you a piece of mind and value for your money.
14. For more information on the above, please contact Mr Simon Bathusi at simon@armstrongs.bw or call +267 395 3481.
When an employee calls in sick on or around the date of a scheduled disciplinary hearing, is it a genuine need or a tactic to delay the disciplinary process?
Unfortunately, a trend has emerged where accused employees attempt to frustrate ongoing disciplinary proceedings through deliberate medical leave, making it difficult for employers to navigate the fine line between legitimate sick leave and its potential misuse.
Addressing what recourse is available to an employer in such a situation requires first examining the two fundamental rights that maintain balance within the workplace ecosystem.
Employer’s Right to Maintain Discipline vs Employee’s Right to be Heard
Employee discipline plays a vital role in maintaining order, productivity, and adherence to company policies and standards in the workplace. Its absence would not only negatively affect production and service delivery but would also lead to the deterioration of the overall workplace environment. Therefore, it comes as no surprise that an employer’s right to maintain discipline in the workplace has been firmly established in our jurisdiction.
Equally recognized is an accused employee’s right to be heard, which affords them the opportunity to present their version of events and defend themselves against potentially unjustified accusations. Without it, workplace environments would become breeding grounds for abuse of power and arbitrary disciplinary action.
While both rights are important in ensuring fairness in the workplace, there are instances where the two come into conflict.
Waiver or Forfeiture of Employee’s Right to be Heard
The old (but gold) case of Phirinyane v Spie Batignolles 1995 BLR 1 (IC) (“Phirinyane”) is arguably the leading authority for the principle that an accused employee’s right to be heard is not absolute and that an accused employee can waive or forfeit their right to be heard through their conduct.
The Industrial Court in Phirinyane held that the following constituted conduct that could warrant the loss of an accused employee’s right to be heard: (i) deserting the workplace; (ii) displaying unruly behaviour or blatantly abusing the employer when the employer is trying to discuss, convene, or hold a disciplinary hearing; and (iii) refusing to attend a scheduled disciplinary hearing after being given adequate notice. (N.B.: This is not an exhaustive list.)
The golden thread that runs through the above-mentioned conduct is that it involves behaviour that actively frustrates or obstructs an employer’s ability to conduct a fair disciplinary process, such that the employer cannot reasonably be expected to hold a hearing.
Directing employers on what to do when such conduct arises, the Industrial Court in Phirinyane advised that a disciplinary hearing cannot be dispensed with altogether. Instead, an employer must proceed with the hearing in the accused employee’s absence. This ensures that the employer can satisfy itself that the alleged misconduct had been committed and that the accused employee was the one who committed it.
In this way, due process and fairness are maintained throughout the disciplinary proceedings, despite the accused employee’s attempts to frustrate them.
Continuing a Hearing Without the “Sick” Employee
Considering the above principles, the following question arises: When an employer suspects that an accused employee is using sick leave to avoid a disciplinary hearing, can the employer proceed in the employee’s absence?
To answer this, an examination of local case law on the subject is imperative.
Steven Dennis Mangenela v The Attorney-General and Another CACGB-094-23 (“Mangenela”)
In Mangenela, the Court of Appeal clarified that if an employee repeatedly presents sick notes that conveniently align with hearing dates, this pattern may indicate an attempt to frustrate the disciplinary process. In such cases, the employer is entitled to disregard the sick notes and proceed with the hearing in the employee’s absence.
The Attorney-General & Another v Thatayaone Donald Disang CACGB-002-24 (“Disang”)
The Court of Appeal held that sick notes must be considered by the employer in light of the employee’s general conduct during the disciplinary process or from the time the employee became aware of the possible charges.
The employee had submitted sick notes coinciding with the scheduled dates of the disciplinary hearing a total of six (6) times. The repeated submission of sick notes was coupled with the employee’s initial reluctance to proceed with the hearing—first through an extension request to enable him to adequately address the allegations (which was granted), and second through a request for further particulars on the allegations (which particulars were known to him and did not affect his ability to address the allegations).
The Court of Appeal found that the employee’s conduct was indicative of a strategy to frustrate the disciplinary process and that the employer was consequently well within its rights to have the disciplinary hearing proceed in his absence.
Portia Mosadi v The Attorney-General CACGB-101-21 (“Mosadi”)
The employee faced, among other charges, two counts of theft, misappropriation, or wilful dishonesty against the Government. She was informed that the hearing would be held on the 9th of November 2017 and failed to turn up on that day on account of ill health, having presented a sick note.
The hearing was rescheduled to the 30th of November 2017, and subsequently to the 6th of December 2017, the employee having failed to show up both times for non-health-related reasons. The hearing was rescheduled to the 13th of December 2017, with the chairperson of the disciplinary committee cautioning the employee that this would be the last postponement. The employee still failed to appear without explanation. The hearing proceeded in her absence, and she was found guilty. She was accordingly notified of the outcome, and that mitigation was scheduled for the 21st of December 2017, which she also did not attend.
It was only after the fact that the employee claimed to have been on sick leave between the 13th and 21st of December 2017 but had not presented a sick note to that effect. She argued that her consequent dismissal was procedurally unfair, as her right to be heard had not been fulfilled.
The Court of Appeal, having considered the employee’s claim of ill health and her general conduct from the time she became aware of the possible charges, held that the employee was more likely than not in good health at the time. The claim of ill health being a possible ruse, the employer was justified in conducting the hearing in her absence.
Here, the employee was invited to a disciplinary hearing scheduled for the 17th of October 2014 and was unable to attend due to ill health, having presented a sick note. The hearing was subsequently rescheduled for the 27th of October 2014. On that date, the employee was still unable to attend due to ill health and sent a letter to his employer, along with a copy of the doctor’s note indicating his inability to attend.
Suspecting that this may be a strategy to avoid disciplinary action, the employer proceeded with the hearing in the employee’s absence and found him guilty.
The Court of Appeal held that it could not fault the Industrial Court’s finding that the employee’s dismissal was procedurally unfair, as there was no clear evidence that the employee was not unwell and that the doctor’s note was untruthful.
The Court of Appeal in Disang, reviewing the circumstances in Nyepetsi, stated:
“In the case cited, sick notes fell within a space of one month, and there was no indication of a pattern in the conduct of the employee to evade the conduct of a fair disciplinary hearing.”
Conclusion
The above decisions suggest that where an employee is absent due to illness, the safer course for the employer may be to postpone the hearing within reason. If the employee continues to submit sick notes that align suspiciously with hearing dates or shows a pattern of behaviour suggesting an attempt to evade the process, the employer may then proceed with the hearing in the employee’s absence.
What is within reason ultimately depends on the facts and circumstances of the case, and the outcome will largely depend on the court’s attitude towards the specific evidence presented—hence the variability in the judicial decisions above.
Notwithstanding the fact that the cases do not provide a definitive answer, the following key takeaways offer practical guidance to employers navigating this complex disciplinary scenario:
Repeated submission of sick notes that coincide with scheduled disciplinary hearings, especially when combined with other delaying tactics, may indicate an attempt to frustrate the process (Mangenela, Disang, Mosadi). In such cases, the employer can justifiably proceed with the hearing in the employee’s absence.
Sick notes should be considered in light of the employee’s overall conduct during the disciplinary process. If the employee’s behaviour—such as repeated requests for postponements or unwarranted delays—suggests a deliberate strategy to avoid the hearing, the employer may proceed after reasonable postponements (Disang).
Employers must always act reasonably and fairly. If there is no clear pattern of abuse or sufficient evidence to doubt the authenticity of the sick notes, proceeding without the employee could result in a finding of procedural unfairness (Nyepetsi).
Employers are not required to postpone hearings indefinitely. After a reasonable number of postponements and clear signs of bad faith, the employer may proceed with the hearing (Mangenela, Disang).
Courts look at the employee’s entire behaviour from the time they become aware of the charges, including previous reluctance to engage or failure to provide timely explanations for absences (Mosadi, Disang).
Bigamy is one of those crimes we think doesn’t happen anymore, like challenging your rival to a duel or cheque fraud. But it appears that it still has a place in modern society.
Bigamy is the crime of going through a marriage ceremony with a second person while still being in a marriage that has not been dissolved by death, divorce, or annulment. It is provided for in our Penal Code, along with marriage with dishonest or fraudulent intent, which also carries a 5-year sentence. Additionally, signing a false marriage certificate can result in a 7-year sentence.
The effect of bigamy is that the second “marriage” is void.
As with all crimes, there must be the appropriate mens rea or criminal intent. The mens rea is undoubtedly present when the bigamist knows that he or she is still married, as is most often the case—separation from your spouse is not enough to allow a second marriage.
The Indian Court dealt with a landmark case involving a woman married to a man who converted to another religion. He had been married to his wife for a long period, and they had children from their marriage. However, he entered into a second marriage. The Court ruled that the husband had converted to avoid prosecution under bigamy and had no faith in his new religion. The second “marriage” was found to be fraudulent, and the first marriage could not be dissolved simply because the husband converted to a different religion.
Bigamy can, and should be, dealt with by criminal law, but there are also remedies in civil law.
The Natal High Court found that where a man purported to enter into a second civil marriage while his first marriage was still valid, the second marriage was bigamous and unlawful. In that case, the second wife was unaware of the first marriage and had a claim for damages against the husband. However, she had no claim for spousal support.
A duped second “wife” may apply for the marriage to be declared null and void and may claim damages for impairment of dignity, insult, and degradation, as may the wronged first wife.
However, if you know a person to be already married and receive a proposal of marriage from them, don’t expect to be able to make a claim for breach of promise to marry!
In our own courts, the reported case of Ntshekang v Pule dealt with the position of the law in regard to customary law. It was found that “A party married according to civil rights commits bigamy if he or she marries again before divorcing the spouse in the first marriage. Similarly, a party married according to customary law commits bigamy if he or she contracts a civil rights marriage with a third party. The only time a party married according to customary law may contract a civil rights marriage is if he or she marries the spouse already married to him or her according to customary law before a second customary marriage is contracted by the husband with a third party.”
At Armstrongs, we have very recently dealt with two cases of bigamy—both instances committed by husbands. In the first, the husband from Botswana was married under civil law. The marriage turned sour, but instead of seeking a divorce, he simply married his new paramour in a neighboring country, swearing on oath that there was no impediment to the second marriage. Because the offense was not committed in Botswana, our neighbors’ authorities are dealing with it.
In the second case, the husband had been married for many years following a civil ceremony in the United Kingdom and is still married. He and his wife have two adult children. The wife quite by chance discovered a marriage certificate from a marriage officer in Botswana and a video of the wedding. The husband is shown in the video swearing that he had never been married before and that there was no impediment to his marriage to his very young bride, whom he apparently met on a dating site.
We obtained an order ring-fencing the husband’s considerable assets in Botswana pending the wife’s divorce action in the United Kingdom and her claim for her half-share of the assets.
The lessons to be learned—unless you want five years in prison and two mothers-in-law—dissolve your first marriage first, and be careful of whom you meet on a dating site.
