Corporate Power Allocation and Exercise in Zambia: The Enduring Authority of Boxtel and Kasengele and its Implication for Corporate Disclosure

This article examines the legal, and regulatory framework for corporate power allocation and exercise in Zambia so as to establish whether or not the said framework provides sufficient incentives for effective corporate information disclosure. The central argument of this article is that, under the said framework, the overriding authority that shareholders wield over the affairs of the company without corresponding duties to the company is likely to compromise the quality of disclosure and increase agency costs for issuers. This argument is underscored by the view that, effective corporate disclosure is a means of reducing agency costs for listed issuers. The further argument is that, the high agency costs for listed issuers are likely to water down the efficacy of the current low correlation of African emerging markets with each other and developed markets to attract investors for international portfolio diversification. The study employs the doctrinal approach to examining the effectiveness of legal and regulatory rules. The main findings of the study were that: (a) The duty of the company to disclose material financial information on the periodic or continuous basis, is originally-vested in the directors by the Companies Act (b) Shareholders in Zambia wield overriding authority over the affairs of the company including the wishes of their nominees, and (c) using a sample of 14 LuSE-listed entities, out of a total of 24 listed entities, in some cases, shareholders interfere with the performance, by the directors, of the company’s duty to disclose material information especially when it appears to be detrimental to the company, or by extension, to the shareholders.