Zimbabwe Director Agreement

Director Agreements in Zimbabwe

A director agreement — formally known as a director service agreement or director service contract — is a legal document that governs the relationship between a company and its director. In Zimbabwe, directors occupy a unique position: they are not employees in the traditional sense, yet they carry significant legal responsibilities and personal liability.

Under the Companies and Other Business Entities Act (Chapter 24:31), directors have statutory duties including the duty to act in good faith, the duty of care and skill, and the duty to avoid conflicts of interest. A director agreement puts these obligations in writing and adds commercial terms such as remuneration, notice periods, and restrictive covenants.

Types of Directors in Zimbabwe

Key Clauses in a Director Agreement

• Appointment and term — Date of appointment, duration (fixed term or ongoing), and conditions for renewal
• Duties and responsibilities — Specific duties, time commitment, reporting lines, and board meeting attendance requirements
• Remuneration and benefits — Director fees, salary (for executive directors), bonuses, share options, and expense reimbursement
• Fiduciary duties — Codification of statutory duties under the Companies Act
• Conflicts of interest — Disclosure obligations and procedures for managing conflicts
• Confidentiality — Protection of company information during and after the directorship
• Non-compete clause — Restrictions on competing activities during and after the term
• Intellectual property — Ownership of IP created during the directorship
• Termination — Notice periods, grounds for immediate termination, and removal procedures
• Indemnity and insurance — Director and officer (D&O) insurance and indemnity provisions

Director’s Fiduciary Duties Under Zimbabwe Law

Every director in Zimbabwe owes the following fiduciary duties to the company:

1. Duty to act in good faith — Directors must act honestly and in the best interests of the company, not their own personal interests.
2. Duty of care, skill, and diligence — Directors must exercise the degree of care, skill, and diligence that a reasonably prudent person would exercise in comparable circumstances.
3. Duty to avoid conflicts of interest — Directors must not place themselves in a position where their personal interests conflict with their duty to the company.
4. Duty not to misuse company property — Directors must not divert company assets or opportunities for personal gain.
5. Duty to keep proper records — Directors must ensure the company maintains accurate financial records and statutory registers.

Director Remuneration in Zimbabwe

Director remuneration must be approved by shareholders. Common components include:

• Director fees — Fixed fees for non-executive directors, typically paid monthly or quarterly
• Salary — Monthly salary for executive directors, subject to PAYE tax
• Performance bonuses — Tied to company performance metrics
• Share options — Options to purchase shares at a predetermined price
• Sitting allowance — Per-meeting fees for board and committee attendance
• Expense reimbursement — Travel, accommodation, and other business expenses

Termination of a Director

A director’s appointment can be terminated by:

• Resignation — with the notice period specified in the agreement
• Removal by shareholders — by ordinary resolution under the Companies Act
• Disqualification — by court order or automatic disqualification (e.g., insolvency, criminal conviction)
• Expiry of fixed term — if the agreement specifies a fixed period
• Death or permanent incapacity