Zambia

A transactions in Zambia are typically structured as either:

• share transfers;
• share subscriptions; or
• asset purchases.

A share transfer involves the purchase of shares in the target company from the existing shareholders while a share subscription involves the issuance of newly created or unallotted shares in the capital of the company to the acquirer. Under a share transfer and share subscription, the target company continues to exist with all its assets and liabilities. From a transaction cost perspective, share subscriptions are preferred to share transfers in practice, as share subscriptions are generally not subject to the payment of property transfer tax.

In an asset purchase, the acquirer selects and acquires specific assets of a business entity and does not acquire any shareholding in the affected business entity. This structure allows the acquirer to ring-fence against the liabilities of the entity disposing the assets, although if an asset or business is transferred as a going concern, such a transfer would not attract the payment of value added tax (VAT), but the transferee would incur the liability of the transferor subsisting immediately before the transfer takes effect and need to comply with the following requirements:

• the keeping and preserving or the production of any records or accounts;
• the furnishing of tax returns;
• paying any tax or interest under the VAT Act; and
• complying with any requirements made in respect of the business by the Commissioner-General of the Zambia Revenue Authority.

Amalgamations are also permissible under Zambian law despite their less common use in practice. Amalgamation involves two or more entities merging into a single entity. This process results in the dissolution of the initial entities, which cease to exist independently with their assets, liabilities, and operations being integrated into the newly formed entity.

The Zambian M&A market is currently more active and dynamic than it was 12–18 months ago, with a noticeable increase in deal activity, particularly in the mining, financial services, energy, agriculture, and infrastructure sectors. This growth has been driven by, inter alia, renewed investor confidence and strong global demand for critical minerals, positioning Zambia as a key destination for resource-focused investment and a disposal by outgoing shareholders in other transactions. Following Zambia’s positive strides in restructuring its national debt, the Zambian economy is projected to grow with an anticipated surge in M&A activity.

Over the past 12–24 months in Zambia, major M&A trends have included the following:

• Acquirers have increasingly adopted more rigorous due diligence processes to identify potential risks in target companies.
• Sellers have shown a growing willingness to pursue auction-driven M&A processes involving multiple bidders and set out process timelines.
• The energy crisis in Zambia has reshaped the structuring of M&A transactions, with the development of captive power plants or the securing of energy supply increasingly forming part of deal arrangements. This has, in turn, extended transaction timelines. At the same time, the crisis has created new opportunities in Zambia’s energy sector, particularly following the recent introduction of open access to the national grid, which is expected to stimulate further investment in Zambia’s energy sector.
• Public-private partnerships (PPP) and joint ventures (JV) with government entities have become more common, particularly for infrastructure and large-scale projects, such as the revitalization of the Tazara Railway and the Indeni Oil Refinery, which have been done as PPPs and JVs, respectively.
• Increased investment interest in Zambia across a broad range of sectors — including mining, infrastructure, and agriculture — particularly from investors in the Middle East and the Far East.

In the next 12–24 months, we anticipate a measured but increasingly active M&A market in Zambia. The surge in M&A activity will continue to be driven by a number of factors, which include the following:

• Sector-specific legislative reforms by the Zambian government. In the mining sector, for example, the Zambian government recently enacted the Geological and Minerals Development (Local Content) (Preference for Goods and Services in the Mining Sector) Regulations, 2025, Statutory Instrument No. 68 of 2025 (“Local Content Regulations”). Principally, the Local Content Regulations require that by June 30, 2026, mining or mining-related companies must reserve a minimum of 20% of their annual procurement budget for core mining goods and services to entities where at least 25% of the equity is owned by Zambian citizens. Mining or mining-related companies are further required to progressively increase the reserved minimum procurement threshold to not less than 40% by the end of 2030. This is expected to trigger the acquisition of equity interests in major suppliers of core mining goods and services by Zambian citizens, with considerations on how to structure and finance such transactions critical to the success of the transactions.
• The rising global demand for critical minerals. The mining sector accounts for a significant share of M&A activity in Zambia and the rising global demand for critical minerals such as copper is expected to encourage the acquisition of equity interests in companies operating in Zambia’s copper-rich areas.

While the commercial terms of M&A transactions are largely governed by the common principles of contract in Zambia, M&A transactions are required to comply with the provisions of, inter alia, the following pieces of legislation:

• The Companies Act No. 10 of 2017 as amended from time to time (“Companies Act”). The Companies Act regulates, inter alia, share transfers, share subscriptions, and amalgamations and outlines the procedures to be complied with in effecting the same. The Patents and Companies Registration Agency is the main regulatory authority that administers the provisions of the Companies Act.
• The Competition and Consumer Protection Act, No. 24 of 2010 as amended from time to time (“Competition Act”). The Competition Act regulates mergers in Zambia and principally requires parties to a merger transaction that meets the prescribed financial threshold to seek the approval of the Competition and Consumer Protection Commission (CCPC) prior to the implementation of the merger transaction.
• The Securities Act No. 41 of 2016 as amended from time to time (“Securities Act”). The Securities Act applies to M&A transactions involving listed entities or entities whose securities are registered with the Securities and Exchange Commission (SEC).
• The Property Transfer Tax Act, Chapter 340 of the laws of Zambia (“PTT Act”). The PTT Act provides for the levying and collection of property transfer tax on a transfer of “property”, which includes, inter alia, shares, land, mining rights, and intellectual property.

Other sector-specific legislation that would need to be complied with includes the following:

• The Banking and Financial Services Act No. 7 of 2017 as amended from time to time (BFSA). The BFSA applies to M&A transactions involving financial institutions and is administered by the Bank of Zambia (BOZ).
• The Minerals Regulation Commission Act No. 14 of 2024 (“MRC Act”). The MRC Act applies to M&A transactions involving the acquisition of mining rights and is administered by the Minerals Regulation Commission (MRC).
• The Insurance Act No. 38 of 2021 (“Insurance Act”). The Insurance Act applies to M&A transactions involving insurance entities and is regulated by the Pensions and Insurance Authority (PIA).
• The Energy Regulation Act No. 12 of 2019 (“Energy Act”). The Energy Act applies to M&A transactions in the energy sector and is administered by the Energy Regulation Board (ERB).

Prior approval from the CCPC would need to be obtained for M&A transactions that meet the prescribed merger and financial thresholds. Further, depending on the sector in which the target operates, approval and post notifications would need to be obtained or made to sector regulators, which include:

• BOZ;
• MRC;
• PIA;
• ERB; and
• SEC.

In Zambia, both cash and non-cash are used as forms of consideration in M&A transactions. However, parties in practice frequently prefer cash consideration. Parties enjoy considerable flexibility under Zambian law to determine the terms of consideration through their contractual freedom.

The Companies Act permits the use of non-cash considerations. For example, in an M&A transaction involving the subscription of shares, the Companies Act allows the consideration for the issuance of shares to take various forms, including promissory notes, contracts for future services and real or personal property. However, the Companies Act requires that if the shares are to be issued for consideration other than cash, the directors of the company must:

• determine the reasonable present cash value of the consideration; and
• be of the opinion that the present cash value of the consideration to be provided for the issue of the shares is not less than the amount to be credited for the issue of the shares.

A red flag due diligence is usually undertaken and covers the legal, financial, and tax matters of the target entity. The legal matters mainly cover the due incorporation of the target entity and its level of compliance with the applicable legal obligations in the conduct of its business operations. The financial and tax aspects of the due diligence are concerned with the financial liabilities associated with the target entity. The primary focus of a due diligence in an M&A transaction is the identification of potential deal breakers. In practice, it is also common for parties to agree on a materiality threshold for the issues to be covered in the due diligence and physical site visits where this is deemed to be necessary.

M&A transaction documents usually provide for warranties and indemnities. However, warranty and indemnity insurance policies are not commonly offered by Zambian insurance companies. Their use is generally limited to larger, cross-border transactions involving multinational buyers or sellers, where W&I insurance is already a familiar risk-allocation tool and is often driven by offshore transaction standards.

Generally, there are no restrictions or review mechanisms for foreign buyers acquiring domestic businesses or assets. However, certain sector- and asset-specific restrictions apply and include the following:

• foreign entities cannot legally acquire and hold land in Zambia unless they obtain an investment license from the Zambia Development Agency or they elect to incorporate a company in Zambia and own less than 25% of the issued share capital in the incorporated company;
• a mining right over an area exceeding 6.68 hectares up to a maximum of 1000 hectares can only be issued to a citizen-influenced company, citizen-empowered company, or citizen-owned company;
• gold panning and artisanal mining is reserved only for Zambian citizens or a cooperative consisting only of Zambian citizens; and
• small-scale mining can only be undertaken by a citizen-owned, citizen-influenced or citizen-empowered company.

Public M&A transactions in Zambia are regulated under the Securities Act and the Securities (Takeovers and Mergers) Rules (“Takeover Rules”). The Takeover Rules require an offer to be put forward, in the first instance, to the board of the target or to its advisers and before the offer is announced to the public. The circumstances in which an announcement of an offer is required include:

• when a firm intention to make an offer is notified to the board of the offeree company from a serious source, irrespective of the attitude of the board to the offer;
• when, following an approach to the offeree company, the offeree company is the subject of rumor and speculation, or there is undue movement in its share price or a significant increase in the volume of share turnover, whether or not there is a firm intention to make an offer; or
• when, before an approach has been made, the offeree company is the subject of rumour and speculation or there is undue movement in its share price, and there are reasonable grounds for concluding that it is the potential offeror’s actions which have led to the situation.

A listed company or company whose securities are registered with the SEC that proposes a takeover or merger, or is being taken over by another company as envisaged by the Securities Act, must also apply for and obtain the SEC’s approval prior to implementing the takeover or merger. Additionally, if the prescribed merger and financial thresholds under the Competition Act are met, the proposed deal would need to be disclosed to and approval obtained from the CCPC or the COMESA Competition Commission, as the case may be.

Other regulatory disclosures and approvals would need to be made or obtained depending on the particular industry or sector. These may include disclosures to and approvals from the BOZ, the MRC, the PIA, and the ERB.

Deal security measures that a bidder can seek include, inter alia, the following:

• exclusivity agreements, where the target agrees not to solicit or engage with other potential buyers for a specified period;
• break fees (termination fees) payable by the target if it terminates the deal due to certain conditions (e.g., accepting a higher competing bid); and
• no-shop clauses, preventing the target from actively seeking alternative bids.

However, in the recent past it has become more common for deals to be undertaken via auction process with multiple bidders getting involved in the acquisition process and all bidders providing their preferred terms and also putting in their proposed bid for the acquisition.

The Companies Act provides for minority shareholder rights during takeovers. In a takeover, the acquiring company is required to notify the remaining shareholders within 30 days of a share transfer, if after the transfer of shares, the acquiring company holds more than 75% of the shares in the target company. Upon receiving the notification, the remaining minority shareholders have the right to require the acquiring company to purchase their shares.

Additionally, the minority shareholders may apply to a court of competent jurisdiction for an order cancelling or prohibiting a takeover if the takeover is unfairly prejudicial to, or unfairly discriminatory against the minority shareholders.

In Zambia, disputes arising from mergers and acquisitions are most commonly resolved through arbitration rather than litigation. Parties to M&A transactions typically include arbitration clauses in M&A transaction documents, making arbitration the primary forum for resolving disputes between the parties.

Arbitration is preferred largely because commercial litigation in Zambia can be lengthy, with matters often taking several years to reach final determination. For cross-border transactions, arbitration is further supported by the fact that Zambia is a signatory to the New York Convention, and arbitral awards are enforceable under the Arbitration Act No. 19 of 2000.

Parties to an M&A deal are free to choose any governing law other than Zambian law. However, the Zambian Supreme Court in the case of Chansa Chipili & Powerflex (Z) Limited v. Wellingtone Kanshimike & Wilson Kalumba, SCZ No. 27 of 2012 guided that foreign jurisdiction clauses are not in themselves decisive of the legal point on jurisdiction. The Supreme Court further held that in deciding whether to recognize foreign jurisdiction clauses, courts will look at the jurisdiction with which the action has the most real and substantial connection. Factors such as the residence of the parties, places where business is conducted, convenience in terms of expenses and availability of witnesses would be considered.

Emerging technologies such as artificial intelligence (AI) are slowly triggering an increase in M&A activity in sectors that have previously not seen significant M&A activity. For example, the need for AI-powered fintech solutions is gradually attracting interest in the acquisition of payment systems businesses in Zambia. Technological advancements are also set to improve M&A transaction timelines as various regulatory bodies responsible for granting the necessary approvals are gradually digitalizing their operations, thereby shortening approval timelines.

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