There is a certain romance to buying an existing business. The brand is established. The customers are loyal. The supply chains are in place. The heavy lifting of starting from scratch has already been done. In Zimbabwe’s challenging economic environment, acquiring a going concern can feel like a shortcut to stability. But that shortcut is littered with traps. And the traps are not always visible from the surface.
The core principle is simple but unforgiving. When you buy a business in Zimbabwe, you inherit everything. You inherit the assets, the goodwill, and the contracts. But you also inherit the debts, the tax arrears, the pending litigation, and the regulatory violations. There is no legal filter that separates the good from the bad. What the seller knows and does not disclose becomes your problem the moment the transaction closes.
A US$31,000 chrome mining deal that collapsed in Zimbabwe’s High Court illustrates the stakes with painful clarity. A Chinese firm purchased what it believed were valid mining rights, only to discover during a dispute that the special grants underpinning the deal had expired months before operations even began. The court found that the buyer was aware of the expiry dates endorsed on the grants but had failed to verify their validity before completing the purchase. Under Zimbabwe’s Mines and Minerals Act, it is the buyer’s duty to confirm the legal status of mineral rights before entering an agreement. The court discharged the buyer’s application, leaving it with nothing but legal costs and a hard lesson. This case highlights accountability failures with sellers trading expired mining licences and weak government oversight, revealing systemic risks that proper due diligence could have uncovered. The buyer who skips verification is the buyer who funds the seller’s exit and inherits the seller’s problems.
The first and most fundamental step in any Zimbabwean acquisition is to verify the target’s corporate existence and legal status. This is not a formality. It is the bedrock of the transaction. A company search report provides the basic registration information of a business, including the official registered name, the unique registration number, the date of incorporation, and the company type. More critically, the report reveals the company’s current legal and regulatory status. Is it active and compliant, or is it dormant, deregistered, or already in liquidation? Checking the legal status is crucial before entering into contracts or business agreements. A company that has been struck off the register for failing to file annual returns cannot lawfully transfer assets or enter into binding contracts. Any transaction with such an entity is legally vulnerable.
Beyond basic registration, the search report reveals the governance structure. It lists the names and details of the directors and key management personnel, including appointment dates and positions held. It also includes details of the shareholders and the distribution of shares, helping potential investors understand who controls the company and evaluate financial influence or decision-making authority. Most reports also include a copy or summary of the company’s Memorandum and Articles of Association, which outlines company objectives, internal governance rules, and shareholder rights. This document is important for understanding how the company operates legally and its scope of activities.
The second pillar of due diligence is tax compliance, and this is where many deals in Zimbabwe go to die. The Zimbabwe Revenue Authority does not forget. A target company may appear profitable, but if it has unfiled returns, unpaid assessments, or unresolved disputes, those liabilities survive the sale and attach to the business. Tax compliance involves checking for compliance with Zimbabwe Revenue Authority requirements, ensuring that taxes such as corporate income tax, VAT, PAYE, and withholding tax are up to date, and reviewing past ZIMRA assessments, disputes, or penalties.
The ITF263 Tax Clearance Certificate is the most visible indicator of tax health. ZIMRA’s new systems are designed to auto-generate the certificate only to up-to-date taxpayers. The taxpayer must be up to date with all statutory returns required to be submitted under all Acts administered by ZIMRA, for the tax heads the taxpayer is registered for. A target company that cannot produce a valid, current ITF263 is a giant red flag. The certificate’s validity periods are now staggered: large taxpayers receive certificates valid for six months, while medium and small taxpayers, including companies participating in tenders, receive certificates valid for three months. If the target’s ITF263 is expired or cannot be produced, the buyer must assume there are outstanding compliance issues that ZIMRA will eventually pursue.
Beyond the certificate itself, the buyer must scrutinise the company’s VAT and income tax reconciliations. ZIMRA scrutinises VAT and income tax reconciliations for inconsistencies in turnover, fringe benefits, payroll data and banking records. Withholding tax compliance is closely monitored, with non-compliance around ITF263 requirements and misapplication of WHT on dividends, interest, and cross-border services attracting significant penalties. A target that has been deducting withholding tax from suppliers but failing to remit it to ZIMRA has effectively been using trust funds as working capital. When ZIMRA eventually audits and discovers the shortfall, the liability can be crippling. The buyer who did not verify tax compliance inherits that liability.
The third pillar is asset verification, particularly land and immovable property. In Zimbabwe, the land registry is the ultimate source of truth, but that truth is not always what the seller represents. The due diligence process for property begins with confirming the existence of a title deed. The buyer must ask the seller to provide the original title deed, check that the title deed is registered in the seller’s name, and verify that the property is freehold, not communal, leasehold, or under A1 or A2 allocation. The next step is a formal Deeds Registry search, which confirms ownership and checks for any caveats, mortgages, or liens.
A critical and often overlooked step is the requirement to validate old title deeds under Statutory Instrument 76 of 2025. The Registrar of Deeds now requires all holders of old title deeds to submit copies of their documents to the deed’s registry for validation within twenty-four months from the date of publication of the statutory instrument. The validation process includes verification of the authenticity of each title deed and ensuring that it complies with the requirements of the Act. A seller who has not completed this validation process is selling a title that may not be recognised. The buyer must also confirm property type and land use, verify that the land was legally subdivided if buying a subdivided stand, and obtain proof that council rates and levies are up to date. The buyer must also confirm the seller’s authority to sell, whether through matching deed name with national ID, verifying the validity of a power of attorney, or checking company registration and board resolution approving the sale.
For businesses with significant movable assets—machinery, vehicles, equipment—the buyer must verify ownership and condition, and critically, check for any liens or encumbrances. A piece of equipment that appears on the factory floor may be subject to a hire purchase agreement or a bank lien. The seller does not own it and cannot sell it. The buyer who pays for it acquires nothing but a dispute.
The fourth pillar is litigation and contingent liabilities. It is possible for a creditor to obtain a litigation due diligence report in Zimbabwe. This is a simple report which lists and describes all pending litigation against a debtor. The report may also contain any decision, order or judgment involving a particular debtor. A litigation due diligence report can assist a buyer to ascertain information or any patterns concerning a debtor and any unsatisfied judgments. Litigation due diligence may also include a perusal of all letters or correspondence sent to a company’s auditors for their year-end audits titled litigation letters. This will include a list of all active litigation files, including letters asserting claims and complaints. It also contains information about any court orders or judgments which may have been obtained concerning the company together with any out of court settlement arrangements which may have been entered into.
A company that is not currently in litigation may still be carrying the seeds of future disputes. Unresolved customer complaints, employee grievances, and regulatory warning letters are all contingent liabilities that can mature after the sale. The buyer must ask for a disclosure letter from the seller that lists all known disputes and potential claims. If the seller is unwilling to provide such a letter, the buyer should assume there are undisclosed issues and price that risk into the deal.
The fifth pillar is employment and labour obligations. When a buyer acquires a business as a going concern, the employees do not simply vanish. Under Zimbabwean labour law, the transfer of a business generally results in the transfer of employment contracts. The buyer inherits not just the employees but their accrued leave, their length of service, and any pending disciplinary or grievance matters. A target company with a history of labour disputes, unpaid NSSA contributions, or unresolved retrenchment claims is a time bomb. The buyer must review employment contracts, verify NSSA and PAYE compliance, and assess the potential cost of any planned retrenchments or restructuring.
The sixth pillar is regulatory approvals and licences. Many businesses in Zimbabwe operate under sector-specific licences that are not automatically transferable. A mining claim requires approval from the Ministry of Mines. A liquor licence requires transfer approval from the Liquor Licensing Board. A tourism operator’s licence requires sign-off from the Zimbabwe Tourism Authority. The buyer must verify all sector-specific licences, including mining claims, environmental impact assessment certificates, and tourism licences. The buyer must also confirm that these licences are valid, current, and transferable. A business that appears valuable on paper may be worthless if its core operating licence cannot be transferred or renewed.
There is an additional regulatory consideration for larger transactions. Any transaction meeting the combined turnover or asset threshold of USD 1.2 million in Zimbabwe is notifiable under the Competition Act. The Competition and Tariff Commission’s review process starts with notification and payment of fees capped at USD 40,000, followed by detailed engagement including market research and stakeholder consultations. Failure to obtain proper approvals may result in penalties or transaction invalidation. The buyer who proceeds without notifying the CTC may find the deal unwound or subject to conditions that fundamentally alter its economics.
The practical steps to conducting effective due diligence in Zimbabwe are straightforward. First, commission a full company search from the Registrar of Companies and review the CR6 for current directors and the share register for ownership structure. Second, obtain and verify the ITF263 Tax Clearance Certificate and request three to five years of audited financial statements prepared under IFRS. Third, conduct a Deeds Registry search on all immovable property and verify the validation status of title deeds under SI 76 of 2025. Fourth, obtain a litigation due diligence report and review all litigation letters sent to auditors. Fifth, review all material contracts, including supplier agreements, customer contracts, leases, and employment agreements. Sixth, verify the status and transferability of all sector-specific licences and permits. Seventh, if the transaction exceeds the CTC threshold, prepare and submit the merger notification.
Buying an existing business in Zimbabwe is not inherently riskier than buying a business anywhere else. But the risks are different, and they are concentrated in areas that foreign investors and even local entrepreneurs often overlook. The tax authority has a long memory.
Conclusion
The land registry is in transition. The courts move slowly, but they do move. The licences that make the business viable are not automatically yours. The seller who is eager to close quickly is often eager for a reason. The due diligence that uncovers that reason before the money changes hands is not a cost. It is the cheapest insurance you will ever buy. The buyer who skips it is not saving time or money. They are simply deferring the reckoning to a day when the seller is long gone and the problems are entirely their own.
