A foreign investor has found a local partner, agreed a sector, and prepared a term sheet. The excitement usually fades when both sides reach the questions that decide the venture: who can sign contracts, who funds a shortfall, and what happens when the board cannot agree.
Joint venture risks become material when the parties share ownership without agreeing how control, incentives and deadlock will work in practice. In Zimbabwe, these decisions are particularly important in sectors such as mining, where licences, long-term assets and operating commitments demand careful governance.
A joint venture can offer market insight, capital and operating capacity. It can also lock an enterprise into a relationship that slows decisions, exposes assets and creates regulatory obligations that an independent market entry may avoid.
Start With the Independent Entry Test
We advise boards to compare the proposed joint venture with a credible independent-entry plan before they negotiate ownership terms. The question is not whether a partner adds value. The question is whether that value exceeds the loss of control, added governance demands and risk of dispute. A sound comparison protects strategic flexibility and helps investors choose the structure best suited to sustainable growth.
Do not form a joint venture merely because a local party has access, relationships or an asset. Test whether a service agreement, distribution arrangement, lease or minority investment can provide the same commercial benefit without creating shared control.
Step 1: Define the contribution each party cannot replace
Write down what each party contributes, when it contributes it, and what happens if it does not perform. Cash, mining rights, land access, equipment, licences, customer channels and management time need separate treatment because each carries a different default risk.
The Supreme Court decision in Easy Credit v IDBZ, decided on 18 February 2019, offers an important warning. The Court would not turn a poorly documented financing arrangement into a joint venture or supply missing risk-sharing terms, so parties must expressly state contributions, authority, profit allocation, loss allocation and remedies.
If one party contributes only introductions while the other contributes capital, assets and the operating team, an equal equity split may not reflect the economic position. We would first ask whether a time-bound commercial agreement gives the introducing party a fair return without giving it equal power over the enterprise.
Step 2: Understand the control you give away
Control has a practical cost. It can delay a supplier appointment, prevent refinancing, stop a project variation or leave a business unable to respond to a regulatory issue while directors negotiate.
Equal shareholding does not necessarily mean workable control unless the documents deal with a casting vote, quorum, reserved matters, escalation and an exit mechanism. Without those provisions, each party may hold an effective veto over decisions that the operating business needs to make quickly.
Take an illustrative mining venture built around the issues that later arose in Zimbabwe Base Metals Mining v Damo Resources, decided on 5 December 2024. The dispute concerned a commitment payment, execution conditions and formation of the joint venture special-purpose vehicle. The risk extended beyond the initial commitment: unresolved conditions and asset-transfer sequencing threatened the wider project before operational control had properly passed.
The better sequence would have been to complete the special-purpose vehicle, define each condition precedent, identify the required asset and rights transfers, and specify the funding-default remedy before either party took operational control. In a capital-intensive venture, do not release material funding or control of key assets while those basics remain unfinished.
Build Governance Before Incorporation
Company registration should follow commercial agreement, not substitute for it. Incorporating a special-purpose vehicle gives the venture a legal home. It does not answer who decides, who pays or who carries the consequences when the plan changes.
We recommend a governance schedule that management can use on an ordinary Tuesday morning, not only during a dispute. It should match the shareholders agreement, board charter, funding documents and any sector-specific approvals.
Step 3: Separate board decisions from operating decisions
Reserved matters should cover decisions that can change ownership value or risk. These commonly include borrowing, major capital expenditure, changes to the business plan, sale of material assets, related-party contracts, new share issues and appointment or removal of senior executives.
Give management clear authority below those thresholds. If directors must approve routine procurement, staffing or customer terms, the board becomes an operating bottleneck and the local management team loses accountability.
The step many parties skip is defining quorum after a director resigns, refuses to attend or faces a conflict of interest. A quorum rule that works only when all directors cooperate does not protect the enterprise when governance is under pressure.
Step 4: Align incentives before the first funding call
A joint venture fails when one shareholder benefits from growth while the other benefits from delay, related-party supply contracts or preservation of a separate business. The shareholders agreement should disclose related-party arrangements and establish who approves them.
Set out how the venture will fund cost overruns and working-capital needs. A pro rata funding obligation, dilution mechanism, shareholder loan terms or a defined default process may suit different ventures, but silence is not a strategy.
Do not assume that a profit-sharing clause resolves incentives. Parties also need to agree whether profits remain in the business, when distributions can occur, and who approves a budget that may defer dividends for several years.
Treat Deadlock as an Operating Risk
Arbitration can determine rights after a dispute starts. It does not keep a payroll running, protect possession of an asset or authorise an urgent operational decision while the parties wait for an award.
In Landela Safaris v NRZ, decided on 24 April 2024, a shareholder dispute in a tourism-property joint venture proceeded to arbitration while the High Court granted interim possession and lease-related relief. The case shows why unresolved governance can immobilise operations before the merits reach a final decision.
Step 5: Use a staged deadlock process
Start with operational escalation between the nominated executives, then move to named senior decision-makers with authority to settle. Give each stage a defined time period and state whether the disputed decision remains suspended while escalation continues.
After escalation, select a mechanism that fits the asset and the relative bargaining power. Mediation may preserve a commercial relationship. A buy-sell mechanism may work where both parties can finance an acquisition. A valuation process may work where one party has a right to purchase after a funding default.
No mechanism works without a valuation method. Specify the valuer, valuation date, treatment of shareholder loans, treatment of contingent liabilities and whether a minority or control discount applies. Those details decide the outcome, particularly where the joint venture owns a licence, a concession or a project with uncertain future cash flow.
Take an illustrative tourism-property venture whose shareholders dispute a lease. If the company cannot agree who may occupy or operate the property, even a profitable season can become uncertain while the dispute moves through arbitration and interim court applications. The immediate impact may include legal expense and lost trading time, but the larger risk is disruption to customers, employees and suppliers.
The parties should have agreed an interim operating protocol before signing. It would identify who preserves the asset, which payments continue, what information each shareholder receives, and which actions require consent while a dispute remains unresolved.
Check Zimbabwe Merger and Public-Sector Rules Early
A greenfield joint venture is not automatically outside merger control. If the arrangement gives either party direct or indirect control and meets the applicable threshold, it can be a notifiable merger.
As of October 2026, a joint venture that creates direct or indirect control may fall within Zimbabwe Competition and Tariff Commission merger-notification rules where the applicable turnover or asset threshold is met. Notification deadlines and penalties can apply. Rather than relying on a generic figure, investors should obtain a current, transaction-specific assessment before signing or implementing the arrangement.
Merger notification may also involve a statutory filing fee determined by the transaction and the rules in force. The amount should be confirmed directly for the proposed deal rather than presented as a fixed estimate. Early regulatory planning helps protect transaction timelines, reduce unexpected compliance exposure and give the board greater certainty before capital is committed.
Consider an illustrative transaction that may meet the merger-notification threshold. A board that treats the venture as a simple start-up arrangement may omit the Competition and Tariff Commission timetable and regulatory review. That can create avoidable filing expense, approval delays and implementation risk. The better approach is to assess merger control while the parties are still agreeing the term sheet.
We would identify control rights in the term sheet, not after signing. Veto rights, board appointment rights, budget approval and control over strategic decisions can matter as much as the percentage of shares held.
For ventures involving Government, a local authority or a State-controlled entity, use the Zimbabwe Investment and Development Agency Act framework administered by ZIDA and its One Stop Investment Services Centre. A public-private partnership agreement that requires Cabinet approval can be invalid if signed without it, and legal sanctions may apply. Confirm the required approval route before making commitments.
Do not rely on the repealed Joint Ventures Act for a public-sector arrangement. Confirm the approval route with legal and investment advisory teams before commitments are made or public announcements are issued.
When Going Alone Is Usually the Better Decision
Independent entry often deserves preference where the investor can secure its critical licences, customers, premises and operating team without granting shared control. It also makes sense where the proposed partner will not commit measurable capital, assets or operating obligations.
If your commercial model works with a distribution agreement, agency appointment or contracted local operator, do not create a joint venture solely to demonstrate local participation. Those structures can preserve local insight while leaving strategic authority with the investor.
A joint venture remains appropriate where both parties bring indispensable, complementary assets and accept a documented framework for control and downside risk. The enterprise needs a reason to share power that is stronger than convenience or optimism.
A Board Checklist Before Signing
Before signing a term sheet or beginning company registration, ask these questions:
1. Can we achieve the same market access through a contract that does not create shared control?
2. What does each party contribute, by what date, and what remedy applies if it fails?
3. Which decisions belong to management, which require the board, and which require shareholder consent?
4. Can the business operate if one shareholder stops attending meetings or refuses to fund?
5. Does the arrangement create direct or indirect control that may require Competition and Tariff Commission notification?
6. If a public entity participates, have we confirmed the ZIDA process and any required Cabinet approval?
Business advisory at this stage should combine the commercial model, governance design and regulatory assessment. A legal document cannot repair an investment case that never identified the source of control, incentive or deadlock risk.
Frequently Asked Questions
Does equal shareholding always create equal control?
No. Control depends on board appointment rights, quorum, casting votes, reserved matters and the rights that each shareholder holds over budgets and strategic decisions. Equal ownership without a workable deadlock process can leave the enterprise unable to act.
Can a new Zimbabwe joint venture require merger approval?
Yes. A greenfield venture may require notification where it creates direct or indirect control and meets the applicable Competition and Tariff Commission threshold. Because thresholds and filing obligations can change, confirm the current requirements for the proposed transaction before signing.
What should a Zimbabwe joint venture agreement say about funding?
It should state the amount, timing and form of each contribution, whether further funding is compulsory, and what happens if a party does not pay. The agreement should also deal with shareholder loans, dilution, security and whether the non-defaulting party may fund the shortfall.
Is arbitration enough to solve a joint venture deadlock?
No. Arbitration can resolve disputes, but it may not provide an immediate operating solution. The Landela Safaris v NRZ matter shows that interim court relief may still become necessary while arbitration proceeds.
Joint venture structuring deserves the same discipline as any material acquisition or market-entry decision. Our business advisory and corporate governance support helps investors compare independent entry with partnership options, clarify decision rights, assess regulatory obligations and protect operational continuity. Speak With Our Team for a tailored Zimbabwe joint venture and regulatory review, and enquire for a personalised quote based on your transaction.
