THE Zimbabwe Revenue Authority (Zimra) has granted Meikles Limited the capital gains tax exemption it required prior to unbundling and separately listing its 97-year-old tea producer, Tanganda.
When the unbundling is completed, Meikles will proceed to list Tanganda separately on the Zimbabwe Stock Exchange (ZSE), which is scheduled to take place between 1 and 3 February.
Tanganda was supposed to be listed on December 2, 2021, but the company deferred the exercise to December 9, 2021, after Meikles applied for a capital gains tax reprieve from Zimra, which, however, could not grant the request in the planned time.
“Shareholders are advised that Zimbabwe Revenue Authority (Zimra) granted the company the capital gains tax relief provided under section 15 (1) (b) of the Capital Gains Tax Act (Chapter 23:01) for only 51,39 percent of the issued shares.
“Consequently, there is a residual capital gains tax amount to be paid on the demerger of Tanganda,” Meikles said in a statement on Friday.
In terms of the law, Meikles should pay Capital Gains Tax (CGT) upon unbundling Tanganda, which is levied on the capital gain arising from the disposal of a specified asset.
Zimra defines a specified asset as immovable property such as land and buildings and any marketable security like debentures, shares, unit trusts, bonds and stock.
However, an Initial Public Offering (IPO) can be exempted from the CGT, which forms the basis on which Meikles applied to be exempted from the levy for the listing of Tanganda.
“To consummate the demerger transaction, the directors have authorised the company to pay the residual capital gains tax liability.
“Processes to finalise the assessment of the capital gains tax liability prior to the implementation of the demerger and the listing of Tanganda are in progress.
“The deferment to complete the transaction only affected the implementation and listing dates advised as per notice dated November 16, 2021. With all the conditions precedent having been met, the tentative implementation and listing dates are February 1 and 3, 2022, respectively,” the group added.
The transaction, which was announced in April last year and confirmed late September, is part of several crucial deals being executed by the diversified group, whose interests span across the hospitality sector, security services and real estate.
It will result in Meikles trimming its scope of operations to hospitality and retail sectors.
Commenting on the unbundling, chairperson John Moxon said he wanted to give Tanganda the chance to wander along independently and discover embedded capabilities that have been overshadowed by the current corporate structure.
Tanganda is the largest producer, packer and distributor of tea in Zimbabwe. It had its first commercial tea planted in 1924.
Tanganda said it “was now in a solid financial and agricultural position, and therefore that shareholder value would best be served for Tanganda to function as a stand-alone, value enhancing export business”. – Herald