The Industrial Development Corporation (IDC) says most group companies are not able to pay dividends to their shareholders due to legacy obligation challenges.

Speaking in an interview with Money FM News, Corporation Chief Executive Officer Matayo Kaluba said over the years most companies did not remit to the National Pensions Scheme Authority (NAPSA ) and the Zambia Revenue Authority (ZRA) resulting in accumulation of  huge bills.

“The company’s law is such that it is not enough for you to record profits you have to have positive reserves, now these companies are deep in old statutory obligations,” Mr Kaluba explained.
He said there is need to remove the companies from the negative before they can start paying dividends, some of them because of this legacy debt you will find that the obligation is causing them to record a loss, but when you look at their year on year numbers the actual performance in that year they would have recorded a profit.

“But because they are coming with 3,000,000 million loss which they are carrying forward year after year, every year they are recording a loss despite the reforms the corporation has implemented,” Mr Kaluba said.

He said one of the key things the Corporation is focusing on is helping companies ensure that they are up to date with their statutory obligations, and the organization has since created a tax unit with tax experts that will help the entities manage their tax obligations in a bid for them to start paying dividends.
“And we are engaging NAPSA to ensure that the law can be amended, so that it allows for companies to pay the principal and have a waiver from the old penalties, am sure you are aware that the NAPSA penalties are about 240% per year which is huge for a company to pay,” He said.

“And we are engaging NAPSA to ensure that the law can be amended, so that it allows for companies to pay the principal and have a waiver from the old penalties, am sure you are aware that the NAPSA penalties are about 240% per year which is huge for a company to pay,” He said.