No more chairing of multiple boards

THE Ministry of Finance will no longer allow individuals to chair more than one board of listed companies or corporate bodies at the same time.

Treasury this week gazetted a statutory instrument barring multiple chairing of boards saying it goes against the grain of best practices of corporate governance.
In statutory instrument 100 of 2010, titled ‘Securities (Registration, Licensing and Corporate Governance) Rules, the ministry said every corporate body should also have a clear succession plan for its chairperson and CEO in order to avoid unplanned and sudden departure “which could undermine the corporate body and shareholder interest”.

This is the first time the ministry has come up with guidelines aimed at improving corporate governance.
There are many individuals who chair boards of more than one ZSE listed company, a fact treasury argues goes against the spirit of good corporate governance.
The ministry has also set out the prerequisites for registration of security exchanges which include an initial registration of US$10 000.

Security exchanges would pay an annual fee of US$5 000.
Companies applying for a securities dealing licence, dealer licence, security transfer licence and securities investment management licence will pay between US$2 000 and US$8 000 for initial registration and part with between US$500 and US$4 000 per year as renewal fees.

Licensed dealers would also be levied 0,18% of total sale or exchange of securities brokered to be remitted to SEC by not later than “close of business on the Wednesday of the week following the week in which securities were purchased, sold or exchanged”.

An investor protection fee of 0,05% per month would also be levied on security holders and should be paid by the 10th of each month.
Other levies such as security exchange, investment management, investment advisors and corporate would also be charged on a monthly basis.

The Finance Ministry has made it mandatory to satisfy certain qualifications and experience before being appointed as CEO or compliance officer.
The rules published by the Finance Ministry come at a time when the Securities Exchange Commission (SEC) is operational and has tendered for a Central Security Depository which is an electronic book entry system.

This electronic book entry system would hold and administrate securities enabling transactions to be processed by book entry system.

SEC is a statutory body established in terms of the Securities Act and it has the mandate to licence all members of the ZSE as well as determine the level of capitalisation required for practicing members of the local bourse.

Under the Act, SEC has the power to intervene in the event that irregularities arise in the areas of conduct of licensed members, financial difficulties, rejection of applications and/or termination of membership.

Leonard Makombe