ZSE demutualisation nears completion

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THE Zimbabwe Stock Exchange (ZSE) says it will soon complete the demutualisation exercise of the local bourse despite missing a March 31 deadline due to regulatory procedures, an official has said.

Bernard Mpofu

After initially planning to complete the exercise in January, the new ZSE board moved the process to March.

The ZSE, one of the oldest exchanges on the continent, is currently controlled by stockbrokers through a mutual society.

The exchange will also change its name to Zimbabwe Stock Exchange Ltd once all demutualisation processes are completed.

Stockbrokers and government will in the interim own 68% and 32% respectively. The equity stakes will later be halved to 34% and 16% respectively to attract new investors.

The remaining 50% stake will be shared among private financial institutions and individuals.

ZSE CE Alban Chirume told businessdigest this week that the process was now nearing completion, although he did not give timelines.

“The ZSE is in the last stages of the demutualisation exercise. A new board of directors was appointed on February 1 2016 as part of the demutualisation exercise to enable the registration of the new company with the Securities and Exchange Commission of Zimbabwe,” Chirume said.

“The decision to list the new entity will be considered by the board and the new shareholders once the demutualisation exercise has been completed as this is the prerogative of the shareholders of the new entity.”

Commenting on the new listing requirements which were drafted in 2014, Chirume said the new listings rules were forwarded to the Ministry of Finance and Economic Development during the first quarter of 2016 as part of the gazetting procedures. He said the ZSE was now awaiting the completion of the gazetting processes.

Nearly US$2 billion in shareholder value was lost year-on-year in the quarter to March compared to the same period last year as investors fret over indigenisation regulations compelling foreign investors to sell controlling 51% equity stakes to indigenous Zimbabweans.

The under performance of the local bourse reflects waning confidence in the economy after total market capitalisation eased 42% annually, marking a persistent bearish run for 12 consecutive months.

Chirume said the setting up of the Zimbabwe Emerging Enterprise Market, a trading platform for small to medium enterprises would be less stringent to attract the thriving sector.

“The Zimbabwe Stock Exchange (ZSE) is working on launching a listing and trading platform for SMEs within the existing exchange which is the Zimbabwe Emerging Enterprise Market (Zeem). There are thus no plans to establish a separate alternative exchange. Zeem is now at regulatory approval stages. In this case what needs to be approved are the listings requirements, which have gone through a thorough public and legal review,” Chirume said.

“The public shall hold a minimum of 26% of each class of equity securities listed and the number of public shareholders shall be at least 50. For a company currently listed on the ZSE, the float is 30% and the number of shareholders are at least 300. The proposed rules for ZEEM are less stringent in that regard.”

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