Zim amends Securities Act in line with global best practices

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By Alois Vinga

ZIMBABWE is amending its Securities Act to meet the requirements of the International Organisation of Securities Commissions (IOSCO), in a development expected to make it easier for the country to attract foreign direct investment.

In business terms, a security is a tradable financial asset which is non-physical with value being derived from contractual claims such as bank deposits, bonds, and stocks.  Cash, stocks, bonds, bank deposits and the like are examples of financial assets.

Unlike land, property, commodities or other tangible physical assets, financial assets do not necessarily have inherent physical worth.

Generally, a country’s Securities Act should ensure more transparency in financial statements so investors can make informed decisions about investments and make sure that misrepresentation and fraudulent activities in the securities markets are avoided.

However, addressing delegates at a Tuesday morning, Securities and Exchange Commission of Zimbabwe (SECZ) chief executive Tafadzwa Chinamo said that the country was failing to become a member of the IOSCO due to weaknesses in the currentSecurities Act.

“So, being eager to be admitted we made an application, but they got back to us and pointed out that our laws our deficient in a number of areas and must be amended before admission.

“We did the best to correct what was wrong and resubmitted our application but again the answer was a regret,” he said.

He added that IOSCO assigned Belgium to assist Zimbabwe in meeting the requirements.

“As a result, the amendments shall make sure that companies listed on the stock exchange disclose important information to investors which will empower them to make informed decisions and if such details are falsified SECZ will be empowered to sue the company.”

Chinamo pointed out that it will become a requirement for companies to submit their profiles with the SECZ and include the description of security being offered to investors.

He also said that financial statements certified by independent auditors will be now filed with SECZ and any material changes in the company’s operations and governance structures should be availed to the commission.

In addition, credit rating and administration service providers will now be expected to fall under SECZ among other changes.

Commenting on the developments, one of the meeting’s participants, Chakanyuka Nziradzemhuka said the proposed amendments were commendable and would go a long way in improving the country’s business competitiveness.