Zimbabwe: New Law Set to Require Licences for Asset Managers

ASSET managers and operators of collective investment schemes have 12 months to obtain licences if the president signs into law 'amendments to the Securities Act which would give rise to the Securities and Exchanges Act.

The new law, which would infer more executive powers in the Securities and Exchanges Commission's (Secz) CEO, will among other things require securities exchanges to operate as companies and not as mutual societies or other formations as is currently the case.

The Secz's CEO will be responsible for registering asset managers and suspending or cancelling their registration and performing other functions, including prescribing minimum capital requirements.

Under the proposed Securities and Exchanges Act, asset managers will be placed under the control of the Secz and this has required amendments to the Asset Managers Act (Chapter 24: 26. A clause in that Act had put the asset managers under the control of the RBZ following the ENG scandal of 2003-2004 where asset managers had become pseudo-banks.

"The new amendments will make it easier to regulate and investigate market issues going forward," Secz CEO Tafadzwa Chinamo said in an interview this week.

Collective investment schemes will also come under the control of Secz if the Securities and Exchanges Act receives presidential assent. They are currently regulated by the Reserve Bank of Zimbabwe under a separate Act; the Collective Investment Schemes Act (Chapter 24:19). Clause 36 of the amendments to this Act,(Collective Investment Scheme Act) will be aligned with the Securities and Exchange Act, to bring these schemes under the control of the Secz.

SECz's Chinamo said the control of asset managers puts them in a better place to interact with stockbrokers.

He gave the example of the Interfin and Remo share saga, saying the issue had spilled over to asset managers following Kingdom Asset management's interdict against Remo stockbrokers.

Currently, asset managers' licences are valid for a year. However, the amendments will make the licences valid indefinitely, unless in a particular case the commission fixes a shorter period, subject to the licence-holder paying an annual fee.

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