Regulatory Environment

As expected the company operates under a highly regulated environment at two levels. The Zimbabwe Stock Exchange through its Board provides the first level. As members of the ZSE we have legal obligation for compliance on the Members Rules. The Board is constituted largely by independent professionals who meet regularly and conduct their routine business by way of a sub committee system which includes strategic members of the ZSE who do not sit on the Board. These provide the necessary technical and operational skills to the Board. The Members Rules are enshrined in Section 65 of the Securities Act (Chapter 24:25). The Securities Act is administered and supervised by an established and independent Securities Commission. The Securities Commission is itself established under the Ministry of Finance and they operate with a full compliment of executive staff with a Chief Executive Officer from registered offices in Harare. The Act itself was originally crafted according to global best practice. However it is recognised that the practices have since experienced a dramatic shift in specific areas of identified weakness over the last five years. This is following the much publicised breaches at Enron, World Com and Bernie Madoff experience. The latter having operated a Ponzi scheme to the detriment of his clients to the tune of $100 billion being a former USEC Chairman. There are already proposals therefore to effect strategic changes to the Act to take account of these.

The environment itself is therefore set to become even more regulated as against less. This shift is in line with international best practice and provides for tighter control of trading and support services. The range of activities which are now licensed has become wider, while certain key aspects of trading involving misdemeanour or manipulation such as insider conditions will now be more fully monitored and supervised through tighter surveillance. The requirements of licensing still dictate annual renewals with current unencumbered capital requirements of $75 000.00 for licensed firms.