The Securities Regulatory Commission of Zimbabwe (SECZ) has proposed raising the ratio of ordinary shares that would go public for private companies planning to list on the Zimbabwe Stock Exchange (ZSE) from the current minimum of 30%.
This is likely to apply to any company that will float initial public offering (IPOs) after next year, according to the timeline being suggested.
The regulatory authority said it had invited buy-in from key players, including securities dealers, brokers, the ZSE and pension funds, to develop additional regulations that will touch on the minimum ratio of IPO shares that should be offered to the public and cover insider trading.
Although SECZ is mum on the new threshold, some market players suggest the floor may be raised to 50% to align it with the Indigenisation and Economic Empowerment Act of 2007.
The draft regulations are scheduled to reach the Ministry of Finance for review and approval “within” 12 months.
SEC chairperson Willia Bonyongwe said the ZSE market capitalisation is still low by regional comparisons partly because the bulk of trading companies’ common stock is privately exchanged.
“We want to develop new rules to deal with inside trading and to review the rules related to the fraction of shares that should be listed,” Bonyongwe said.
“We want to take a look at what is happening in Sadc and look at ourselves in the light of that.”
The ZSE last popped a champagne bottle to a new listing in 2007 when Zeco Holdings came on board offering 30% of its common stock to the public.
The bourse, which currently houses 72 industrial companies and four miners, expects to add AIM-listed LonZim plc and Telecel Zimbabwe to the list in the near term.
The Indigenisation and Economic Empowerment Act has also spawned a pipeline of IPOs, particularly by mining companies, that may come to the market as early as next year, potentially boosting the bourse’s market capitalisation.
By close of trades on Monday, ZSE’s market capitalisation was $3,861 billion.