THE Securities and Exchange Commission (SECZ) has approved the establishment of a Central Securities Depository (CSD) to be run by Chengetedzai Depository Company under a one-year licensing deal.
Tarisai Mandizha Business Reporter
A CSD is a system that maintains an electronic register of securities or financial instruments such as shares, bonds and other fixed income instruments and provides an efficient settlement process.
The records are kept in an electronic form and transfer is by way of electronic book entry.
SECZ chief executive officer Tafadzwa Chinamo said the provisional of licence would be valid for 12 months only with Chengetedzai Depository Company implementing the project.
“The CSD is a new project in the country. So if it’s a new thing, you do not know what rules to apply, so a provisional licence was given,” Chinamo said.
He said the Chengetedzai DC was awarded a provisional licence which was only valid for one year and was expected to meet certain requirements as the project was being implemented.
Chinamo said if the CSD failed to perform, SECZ would not hesitate to withdraw the licence.
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“Like any other companies which are licensed by SECZ, if any one fails to perform, they will lose their licence as they are bound by our regulations,” he said.
Chengetedzai DC is currently running the CSD, which is a specialised financial organisation holding securities in certificated or uncertificated (dematerialised) form so that ownership can easily be transferred through a book entry rather than a transfer of physical certificates.
“The CSD shall replace physical paper certificates and proof of ownership/shareholding shall be in the form of statements of share accounts.
“In terms of Section 72 of the Securities and Exchange Act, listed companies may issue a security in dematerialised form or convert certificated security into dematerialised security,” Chinamo said.
“Listed companies should obtain authorisation through a resolution of their board of directors, board of management or other governing body. A certificate security shall not be converted into a dematerialised security without the consent of the current holder of the document of the tittle concerned.”