adminGolden Sibanda Senior Business Reporter
FINANCE and Economic Development Minister Patrick Chinamasa has expressed concern over conflicting legislation that governs capital markets saying the scenario has presented opportunities for arbitrage. He made the remarks during the launch of the Securities Commission of Zimbabwe logo and newsletter in Harare on Wednesday.
The initiative is meant to enhance SECZ’s visibility in the market. Minister Chinamasa said there was need to work on strengthening and modernising capital markets infrastructure and institutional capacity for transparency, efficiency and investor confidence purposes.
This is because most African markets suffer from the malignant effect of weak corporate governance systems for accountability and transparency.
Government and industry are concerned about legislation that governs capital markets as they currently do not speak to each other.
Conflicting provisions between the Companies Act and listing rules for public listed companies have presented headaches for regulatory authorities as companies have tended to exploit the loopholes by opting for laws that suit them but prejudicing minority investors.
“I have noted with concern the existing conflicting legislation that is presenting significant arbitrage opportunities,” Minister Chinamasa said.
“The market lacks clear and binding corporate governance code for the industry with precise punitive clauses. This comes as a cost to the investing public. Remember, the market lost previous loyal investors due to loss of trust over various reasons and we need to win them back.”
In one of the instances a public listed company chose to wantonly disregard SECZ-approved delisting rules for the ZSE in favour of court process as provided for in the Companies Act in what the regulator felt trampled upon the rights and interests of minority shareholders.
Minister Chinamasa said there was critical need for public listed firms to uphold best practices by complying with all necessary reporting and disclosure requirements to enable informed decisions by investors.
Against this background, SECZ chief executive Mr Tafadzwa Chinamo said the Public Accountants and Auditors Board was carrying out consultations to gain insight into all conflicting capital markets laws that present problems to regulation due to their divergence.
“What is needed is a scan of all laws that affect capital markets to ensure that there are not conflicts. The laws must not violate market rules.”
As such, the work being done will emphasise on synchronising conflicting legislative provisions of all laws that affect capital markets.
Minister Chinamasa said that poorly governed markets tended to lose out on foreign capital inflows as markets “exists the grace of investors”.
As it tries to rebuild its productive capacity, Zimbabwe critically needs foreign capital as tries to wade out of the quagmire it was pushed into by the debilitating impact of illegal sanctions imposed by the West.
To that end, capital markets play a significant role of the financial services sector as the platform for mobilisation of long-term capital for corporates.
Minister Chinamasa said revamping foreign portfolio investment and foreign direct investment can contribute towards reviving the economy.
Online Reporter