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Conrad Mwanawashe Business Reporter
RESERVE Bank of Zimbabwe Governor Dr John Mangudya has allayed fears that amendments to the Banking Act in terms of shareholding thresholds and directorships are meant to cause capital flight from the financial services sector, stressing that there were adequate laws to protect shareholders.
Although there were prescribed shareholding structures, consultations were ongoing on the issue.
“Following previous announcements we’ve made on proposed amendments to the Banking Act (Chapter 24:20), it has come to our attention that there is misinterpretation and misrepresentation regarding levels of shareholding in banking institutions and matters concerning directorships,” he said in a statement yesterday.
“The Reserve Bank of Zimbabwe wishes to advise that the process of amending the banking laws is on-going and stakeholder consultations will continue in different forms until the process is completed.”
The Banking Regulations S. I. 205 of 2000 currently limit shareholding of companies, other than financial entities, to 10 percent of the banking institution’s voting shares while individuals may own up to 25 percent of the banking institution’s voting shares.
Furthermore, in terms of the banking regulations, financial institutions in Zimbabwe or financial institutions under the supervision of a financial services regulator outside Zimbabwe are allowed to take up to 100 percent shareholding in a banking institution in this country.
“Further, take note that the current banking laws provide for situations of acquisition of significant interest, which may be in excess of the thresholds specified above in specific instances such as where a banking institution is faced with undercapitalisation,” Dr Mangudya said.
“Cognisant of the fact that institutional shareholders, unlike individuals, are more likely able to inject additional capital when called upon to do so, proposals are being made that shareholding limits for companies be increased from the current 10 percent to 25 percent.”
On directorships, the RBZ said that any person, whether local or foreign, may be appointed to be a director of a banking institution as long as they meet the qualification criteria spelt out in the Banking Act [Chapter 24:20].
“As monetary authorities, we continue to remind members of the public that the stability of the banking sector is a function of the cooperative efforts and goodwill of all stakeholders and we encourage this cooperative spirit among all stakeholders,” said Dr Mangudya.
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