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The Securities and Exchange Commission of Zimbabwe says the investor protection fund, which ended last year with a capital base of US$6,2 million has potential for growth this year on the back of measures prescribed in the 2014 National Budget.
According to the Budget, the investor protection fund is exempted from income tax, receipts and accruals effective January 1, in order to facilitate its growth.
In an interview with FinX, chief executive Mr Tafadzwa Chinamo said the exemption was a welcome development. “The exemption from tax was something that we have wished for because it’s a nonprofit fund.”
Mr Chinamo said with the measures in place, US$6,2 million is a decent amount which would fulfil its obligations in the event that one of the licenced players collapses or goes bankrupt. “There haven’t been claims on the fund yet though there have been some brokers who have gone under.”
“However its major use to date has been to pay for the holding costs of the unclaimed shares transferred to the custodians from the brokers following that 2012 directive.”
Mr Chinamo added that the cost of holding the shares was around US$2 000 a month. He also disclosed that the value of the shares was around US$10,2 million.
The investor protection fund was established in 2009 for the purpose of providing compensation to investors for losses suffered as a direct result of a financial collapse of a market player licensed by SECZ being unable to meet its liabilities through insolvency, malpractice or other causes.
Mr Chinamo said the fund generally grows from a combination of three things which are how the market performs, and activity on how the market and being subject to capital gains.
“So its growth is more on contribution from the stock market.” – FinX.
Online Reporter