29 December 2011
STOCKBROKERS are pushing for the ouster of Zimbabwe Stock Exchange (ZSE) CEO Emmanuel Munyukwi after initially passing a vote of no confidence in him at a meeting where members sought to address issues affecting the viability of the exchange last week.
Sources involved in the deliberations said members were not happy with the current leadership of Munyukwi who they believe to be contributing to the non-performance of the bourse.
But Geoff Mhlanga of ISB Securities intervened and advised member brokers on the labour implications of wielding the axe on Munyukwi, given that they will have to prove beyond reasonable doubt if he were incompetent. After the advice, the members formed a committee headed by Mhlanga to comprehensively deal with concerns raised by the Securities and Exchange Commission (SEC).
Last week, SEC summoned all members to the exchange, raising concerns on viability and non-issuance of an operating licence to the ZSE.
The commission also raised the issue of members abandoning the exchange, given its current state of affairs and the fact that they had not been proactive in the development and running of the exchange.
However, according to the Securities Act, the ZSE is already deemed licensed.
Section 30 (2a) of the Securities Act says that an application for the registration of a securities exchange shall be made to the commission in the form and manner prescribed in rules and shall be accompanied by a certified copy of the applicant’s memorandum and articles of association, where the applicant is a company; the applicant’s constitution, where the applicant is some other form of association, together with any other rules for the conduct of the applicant’s business.
The members make up the ZSE where the day-to-day operations of the exchange are overseen by stockbrokers who have specific committees. Munyukwi reports to the committees.
Currently, the ZSE is a mutual society run by stockbrokers. Once demutualised, it would become a registered company which would have Memorandum and Articles of Association, a Certificate of Incorporation and tax clearance. According to documents seen by businessdigest the exchange already has a signed tax clearance letter from Zimra.
The committee engaged SEC on Thursday last week indicating commitment to fully deal with the outstanding issues. The committee is made up of stockbrokers Mhlanga, Bart Mswaka, Thedius Kasaira, Rufaro Zengeni and Edward Mapokotera.
“This is a positive development since there is now ownership of responsibility and we will be able to resolve all issues raised by SEC,” a broker said.
SEC had raised concerns on the slow pace of automation, which was to be handled by Chengetedzai, the company that won the bid to carry this out.
However government, in August, said that it would take up 51% in the Central Securities Depository (CSD), with the balance being split between the ZSE, Reserve Bank of Zimbabwe, Infrastructure Development Bank of Zimbabwe, National Social Security Authority, ZB and Chengetedzai.
The ZSE only has a 15% stake but the responsibility lies in the technical team at Chengetedzai. Ben Gasura is the chairman in charge of the CSD committee.
The committee has been tasked to deal with other issues including the demutualisation and automation of the exchange.
Munyukwi is believed to have fallen out of favour with member brokers since the extra-ordinary meeting held in June this year, where he failed to provide information on the ZSE audit to members amongst other issues.
The fallout led to brokers calling for an EGM at the exchange which Munyukwi blocked on grounds of it not being properly constituted. It is understood that brokers forcibly made their way into the exchange building and convened their meeting but Munyukwi did not attend.
The impasse was later resolved by Bart Mswaka from Renaissance Securities, who was the chairman of the ZSE board at that time. He managed to summon Munyukwi and members to another EGM. Sources also revealed that Mswaka openly protested against the way the exchange was being run and the conduct of its members. He also revealed that Munyukwi had provided differing reports.
Mswaka later resigned as board chairman.
SEC, which is the regulatory body of the capital markets, is currently in the process of pushing for the exchange to regularise its operations by obtaining an operating licence.
SEC said the ZSE had failed to provide simple documentation which includes 2010 financial statements and a business plan with specific goals indicating the transformation and development of the capital markets.
However, in documents seen by businessdigest, the financial and audit committee appended signatures to the PriceWaterHouse Coopers audited financial results for both 2010 and 2009, which show the exchange in a sound financial position.
The commission acknowledged and signed for the accounts on July 1 2011.
Repeated efforts to reach Munyukwi were fruitless as he was said to be on leave while Mhlanga said he had a busy schedule and would not be able to comment on the issue this year.
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