HARARE, July 22– The Zimbabwe government and members of the country’s stock exchange have signed a Memorandum of Understanding (MoU) for the demutualisation of the local bourse to transform it into a public listed company.

Finance Minister Patrick Chinamasa, Zimbabwe Stock Exchange (ZSE) chairperson Eve Gadzikwa, Securities and Exchange Commission (SEC) chief executive officer Tafadzwa Chinamo and Edward Mapokotera, representing the stockbrokers signed the MoU here Monday.

Chinamasa said the partners had agreed on a pre-demutualisation shareholding structure of 68 per cent in favour of stockbrokers and 32 per cent for the government.

“Demutualisation separates ownership of the stock exchange from management and participation through adherence to internationally accepted code of corporate governance,” the finance minister said. “The primary objective of the project is to transform the exchange from a statutory body into a viable public listed company.”

Under the MoU, the demutualisation will go through a three-stage process beginning with registration of the ZSE as a company, a private placement of 20 per cent of the company’s shareholding to interested institutional investors and the initial public offering (IPO) of shares of the company.

At least 30 per cent of the shares would be put on the market for public subscription under an initial public offering (IPO) whereupon the shareholding of the ZSE company will be diluted to 34 per cent for stockbrokers, 16 per cent for the government and the remaining 50 per cent will be for other investors after listing of the

It is envisaged that 5.0 million US dollars would be raised through the private placement and IPO, according to the MoU. However, no timelines were stated in the agreement on fulfilmentof the different stages.

Gadzikwa said demutualisation put to an end the long-drawn battle on the ownership of the bourse and would also curtail abuse and manipulation of trading by stockbrokers.

“This signifies that there is now clarity in terms of the exchange, for a long time there has been discussions on who owns the exchange,” she said.

Mapokotera, who described the demutualisation as “an exciting moment”, said the process had taken long to be finalised. “The world over, stock exchanges have demutualised and we have been lagging behind but now we are there,” he said. “This is going to improve governance of the ZSE. It will also allow the
exchange to raise capital locally and internationally.”

Chinamo said demutualisation would enable the bourse to regularise its operations by registering with the SEC. “With the ownership issue settled, we now know who to hold responsible for happenings on the exchange,” he said.

The ZSE was established in 1946 as the Rhodesia Stock Exchange and rechristened after attainment of independence in 1980. The bourse had remained a mutual society run by stock brokers.