Conflicting capital markets legislation causing leakages

Published: 07 November 2013

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 log and news letter launch in Harare on Wednesday.

The initiative is meant to enhance SECZ visibility in the market.

Minister Chinamasa said there was need to work on strengthening and modernizing 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 alike 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 that with precise punitive clauses. This comes as a cost to the investing public. Remember, the market lost previous loyal investors upon loss of trust due to various reasons and we need to win them back."
- herald