Zimbabwean CSD Chengetedzai Depository Company (CDC) has challenged a regulatory directive on the transfer of shares listed on the Zimbabwe Stock Exchange (ZSE) from its depository.
CDC has been operational since September 2014. The Securities and Exchange Commission of Zimbabwe (SecZim) and includes among its shareholders subsequently licensed the Zimbabwe Stock Exchange Depository Company, which duly began operations in October 2021. SecZim also issued a directive concerning the migration of registers from one CSD to the other. It is the latter that is now being challenged in the High Court according to local media reports.
Chengetedzai is asking for a review of the directive on the grounds that SecZim did not comply with “a mandatory and material procedure and procedural fairness.” According to lawyers for the CSD, “The directive was issued without the Applicant (Chengetedzai) and other interested parties and stakeholders first having been afforded the right to be consulted to make representations and give input thereon. . . the Applicant (Chengetedzai) and other stakeholders should have been given the Directive in draft form and invited to make representations within reasonable time limits.”
A group of investors and listed businesses has also challenged the directive arguing that it removes their right to choose where their shares should be deposited and, in the case of issuing companies, conflicts with contracts signed with Chengetedzai.
In an interview with The Zimbabwe Independent’s chief business reporter Taurai Mangudhla CDC founder and CEO Campbell Musiwa nevertheless welcomed the new competition: “We believe that competition is good for the market as we have developed our market offering to withstand any competitor,” he said. “Our robust, tried and tested platform relies on years of experience as a CSD.” He acknowledged that a deal for the ZSE to acquire CDC, under discussion in 2019 and 2020, had fallen through.