eBusiness Weekly
Business Writer
CHENGETEDZAI Depository Company (CDC) has filed a High Court application seeking to set aside the Securities and Exchange Commission (SecZim) directive to Securities Market Intermediaries on migration of share deposits between Central Securities Depositories (CSDs).
The application also seeks to nullify SecZim’s order that Chengetedzai comply with the said directive before approval by the Minister of Finance and Economic Development as well as publishing in the Gazette as per the requirements of Section 118(6) of the Securities and Exchange Act (Chapter 24:25) and Section 134 of the Constitution of Zimbabwe.
SecZim, after licensing the Zimbabwe Stock Exchange Depository Company in addition to the already operational Chengetedzai Depository, issued a directive with the aim of ensuring a smooth migration of deposited securities from one CSD to another.
A CSD is a facility that holds and administers securities as well as enabling transactions to be processed by means of book entry.
Chengetedzai Depository Company’ CSD commenced operations on September 8, 2014 while the ZSE’ CSD started operations with effect from October 1, 2021.
Chengetedzai through their lawyers Wintertons Legal Practitioners said the grounds for a review are the failure by SecZim to comply with a mandatory and material procedure and procedural fairness.
“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 as per the decision making process prescribed by Section 111 of the Securities and Exchange Act (Chapter 24;25). “ . . . the Applicant (Chengetedzai) and other stakeholders should have been given the Directive in draft form and invited to make representations within reasonable time limits,” reads part of the application.
Chengetedzai also noted that the SecZim directive unlawfully interferes with the proprietary rights of securities depositors/shareholders in respect of their deposited shares with a central securities depository.
“This Directive effectively takes away the shareholders right to decide the depository where their shares should be kept or deposited and reposing that decision in the board of directors of the issuer companies.”
After the Directive was issued, a Group of seven investors filed an urgent chamber application at the High Court for stay of implementation of the SecZim directive on migration of registers of shares between central security depositories.
SECZ in its directive had taken the position that listed companies should move depositories on a wholesale basis by way of exchanging electronic data between depositories.
The application was however struck off the urgent matters roll on the 11th of November 2021. But according to Chengetedzai’s application, the Directive should be set aside with costs.
