Question

articl : analysis of the current state of the four basic functions of the stock market in zimbabwe (500 words articl )

Answer 1

The role of the Zimbabwe Stock Exchange

We serve following critical functions:

Critical link

We provide a critical link between companies that need funds to set up new businesses or to expand their current operations, and investors that have excess funds to invest in such companies.

Market regulation

We provide a regulated market place for buying and selling of shares at prices determined by supply and demand, not withstanding other macro economic fundamentals.

Market integrity and fairness

The Zimbabwe Stock Exchange provides a properly constituted and regulated environment that ensures market integrity and fairness among stock market participants.

Fair trading and supervision of the stock market

We supervise and monitor the trading process to ensure transparency in the market and that no unfair practices are done to manipulate the market. Any off market deals and any unethical criminal activities are dealt with within the framework of the rules and regulations governing stock market transactions in Zimbabwe. Only stockbrokers and authorized dealers are allowed to transact in shares on behalf of the public.

Investor protection

There is an Investor Protection Fund which is funded from every trade on the bourse. The fund is administered through the Securities Commission of Zimbabwe with trustees selected from SEC, ZSE , Pension administrators and Asset managers. Each broker has a Professional Indemnity policy, that covers professional negligence, fraud and dishonesty by the employees.

The ZSE also has an aggregate Umbrella Professional indemnity policy to pick up excess losses from the underlying brokers policies. The ZSE has a security fund part of which comes from contributions by members.

Foreign investment limits

• Per individual shareholder: 10%
• Collectively on each listed company: 40%

Repatriation of income and capital

Free but subject to exchange control approval.

Taxes

• Withholding tax on dividends is 15% per individual shareholder and is deducted at source
• Capital gains withholding tax is 1% of sales proceeds