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Nelson Gahadza Senior business reporter

CHENGETEDZAI Depository Company (CDC) has requested audience with the Finance and Economic Development Minister Mthuli Ncube regarding the Securities and Exchange Commission (SecZim) directive on the migration of share registers between the country’s two central securities depositories.

SecZim issued the directive; number SS15/10/21 on  October 19, 2021 and following the hotly contested directive, seven shareholders in companies listed on the Zimbabwe Stock Exchange (ZSE) mounted an urgent chamber application with the High Court under case number HC 5923/2021.

It is contended in that application that the directive by SecZim interfered with shareholders’ property rights in terms of common law and the Constitution of Zimbabwe. The directive allows issuers to effect the wholesale migration of shared deposits from one CSD to the other without the consent of the individual.

The application was however struck off the urgent matters roll on November 11, 2021.

Chengetedzai through its lawyers Wintertons Legal Practitioners, said indications were that SecZim required compliance by Chengetedzai with the directive before the minister has had an opportunity to consider and approve or decline the same.

“It is a clear irregularity and illegality in the performance of duty for SecZim to demand compliance with a directive that is not yet effective.

“We kindly request that we be granted an audience to appear before the minister so that we make detailed submissions to the minister,” Chengetedzai said in the appeal.

The company added that the request was made taking into cognisance the provisions of the proviso to Section 108 (7) of the Act which provides that,

“In an appeal in terms of subsection (5), the minister may conduct or cause to be conducted such inquiry into the matter as he or cause to be conducted such inquiry into the matter as he or she thinks appropriate and may confirm, vary or set aside the decision, proposal or action appealed against”

“Provided that the minister shall ensure that the appellant and the Commission are given an adequate opportunity to make representations in the matter.

“If the Covid-19 situation does not allow for a physical hearing, a virtual meeting/hearing could be held or alternatively all interested parties and stakeholders could be directed to file with the minister detailed submissions,” said Chengetedzai.

CDC noted that following the decision of the court on November 11 2021, SecZim demanded that Chengetedzai comply with the directive failing which severe sanctions would be imposed upon it. The demand has allegedly been communicated through telephone calls, meetings and writings.

The court papers highlighted that according to subsection (2) of Section 4 which lists the functions of SecZim provides that these are exercised subject to (other provisions of ) the Act. Other provisions include Section 118 of the Act.

“We contend that SECZIM in exercise of its functions failed to comply with all the provisions of the Act.

“It is pointed out to SecZim that the directive is not yet effectual by reason of the fact that it has not yet been approved by the Minister and published in the Gazette as required by the provisions of Section 118 (6) of the Securities and Exchange Act (Chapter 24:25),” Chengetedzai said in the appeal papers.

According to the papers, the directive also violates the provisions of the Act and the CSD Rules regarding deposit and withdrawal of financial securities.

“In the directive, SECZ acknowledges that investors can voluntarily withdraw deposited securities according to Section 78 of the Act. However, the same directive speaks to transfer of share deposits without consent of holders of these securities deposits,” reap part of the court papers.