Arrangement of Sections
1. Short title
SECURITIES AND EXCHANGE COMMISSION
3. The Commission
4. Functions of the Commission
5. Delegation of functions
6. Rules relating to exchanges
7. Unlawful securities market
8. Application for securities exchange license
9. Lusaka Stock Exchange
10. Power of Commission to give directions to securities exchange
11. Appeal against direction of Commission
12. Power of Minister to close securities exchange
13. Management of securities exchange
14. Rules of securities exchange
15. Securities exchange to assist Commission
16. Amendment to rules of securities
17. Use of certain titles
LICENSING OF DEALERS, INVESTMENT ADVISERS AND REPRESENTATIVES
18. Dealers to be licensed
19. Investment advisers to be licensed
20. Representatives to be licensed
21. Applications for licenses
22. Refusal of license or renewal
23. Terms and conditions of licenses
24. Revocation or suspension of licenses
25. Rights of applicant
27. Register of licenses
28. Records to be kept by licensees
29. Information to be supplied by licensees
30. Fraudulent applications
31. Deposits by dealers and investment advisers
REGISTRATION OF SECURITIES
32. Securities to be registered
34. Dealers not to deal in securities market not operated by securities exchange
35. Trading of listed securities
36. Trading of unlisted securities
37. Registered securities to be traded through licensed dealers
38. Continuing obligations in relation to registered securities
CONDUCT OF SECURITIES BUSINESS
39. Takeovers and substantial acquisitions
40. Code of conduct in relation to conduct of securities business
41. Contract notes
42. Terms of settlement of bargains in securities, etc.
43. Short selling
44. Safeguarding of investors’ property
45. Accounts to be kept by licensees
46. Financial resources rules
47. Investment advisory contracts
IMPROPER TRADING PRACTICES
48. False trading and manipulation of the market
49. Use of deceptive statements, etc. as inducements
50. Fraudulent transactions
51. False or misleading statements in connection with sale of securities
52. Insider dealing
53. Powers of inspection
54. Damages for loss sustained through contravention of this Part
POWERS OF INTERVENTION
55. Scope of powers under this Part
56. Restriction of business
57. Restriction on dealing with assets
58. Maintenance of assets
59. Rescission or variation of prohibition of requirement
61. Winding-up orders
62. Receiving orders
63. Orders of the Court
64. Compensation fund
65. Compensation Fund Committee
66. Constitution of fund
67. Purpose of fund
68. Disbursements from the fund
69. Management of the fund
70. Liability of fund to be limited
71. Recovery of disbursements from defaulters
COLLECTIVE INVESTMENT SCHEMES
73. Authorisation and regulation of schemes
74. Restriction on promotions
75. Immunity of Commission, etc.
77. Offences by bodies corporate
79. Guidance notes, etc.
80. Repeal of Act 43 of 1990 and savings
to provide for the regulation of the securities industry; to establish the Securities and Exchange Commission and to define its objects and functions; and to provide for matters connected with or incidental to the foregoing.
[17th December, 1993]
Act 38 of 1993,
Act 13 of 1994,
SI 172 of 1993.
This Act may be cited as the Securities Act.
(1) In this Act, unless the context otherwise requires—
“Commission” means the Securities and Exchange Commission established by this Act;
“company” means a company registered or incorporated under the Companies Act;
“Court”means the High Court of Zambia;
“dealing” in relation to securities, means acquiring, disposing of, subscribing for or underwriting securities or making or offering to make with any person, or inducing or attempting to induce a person to enter into or offer to enter into, an agreement relating to the acquisition or disposal of, subscription for or underwriting of securities;
“dealer” means a person who carries on the business of dealing in securities, whether as principal or agent;
“dealer’s license” means a license under Part IV authorising a company to carry on a business as a dealer;
“exchange rules” in relation to a securities exchange, means any rules made by the exchange that are binding on its members or any of them;
“investment adviser” means a person who carries on a business of providing advice to persons with respect to investments, but does not include—
(a) a bank as defined in any written law governing the registration or licensing of banks and financial institutions (Banking and Financial Services Act);
(b) an insurance company registered under the Insurance Act;
(c) an advocate or accountant in practice whose advice with respect to investments is incidental to the practice of his profession;
(d) a licensed dealer or a licensed dealer’s representative whose advice with respect to investments is incidental to his business or employment in dealing in securities; or
(e) the proprietor or publisher of a newspaper, news magazine or business or financial publication of general and regular paid circulation distributed only to subscribers thereto or to purchasers thereof, in relation to any advice with respect to investments given therein, where—
(i) he receives no commission or other consideration for giving or publishing the advice; and
(ii) the giving or publication of that advice is incidental to the conduct of his business as a newspaper proprietor or publisher;
“investment adviser’s license” means a license under Part IV authorising the licensee to carry on a business as an investment adviser;
“issuer” means every person who issues or proposes to issue any security;
“ license” means a license in force under this Act, and “licensed” shall be construed accordingly;
“listed security” means a security which has been admitted to listing by a securities exchange for the purposes of dealing in that security on the exchange;
“representative” means a person who is employed by or acts for a dealer or an investment adviser and who performs for that dealer or investment adviser, any of the functions of a dealer or investment adviser, as the case may be, other than the work ordinarily performed by accountants, clerks or cashiers, whether his remuneration is by way of salary, wages, commission or otherwise, and includes any director or officer of a company who performs any such functions for the company;
“representative’s license” means a license under Part IV authorising the licensee to be employed as or act as the representative of a licensed dealer or licensed investment adviser;
“registered securities” means securities registered under Part V;
(a) shares, debentures, stocks or bonds issued or proposed to be issued by a government;
(b) shares, debentures, stocks, bonds or notes issued or proposed to be issued by a body corporate;
(c) any right or option in respect of any such shares, debentures, stocks, bonds or notes; or
(d) any instruments commonly known as securities or which are prescribed by rules made by the Commission to be securities for the purposes of this Act;
“securities exchange” means an exchange established and operated by a company licensed to do so under this Act;
“securities market” means a market or other place at which, or a facility by means of which—
(a) offers to sell, purchase or exchange securities are regularly made or accepted;
(b) offers or invitations are regularly made, being offers or invitations that are intended, or may reasonably be expected, to result, whether directly, or indirectly, in the making or acceptance of offers to sell, purchase or exchange securities; or information is regularly provided concerning the prices at which, or the consideration for which, particular persons or particular classes of persons propose, or may reasonably be expected, to sell, purchase or exchange securities;
“share” means a share in the capital of a company, and includes the stock or any part of the stock of a company;
“underwriter” means either the purchaser of newly issued securities for the purpose of public resale on behalf of the issuer or the guarantor to an issuer that the unsold residue of the issuer’s public issue or sale will be taken up.
SECURITIES AND EXCHANGE COMMISSION
(1) There is hereby established a body to be known as the Securities and Exchange Commission, which shall be a body corporate with a common seal, capable of suing and being sued and subject to the provisions of this Act, capable of performing all such acts as a body corporate may by law do or perform.
(2) The provisions of the First Schedule shall apply as to the constitution of the Commission and otherwise in relation thereto.
The Commission shall have the following functions—
(a) to take all available steps to ensure that this Act and any rules made under this Act are complied with;
(b) to supervise and monitor the activities of any securities exchange and the settlement of transactions in securities;
(c) to license and monitor the activities of securities exchanges, dealers, investment advisers and their respective representatives and of persons who, within the meaning of rules made under this Act, are non-bank custodians or service registrars;
(d) to approve the constitutions, charters, articles, by-laws, rules and regulations governing and pertaining to any securities exchange;
(e) to make, issue, monitor and enforce rules for the conduct of participants in the securities industry and for the supervision and investigation of that conduct, including rules relating to licensing and for the revocation and suspension of licenses;
(f) to promote and encourage high standards of investor protection and integrity among members of any securities exchange;
(g) to support the operation of a free, orderly, fair, secure and properly informed securities market;
(h) to regulate the manner and scope of securities on any securities exchange, the exchange rules, listing requirements, margin requirements, capital adequacy requirements, disclosure and periodic reporting requirements, trade settlement and clearing requirements;
(i) to take all reasonable steps to safeguard the interest of persons who invest in securities and to suppress illegal, dishonourable and improper practices in relation to dealings in securities, whether on the securities exchange or otherwise;
(j) to take all reasonable steps to promote and maintain the integrity of persons licensed under Part IV and encourage the promulgation by such persons of balanced and informed advice to their clients and to the public generally;
(k) to consider and suggest proposals for the reform of the law relating to the securities industry;
(l) to encourage the development of securities markets in Zambia and the increased use of such markets by investors in Zambia and elsewhere;
(m) to promote and develop self-regulation by securities exchange;
(n) to co-operate, by the sharing of information and otherwise, with other supervisory bodies in Zambia and elsewhere;
(o) to exercise and perform such other powers, authorities, duties and functions as may be conferred or imposed upon it by or under this or any other Act
The Commission may delegate to its officers and employees such of its powers and functions as the Commission considers necessary or expedient to delegate.
The Commission may by statutory instrument make rules in respect of the following—
(a) the conditions subject to which, and the circumstances in which, any securities exchange may suspend dealings in securities;
(b) the qualifications for membership of securities exchanges and the maximum number of persons that may be admitted to membership of any securities exchange;
(c) the type of business that may be carried on, and services that may be provided by or at securities exchanges;
(d) prescribing the requirements to be met before securities may be listed on securities exchanges;
(e) prescribing the procedure for dealing with applications for the listing of securities at securities exchanges;
(f) providing for the cancellation or suspension of the listing of any specified securities at any securities exchange if the Commission’s requirements for listing, or the requirements of any undertaking given to the Commission in connection with a listing agreement, are not complied with;
(g) providing for the cancellation or suspension of the listing of any specified securities at any securities exchange if the Commission considers that such action is necessary to maintain an orderly market.
(1) A person shall not establish or assist in establishing or maintaining, or hold himself out as providing or maintaining, a securities market that is not the securities market of a securities exchange established by a company licensed under this Act to do so.
(2) A person who contravenes this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding fifty thousand penalty units or to imprisonment for a term not exceeding three years or to both.
[S 7 am by Act 13 of 1994.]
(1) A company may apply in the prescribed form and manner to the Commission for a license to establish and operate a securities exchange.
(2) Any such application shall be accompanied by the prescribed fee.
(3) Upon receipt of an application by a company under this section, the Commission may grant a license to that company if the Commission is satisfied that—
(a) the establishment of the securities exchange is necessary in the public interest having regard to the nature of the securities industry; and
(b) the applicant satisfies the requirements of the Second Schedule.
(1) With effect from the date of commencement of this Act, the Lusaka Stock Exchange (hereinafter referred to as “the Exchange”) shall, subject to sub-section(3) be deemed to be licensed under this Part.
(2) The Exchange shall, not later than six months after the commencement of this Act or within such longer period as the Commission may allow—
(a) take such steps as are necessary to ensure that it satisfies the requirements of the Second Schedule; and
(b) notify the Commission in writing of the steps so taken.
(3) If the Exchange fails to take action in accordance with sub-section(2) within the time limited by or under that sub-section, the Exchange shall be deemed to have ceased to be licensed under this Part upon the expiration of that period.
(1) Where the Commission is satisfied that it is in the interest of the investing public to give a direction under this section, or that it is appropriate to give such a direction for the protection of investors or for the proper regulation of a securities exchange, the Commission may give a direction to a securities exchange—
(a) with respect to trading on or through the facilities of the exchange generally or with respect to trading of a particular security listed on that exchange;
(b) with respect to the manner in which the exchange carries on any aspect of its business, including the manner of reporting off-market purchases; or
(c) with respect to any other matters that the Commission considers necessary for the effective administration of this Act.
(2) A securities exchange which neglects or fails to comply with a direction given to it under this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding fifty thousand penalty units or to imprisonment for a term not exceeding five years or to both.
[S 10 am by Act 13 of 1994.]
(1) A securities exchange that is dissatisfied by a direction of the Commission under section 10 may, within 30 days after the direction is given appeal to the Minister.
(2) The Minister may confirm, quash or vary the direction of the Commission.
(3) The Minister’s decision on the appeal shall be final and binding except as to any matter of law, and in cases in which the appeal is allowed, it shall be the duty of the Commission to give effect to the Minister’s decision.
(3) The Commission’s direction is not stayed by the lodgement of an appeal, pending the decision of the Minister.
(1) On the grounds described in sub-section(2), the Minister, after consultation with the Commission, may direct that a securities exchange shall be closed for the transaction of dealings in securities for such period as may be specified in the direction.
(2) A direction under this section may only be given if the Minister is satisfied that the orderly transaction of business on the securities exchange is being or is likely to be prevented.
(a) because of a natural disaster that has occurred in Zambia; or
(b) because of an economic or financial crisis, whether in Zambia or elsewhere, or other like circumstance; or
(c) because the exchange has ceased to meet the conditions set forth in the Second Schedule to this Act.
(3) A dealer who deals in securities at or through a securities exchange while a direction is in force under this section with respect to the exchange shall be guilty of an offence and shall be liable on conviction to a fine not exceeding one hundred thousand penalty units.
(4) The Commission may take such steps as it considers necessary to ensure compliance with a direction under this section and, without limiting the generality of the foregoing, may cause the premises of the exchange affected by the direction to be locked and secured.
[S 12 am by Act 13 of 1994.]
(1) The affairs of a securities exchange shall be managed by a board whose members shall comprise those elected or appointed in accordance with its articles of association.
(2) Subject to the provisions of this Act, the board shall have power in all things to administer the affairs of the exchange.
Subject to the approval of the Commission, a securities exchange may make such rules as it considers necessary or desirable for the proper and efficient regulation, operation, management and control of the exchange and the securities market operated by the exchange.
A securities exchange shall provide such assistance to the Commission as the Commission may reasonably require for the performance of its functions and duties, including the furnishing of such returns and information relating to its business or in respect of dealings in securities or any other specified information as the Commission may require for the proper administration of this Act.
(1) A securities exchange that wishes to make any amendment (whether by way of rescission, alteration or addition) to its rules shall submit a draft of the proposed amendment to the Commission for approval.
(2) The Commission may, within 28 days after receipt of a draft in accordance with sub-section(1), by notice to the exchange concerned disallow the amendment, whereupon the amendment, if made, ceases to have force or effect.
(3) If no such notice is given within 28 days after the proposed amendment was submitted to the Commission, the proposed ame
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