CHAPTER 354 - SECURITIES ACT: SUBSIDIARY LEGISLATION

INDEX TO SUBSIDIARY LEGISLATION

Securities (Conduct of Business) Rules

Securities (Transitional) Rules

Securities (Licensing, Fees and Levies) Rules

Securities (Registration of Securities) Rules

Securities (Accounting and Financial Requirements) Rules

Securities (Specification of Approved Assets, Liquid Assets and Ranking Liabilities) Notice

Securities (Registration of Securities)(Investment Companies) Rules

Securities (Collective Investment Schemes) Rules

Securities (Takeovers and Mergers) Rules

Securities (Advertisements) Rules

<TS:0.197222,NM,NO,0.39375,NM,NO,0.590278,NM,NO,0.786806,NM,NO,0.984028,NM,NO,1.18125,NM,NO,1.37778,NM,NO,1.575,NM,NO,1.96875,NM,NO,9.4375,NM,NO>Securities (Compensation Fund) Regulations

SECURITIES (CONDUCT OF BUSINESS) RULES

[Section 48]

Arrangement of Rules

   Rule

PART I
PRELIMINARY

   1.   Title

   2.   Interpretation

   3.   Application

PART II
STATEMENTS OF PRINCIPLE

   4.   Principles of best practice

PART III
CONDUCT OF BUSINESS

   5.   Independence

   6.   Material interest

   7.   Inducements

   8.   Issue of advertisements

   9.   Identification of issuer

   10.   Fair and clear communications

   11.   Customers’ understanding of risk

   12.   Information about the licensee

   13.   Information about collective investment schemes

   14.   Representatives of licensee

   15.   Where customer agreement required

   16.   Customer agreements

   17.   Customers’ rights

   18.   Suitability

   19.   Charges

   20.   Confirmation and periodic information

   21.   Customer order priority

   22.   Timely execution

   23.   Best execution

   24.   Timely allocation

   25.   Fair allocation

   26.   Front running

   27.   Churning

   28.   Insider dealing

   29.   Safeguarding of customer investments

   30.   Complaints

   31.   Compliance

   32.   Supervision

   33.   Customer confidentiality

   34.   Cessation of business

   35.   Suspension or revocation of License

SI 168 of 1993.

PART I
PRELIMINARY

 

1.   Title

These Rules may be cited as the Securities (Conduct of Business) Rules.

 

2.   Interpretation

In these Rules, unless the context otherwise requires—

“advertisement” includes every form of advertising, whether in a publication, brochure or handout, or by the display of notices or by means of circulars or other documents, or by an exhibition of pictures or photographic or cinematographic films or videos, or by way of sound broadcasting or television or by the distribution of recordings or in any other manner;

“customer” means a person for whom a licensee acts as an agent and to whom the licensee owes a duty of care, and includes a potential customer;

“licensee” means a person licensed under Part IV of the Act;

“own account transaction” means a transaction effected or arranged by the licensee in the course of carrying on his securities business and which was done on his own account;

“regulatory system” means the arrangements for regulating a licensee under the Act and subsidiary legislation made thereunder or directions given by the Commission.

 

3.   Application

   (1) These Rules, which include the statements of principle in Part II, apply in relation to all licensees in respect of their securities business.

   (2) These Rules are of general application to all securities business provided that, where a rule applies only in particular circumstances, that rule will apply to a licensee only if those circumstances are relevant to the course of the securities business undertaken by that licensee.

PART II
STATEMENTS OF PRINCIPLE

 

4.   Principles of best practice

   In his conduct of securities business, a licensee shall at all times act according to the principles of best practice and, in particular, shall—

      (a)   observe high standard of integrity and fair dealing;

      (b)   act with due skill, care and diligence;

      (c)   observe high standards of market conduct;

      (d)   seek from customers information about their circumstances and investment objectives which might reasonably be expected to be relevant in enabling him to fulfil a licensee’s responsibilities to his customer;

      (e)   take reasonable steps to give every customer he advises, in a comprehensible and timely way, any information needed to enable the customer to make a balanced and informed investment decision;

      (f)   avoid any conflict of interest with his customers and, where such a conflict unavoidably arises, to ensure fair treatment to his customer by complete disclosure or by declining to act; furthermore he should never unfairly place his interests above those of his customers;

      (g)   protect properly, by way of segregation and identification, those customer assets for which a licensee is properly responsible;

      (h)   maintain adequate financial resources to meet his securities business commitments and withstand the risk to which his business is subject;

      (i)   organise and control his internal affairs in a responsible manner;

      (j)   keep proper records;

      (k)   have adequate arrangements to ensure that all staff employed are suitable, adequately trained and properly supervised, together with well-defined compliance procedures; and

      (l)   deal with the Commission in an open and co-operative manner and keep the Commission informed of anything concerning the licensee that might reasonably be expected to be disclosed to it.

PART III
CONDUCT OF BUSINESS

 

5.   Independence

   Where a licensee is advising or acting for a customer—

      (a)   he shall not claim he is independent or impartial if he is not; and

      (b)   he shall ensure that any claim he makes as to his independence or impartiality adequately includes any limitation that there may be on either.

 

6.   Material Interest

Where a licensee has a material interest in a transaction to be entered into with or for a customer, or a relationship which gives rise to a conflict of interest in relation to such a transaction, the licensee shall not knowingly either advise, or deal in the exercise of discretion, in relation to that transaction unless he has—

      (a)   fairly disclosed that material interest or relationship, as the case may be, to the customer; or

      (b)   taken reasonable steps to ensure that neither the material interest nor relationship adversely affects the interests of the customer.

 

7.   Inducements

A licensee must take reasonable steps to ensure that neither he nor any of his employees or agents either offers or gives, or solicits or accepts, any inducement that is likely to conflict with any duties owed to customers.

 

8.   Issue of advertisements

Where a licensee issues an advertisement concerning his securities business, he shall take all reasonable steps to ensure that–

      (a)   the contents and presentation of the advertisement are demonstrably fair and not misleading;

      (b)   the advertisement discloses fairly the risks concerned.

 

9.   Identification of issuer

Where a licensee issues an advertisement concerning securities business, he shall ensure that the advertisement identifies him as the advertiser.

 

10.   Fair and clear communications

   (1) A licensee may make a communication with another person which is designed to promote the provision of securities services only if he can show that he believes on reasonable grounds that the communication is fair, comprehensive and not misleading.

   (2) A licensee shall take reasonable steps to ensure that any agreement, written communication, notification or information that he gives or sends to customers to whom he provides securities services is presented fairly and clearly.

 

11.   Customer’s understanding of risk

A licensee shall not—

      (a)   recommend a transaction to a customer, or effect a discretionary transaction with or for him, unless he has taken all reasonable steps to enable the customer to understand the risks involved;

      (b)   mislead a customer as to any advantages or disadvantages of a contemplated transaction; or

      (c)   promise a return unless such return is contractually guaranteed.

 

12.   Information about the licensee

A licensee shall take reasonable steps to ensure that a customer to whom he provides securities services is given adequate information about his identity and business address and the identity and status within the licensee’s firm of employees and other relevant representatives with whom the customer has contact.

 

13.   Information about collective investment schemes

Before or when making a personal recommendation to a customer to invest in a collective investment scheme, a licensee shall give him—

      (a)   information about the scheme which is adequate to enable him to make an informed investment decision;

      (b)   appropriate written particulars.

 

14.   Representatives of licensee

   (1) A licensee shall satisfy himself on reasonable grounds and on a continuing basis that any representative he appoints is fit and proper to act for him in that capacity.

   (2) The licensee shall also satisfy himself on reasonable grounds and on a continuing basis that he has adequate resources to monitor and enforce compliance by his representatives with high standards of business conduct.

 

15.   Where written customer agreement required

   (1) A licensee shall not provide to a customer any securities services relating to—

      (a)   the discretionary management of a portfolio; or

      (b)   any other type of business that is prescribed by the Commission, except under a written agreement signed by the customer and returned to licensee.

   (2) The Commission and a licensed securities exchange may from time to time prescribe special procedures relating to the operation of discretionary accounts and every licensee must follow such special procedures or shall secure that such special procedures are followed.

 

16.   Customer agreements

   (1) Where a licensee provides securities services to a customer on written contractual terms (whether pursuant to rule 15 or otherwise), the agreement shall set out in adequate detail the basis on which those services are provided.

   (2) The High Court may, if it considers it just and equitable to do so, by order set aside or vary an agreement entered into in contravention of this rule, but no such order affects any dealing or transaction entered into or carried out by the licensee on behalf of the customer.

 

17.   Customers’ rights

   (1) Licensee shall not, in any written communication or agreement, seek to exclude or restrict—

      (a)   any duty or liability to a customer which he has under the Act or any subsidiary legislation made thereunder;

      (b)   any other duty to act with skill, care and diligence that is owed to a customer in connection with the provision to him of securities services;

      (c)   any liability owed to a customer for failure to exercise the degree of skill, care and diligence that may reasonably be expected of him in the provision of securities services.

   (2) A purported exclusion or restriction prohibited by this rule shall be void and of no effect.

 

18.   Suitability

A licensee shall take all reasonable steps to ensure that he does not give securities advice to, nor effect a discretionary transaction with or for, a customer unless that advice or transaction is suitable for him having regard to the facts disclosed by that customer and other relevant facts about the customer of which the licensee is or ought reasonably to be aware.

 

19.   Charges

   (1) A licensee’s charges shall not be unfair in their incidence or unreasonable in their amount having regard to all relevant circumstances.

   (2) Before a licensee provides securities services to a customer it shall disclose to him the basis or amount of the licensee’s charges for the provisions of those services and the nature of and amount of any other remuneration receivable by him and attributable to them.

 

20.   Confirmation and periodic information

   (1) Where a licensee effects a sale or purchase of securities with or for a customer, he shall ensure that the customer is sent with due dispatch a contract note containing the essential details of the transaction in accordance with section 41 of the Act.

   (2) Where a licensee acts as an investment manager for a customer, he shall ensure that the customer is sent at suitable intervals a report stating the value of the portfolio or account at the beginning and end of the period, its composition at the end and, in the case of a discretionary portfolio or account, changes in its composition between those dates.

 

21.   Customer order priority

A licensee shall deal with customer and own account orders fairly and in due turn.

 

22.   Timely execution

When a licensee has agreed or decided in his discretion to effect or arrange a customer order, he shall effect or arrange the execution of the order as soon as is reasonably practicable in the circumstances.

 

23.   Best execution

Where a licensee deals with or for a customer he shall take all reasonable steps to find and deal on the terms which are the best available to the customer.

 

24.   Timely allocation

A licensee shall ensure that a transaction he executes is promptly allocated.

 

25.   Fair allocation

Where a licensee has aggregated an order for a customer transaction with an order for an own account transaction, or with an order for another customer transaction, then in the subsequent allocation—

      (a)   he shall not give unfair preference to himself or to any of those for whom he dealt; and

      (b)   if all orders cannot be satisfied, he shall give priority to satisfying orders for customer transactions.

 

26.   Front running

Where a licensee intends to publish to customers a price-sensitive recommendation or research or analysis, he shall not knowingly effect an own account transaction in the investment concerned or in any related investment until the customers for whom the publication was principally intended have had, or are likely to have had, a reasonable opportunity to react to it.

 

27.   Churning

A licensee shall not—

      (a)   deal or arrange a deal in the exercise or discretion for any customer; or

      (b)   advise a customer to deal,

if the dealing could in the circumstances reasonably be regarded as too frequent or too large.

 

28.   Insider dealing

A licensee shall not knowingly profit or seek to profit, either for his own account, the account of a customer or any third party, from inside information in the hands of any of his officers, employees or agents, or assist anyone with such information to make a profit for himself.

 

29.   Safeguarding of customer investment

   A licensee who has custody of a customer’s securities in connection with or with a view to securities business shall—

      (a)   keep safe, or arrange for the safekeeping of, any documents of title, or documents evidencing title, relating to them; and

      (b)   ensure that any securities that he buys or holds for a customer are properly registered in his name or, with the consent of the customer, in the name of an appropriate nominee.

 

30.   Complaints

A licensee shall have internal procedures to ensure the proper handling of complaints from customers and to ensure that any appropriate remedial action on those complaints is promptly taken.

 

31.   Compliance

   (1) A licensee shall take reasonable steps, including the establishment and maintenance of procedures, to ensure that—

      (a)   his officers, employees and other representatives are aware of their obligations under the Act and any subsidiary legislation made thereunder, and that they act in conformity with them; and

      (b)   sufficient information is recorded and retained about his securities business and compliance with the regulatory system.

   (2) Records required to be maintained by the regulatory system shall be kept available, for a period of not less than six years, by the licensee for inspection by any person duly authorised by the Commission.

 

32.   Supervision

A licensee shall establish and maintain procedures-

      (a)   for the supervision of each of his officers, employees and other representatives; and

      (b)   for ensuring that each such person does not give advice or provide services of such a nature as is beyond his competence to give or to provide.

 

33.   Customer confidentiality

   (1) Subject to subrule(2), all information in the possession of a licensee relating to a customer shall be kept confidential by the licensee.

   (2) A licensee may disclose information relating to a customer when properly required to do so by the Commission, a clearing house or the market supervision department of a licensed securities exchange of which he is a member, or if he is ordered to do so by a court of competent jurisdiction or other due process of law.

 

34.   Cessation of business

Where a licensee decides to withdraw from securities business he shall—

      (a)   forthwith notify the Commission and each of his customers of such decision; and

      (b)   ensure to the satisfaction of the Commission that any such business which is outstanding is properly completed or transferred to another licensee.

 

35.   Suspension or revocation of Licence

A licensee who contravenes any of the provisions of these Rules shall be guilty of an offence and his Licence shall be liable to suspension or revocation under section 24 of the Act.

SECURITIES (TRANSITIONAL) RULES

[Section 78]

Arrangement of Rules

   Rule

   1.   Title

   2.   Interpretation

   3.   Transitional provisions

SI 169 of 1993<FC:255,0,0>.

 

1.   Title

These Rules may be cited as the Securities (Transitional) Rules.

 

2.   Interpretation

In these Rules, unless the context otherwise requires, “collective investment scheme” has the same meaning as in section 72 of the Act.

 

3.   Transitional provisions

   (1) Where a person would, but for these Rules, be liable to a penalty for not being licensed under Part IV of the Act, subject to sub-rule (4) that person shall not be so liable—

      (a)   until the expiration of a period of seven days after the commencement of the Act; or

      (b)   where, before the expiration of that period, that person applies to be licensed, until—

      (i)   the license is granted; or

      (ii)   the application for a license is withdrawn or refused.

   (2) Where a person would, but for these Rules, be liable to a penalty because publicly traded securities are not registered under Part V of the Act, subject to subrule(4) that person shall not be so liable—

      (a)   until the expiration of a period of two months after the commencement of the Act; or

      (b)   where, before the expiration of that period, that person applies for the registration of the publicly traded securities, until—

      (i)   such securities are registered; or

      (ii)   the application for registration is withdrawn or refused.

   (3) In respect of a collective investment scheme which was in existence and had been publicly marketed before the enactment of the Act, where a person would, but for these Rules, be liable to a penalty because such scheme is not authorised under Part X of the Act, subject to subrule(4) that person shall not be so liable—

      (a)   until the expiration of a period of seven days after the commencement of the Act; or

      (b)   where, before the expiration of that period, that person applies for the authorisation of the collective investment scheme, until—

      (i)   the collective investment scheme is authorised; or

      (ii)   the application for authorisation is withdrawn or refused.

   (4) Except for the periods of grace allowed by subrules(1), (2) and (3), all of the other provisions of the Act shall apply in all cases and in all respects.

   (5) A person who, before the expiration of the period specified in subrule (1), applies for a LICENSE under Part IV of the Act shall be treated for all purposes as if he is a licensee pending the determination of his application.

SECURITIES (LICENSING, FEES AND LEVIES) RULES

[Section 78]

[Re-denominate the currency as stipulated under S 4 of Re-denomination Act, 8 of 2012, read with Bank of Zambia Act, 43 of 1996.]

Arrangement of Rules

   Rule

PART I
PRELIMINARY

   1.   Title

   2.   Interpretation

PART II
LICENSES

   3.   Applications

   4.   Directions in forms

   5.   Manner of application for LICENSE

   6.   Alteration of facts disclosed in applications

   7.   General conditions

   8.   Replacement of LICENSE

   9.   Display of LICENSE

   10.   Change of principal

PART III
FEES AND LEVIES

   11.   Fees

   12.   Waiver, etc. by Commission

   13.   Compensation fund levy

      FIRST SCHEDULE

      SECOND SCHEDULE

      THIRD SCHEDULE

 

[Rules by the Securities and Exchange Commission]

SI 165 of 1993,

SI 153 of 1995,

SI 19 of 1998,

SI 70 of 1998,

SI 104 of 2000,

SI 31 of 2001,

SI 69 of 2001,

SI 20 of 2005.

PART I
PRELIMINARY

 

1.   Title

These Rules may be cited as the Securities (Licensing, Fees and Levies) Rules.

 

2.   Interpretation

In these Rules, unless the context otherwise requires—

“financial year” means the period from 1st April to 31st March;

“LICENSE” means a LICENSE under Part IV of the Act and “licensee” shall be construed accordingly.

PART II
LICENSES

 

3.   Applications

Applications for the purposes described in the second column of the First Schedule shall be in the form specified in the third column, such forms being set out in the Second Schedule.

 

4.   Directions in forms

A form prescribed by these Rules shall be completed in accordance with any directions specified in the form.

 

5.   Manner of application for LICENSE

   (1) An application for a LICENSE or renewal of a LICENSE in the form prescribed together with any relevant annexures shall beenclosed in a sealed envelope and lodged with the Commission.

   (2) Each application for a LICENSE, or for the renewal thereof, shall be accompanied by a detailed statement of the applicant’s assets and liabilities signed by the applicant, or, in the case of an applicant which is a company—

      (a)   copies certified by a director of the company to be true copies of the last balance sheet and of the last profit and loss account (if any), incorporating the results of the last financial year, and which have respectively been audited by the company’s auditors (including every document required by law to be annexed or attached thereof); and

      (b)   a copy of the report of the auditors thereon (certified as aforesaid).

   (3) An application by a company to be licensed as a securities exchange shall be made in the prescribed form and shall be accompanied by a copy of its rules and its Memorandum and Articles of Association certified to be true copies by the person signing the application, and shall be lodged with the Commission.

   (4) The Commission may refuse to accept any application made under these Rules if it is not accompanied by the LICENSE fee prescribed.

 

6.   Alteration of facts disclosed in applications

An application for a LICENSE under Part IV of the Act shall forthwith give written notice to the Commission of—

      (a)   any proposed alteration to; or

      (b)   the occurrence of any event which he knows affects or may affect in a material respect;

information supplied by him to the Commission in relation to his application, being a proposal or event made or occurring while the application is pending a decision by the Commission.

 

7.   General conditions

It shall be a condition of every LICENSE that—

      (a)   the LICENSE shall be personal to the applicant and shall not be transferable;

      (b)   the holder of the LICENSE shall forthwith give written notice to the Commission of- General conditions

      (i)   any proposed alteration to, or

      (ii)   the occurrence of any event which he knows affects or may affect in any material respect,

any matter in respect of which he was required to supply information to the Commission in the course of his application for that LICENSE;

      (c)   the consent of the Commission shall be obtained prior to—

      (i)   the implementation of any alteration of the kind referred to in subrule(b)(i); or

      (ii)   the taking of action resulting from any event of the kind referred to in subrule(b)(ii); and

      (d)   a LICENSE shall not carry on, nor hold himself out as carrying on, any securities business other than that permitted by his LICENSE and from any premises specified in his LICENSE.

 

8.   Replacement of LICENSE

Where the Commission is satisfied that a LICENSE has been inadvertently lost, destroyed or defaced, the Commission shall replace the LICENSE on payment by the licensee of the prescribed fee.

 

9.   Display of LICENSE

   (1) Every holder of a LICENSE granted under Part IV of the Act shall display his LICENSE at all premises in which he transacts with the public the securities business authorised by the LICENSE.

   (2) The requirement in sub-rule (1) shall not be satisfied unless the LICENSE is displayed in such a manner as to be readily visible to the public.

 

10.   Change of principal

A dealer’s representative or an investment representative shall not change his principal in relation to which his LICENSE was issued unless he has lodged a notice in Form 12 with the Commission.

PART III
FEES AND LEVIES

 

11.   Fees

The fees prescribed in the Third Schedule shall be payable to the Commission, with respect to—

      (a)   the grant and renewal of LICENSEs;

      (b)   the registration of securities under Part V of the Act; and

      (c)   theauthorisation of collective investment schemes under Part X of the Act.

 

12.   Waiver, etc. by Commission

   (1) Where the Commission considers it appropriate in the exceptional circumstances of a particular case, the Commission may in its discretion waive payment of all or part of the fee which would otherwise be payable under these Rules.

   (2) Where it appears to the Commission that, owing to the exceptional circumstances of a particular case, the retention by the Commission of a fee which has been paid would be inequitable, the Commission may in its discretion refund all or part of the fee.

 

13.   Compensation fund levy

   (1) The amount to be deposited under sub-section(1) of section 31 of the Act shall be—

      (a)   five per cent of the net capital employed in the licensee’s business; or

      (b)   one million kwacha, whichever is less.

   (2) Such amount shall be payable—

      (a)   within seven days, or such further time as the Commission may in a particular case allow, after grant of the LICENSE; and

      (b)   at such times thereafter as the Commission, having regard to the purposes and requirements of Part IX of the Act, shall direct.

[Am by SI 153 of 1995.]

FIRST SCHEDULE

[Rule 3]

LIST OF FORMS

First Column 

Second Column 

Third Column 

Provisions of Act or Rules 

Description of Form 

Number of Form in Second Schedule 

section 8 (1) 

Application by company to be licensed as a securities exchange 

section 21 (1) 

Application by a company for dealer’s LICENSE 

section 21 (1) 

Application by an individual for investment adviser’s LICENSE 

section 21 (1) 

Application by a company for investment adviser’s LICENSE 

section 21 (1) 

Application for renewal of dealer’s LICENSE or investment adviser’s LICENSE 

section 21 (1) 

Application for representative’s LICENSE 

section 21 (1) 

Application for renewal of representative’s LICENSE 

section 28 (1) 

Record of securities 

section 29 (1) 

Notice of place at which record is to be kept 

section 29 (3) 

Notice of change of place of business and change of place at which record is kept 

10 

section 29 (2) 

Notification of cessation of business 

11 

Rule 11 

Notice of change of representative’s principal and notice of change of place at which record is kept 

12

SECOND SCHEDULE

FORMS

[Section 8 and Rule 3]

Form 1

SECURITIES ACT, LAWS OF ZAMBIA

APPLICATION BY COMPANY TO BE LICENSED AS A SECURITIES EXCHANGE

Application is hereby made to be licensed as a securities exchange under the Act and the following statements are made in respect thereof—

Note—

This application must be accompanied by—

      (a)   the last audited balance sheet and profit and loss account certified as required by rule 6 of the Securities (Licensing and Fees) Rules, 1993;

      (b)   a certified true copy of the rules of the proposed securities exchange;

      (c)   a certified true copy of the applicant’s certificate of incorporation; and

      (d)   a certified true copy of the applicant’s memorandum and articles of association.

   Name of company:..................................................................................

Date of incorporation:..............................................................................

Registered office:....................................................................................

Proposed name of securities exchange:.................................................

Hours of business:...................................................................................

Number of members:...............................................................................

Number of members who will carry on business of dealing in securities independently of and in competition with each other :................................

Dated this..............................................................day of.......................................................19..........

Signature........................................................

Name..............................................................

Chairman of the Securities Exchange

FORM 2

[Section 21(1)]

SECURITIES ACT, LAWS OF ZAMBIA

APPLICATION BY COMPANY FOR DEALER’S LICENSE

Application is hereby made for a dealer’s LICENSE under the Act and the following statements are made in respect thereof—

Notes—

   (1) If space is insufficient to provide details, please attach annexure(s). Any such annexure should be identified as such and signed by the signatory to this application.

   (2)   This application must be accompanied by the last audited balance-sheet and profit and loss account certified as required by rule six of the Securities (Licensing and Fees) Rules, 1993.

PART 1
INFORMATION ON THE APPLICANT

1.

      (a)   Name of applicant:

      (b)   Registered office:

      (c)   Place of incorporation:

      (d)   Full address and telephone number of the principal place at which the business of the applicant is to be carried on:

      (e)   The authorised and paid-up capital of the applicant, including the types of shares issued:

      (f)   The details of shareholders of the applicant’s, including the name, address, amount of shares being held and date of acquisition:

      (g)   Address of place at which applicant’s record under section 28 of the Act will be kept:

      (h)   Set out as an annexure hereto details of each director and secretary showing full name, residential address, date of birth, office held and date of appointment:

2.   State the nature of the principal business of the applicant:

3.

      (a)   State in detail the activity and the manner in which the applicant proposes to conduct the business for which the applicant requires a dealer’s license:

      (b)   The type of clients with whom the applicant proposes to do business:

      (c)   Describe in detail the organisation structure and internal control procedures which the applicant has adopted or proposes to adopt for its proposed business.

4. Set out name and address of each person who, directly or indirectly, exercises or has power to exercise a controlling influence over the management and policies of the applicant other than those shown as directors:

5. Is any director or secretary of the applicant a director or secretary of any other corporation? Using an annexure, answer “Yes” or “No” for each person; if “Yes”, give details of:

      (a)   names of corporations;

      (b)   places of incorporation; and

      (c)   dates of appointment.

(For questions 6 to 8, answer “Yes” or “No” in space provided. If “Yes”, attach annexures giving all relevant particulars.)

6. Has the applicant or any director or secretary of the applicant within the past 10 years—

 

Answer 

   (a)   been licensed or registered in any place under any law which requires licensing or registration in relation to dealing in securities? 

……………………….……… 

   (b)   been licensed, registered or otherwise authorised by law to carry on any trade, business or profession in any place? 

……………………….……… 

   (c)   been refused the right or restricted in its or his right to carry on any trade, business or profession for which a specific LICENSE, registration or other authority is required by law in any place? 

……………………….………

   

7. Has any director or secretary of the applicant within the past 10 years—

    

Answer 

   (a)   been a member or partner in a member firm of any securities exchange? 

……………………….……… 

   (b)   been suspended from membership of any securities exchange or other- wise disciplined by a securities exchange? 

……………………….……… 

   (c)   been refused membership of any securities exchange? 

……………………….……… 

   (d)   been known by any name other than the name or names shown in this application? 

……………………….……… 

   (e)   been convicted of any offence other than a traffic offence in Zambia or elsewhere or are there any proceedings now pending which may lead to such a conviction? 

……………………….……… 

   (f)   had judgement including findings in relation to fraud, misrepresentation or dishonesty been given against him in any civil proceedings, in Zambia or elsewhere? (If “Yes”, using an annexure, give full details, including whether judgement is unsatisfied.) 

……………………….……… 

    (g)   been declared bankrupt or compounded with or made an arrangement for the benefit of his creditors, in Zambia or elsewhere? 

……………………….……… 

   (h)   been engaged in the management of any corporation other than those referred to in answer to question 5? 

……………………….………. 

   (i)   been refused a fidelity or surety bond in Zambia or elsewhere? 

……………………….……… 

    (j)   been disqualified as a director, or been director of a company that has gone into receivership or liquidation, in Zambia or elsewhere? 

……………………….………

   

8. Has any director or management staff of the applicant had any experience in performing the functions in relation to the proposed activity of the applicant referred to in question 3?

9. In relation to each director and secretary of the applicant, set out below details of the officer’s employment and business activities, during the previous 10 years:

Name of director or secretary 

Name and address of employer (if self-employed, so state) 

Nature of business 

Description of duties of relation to the employment or activity 

Period of employment or activity(give exact dates) 10. Set out any additional information (including any formal qualifications or training of the directors or secretary of the applicant and the name of the institution that conducted the course) considered relevant to this application.

11. Set out below details of two persons with whom each director and the secretary of the applicant has had regular contact over the past 5 years and of whom the Commission may enquire regarding the character and reputation of the respective director or secretary.

Name of character referee 

Address of character referees 

Occupation of character referee 

Name of director or secretary in respect of whom enquiries may be made

PART 2 - MISCELLANEOUS

1. We are aware of the provisions of section 30 of the Act relating to fraudulent applications.

2. We declare that all information given in this application and in the attached annexures (if any) are true and correct.

Dated this.........................................................day of..........................................................19............

*Signature................................ 

Signature................................ 

(Name of Director) 

(Name of Director/Secretary)**

*This application is to be signed by two directors, or a director and the secretary of the applicant.

**Delete whichever is inapplicable.

FORM 3

[Section 21(1)]

SECURITIES ACT, LAWS OF ZAMBIA

APPLICATION BY AN INDIVIDUAL FOR INVESTMENT ADVISER’S LICENSE

Application is hereby made for an investment adviser’s LICENSE under the Act and the following statements are made in respect thereof—

Note—

   (1)      If space is insufficient to provide details, please attach annexure(s). Any such annexure should be identified as such and signed by the signatory to this application.

   (2)    This application shall be accompanied by a detailed statement of the applicant’s assets and liabilities and shall be signed by the applicant.

1. Personal particulars of the applicant.

      (a)   Name of applicant:

      (b)   Full address and telephone number of the principal place at which the business of the applicant is/is to be carried on:

      (c)   National Registration Card ID number:

      (d)   Residential address:

      (e)   Address of place at which applicant’s record under section 28 of the Act will be kept:

   2.—

      (a)   Indicate area of proposed business for which the applicant requires an Investment Adviser’s license:

      (i)   advising others concerning securities.

      (ii)   issues or promulgates analyses or reports concerning securities.

      (iii)   pursuant to a contract or arrangement with a customer, undertakes on behalf of the customer (whether on a discretionary authority granted by the customer or otherwise) the management of a portfolio of securities for the purpose of investment.

      (b)   For each indicated area of proposed business, state in detail the manner in which the business will be conducted and the experience of the applicant and his management staff in that business.

      (c)   Describe in detail the organisation structure and internal control procedures which the applicant has adopted or proposes to adopt in the conduct of his business.

3. The type of customers with whom the applicant proposes to do business.

4. Is the business of investment adviser the principal business carried on by the applicant? (Answer “Yes” or “No”, give details of the applicant’ principal business.)

5. Does the applicant have an interest in one or more shares in any company the shares of which are quoted on a securities exchange, the aggregate of the nominal amount of which constitutes not less than 5% of the aggregate of the nominal amount of all the issued shares of the corporation? (Answer “Yes” or “No”. If “Yes”, give full details of such interest including names of companies and percentage of interest.)

6. Is the applicant a director of any corporation in Zambia or elsewhere? (Answer “Yes” or “No”.)

If “Yes”, using an annexure, give details of—

      (a)   names of the corporations;

   <TS:0.196528,NM,NO,0.597917,NM,NO,0.897917,NM,NO,1.29514,NM,NO,1.69653,NM,NO,2.19653,NM,NO,4.4375,NM,NO>   (b)   places of incorporation; and

      (c)   the relevant interests.

(Answer questions “Yes” or “No” in space provided. If “Yes”, attach annexures giving all relevant particulars.)

7. Has the applicant within the past 10 years—

    

Answer 

   (a)   been licensed or registered in any place under any law which requires licensing or registration in relation to dealing in securities or acting as investment adviser? 

.......................................... 

   (b)   been licensed, registered or otherwise authorised by law to carry on any trade, business or
profession in any place? 

........................................... 

   (c)   has been refused the right or restricted in his right to carry on any business or profession for
which a specific license, registration or other authority is required by law in any place? 

........................................... 

   (d)   has been a member or partner in a member firm or a securities exchange? 

........................................... 

   (e)   been suspended from membership of any securities exchange or otherwise disciplined by a securities exchange? 

........................................... 

   (f)   been refused membership of any securities exchange? 

........................................... 

   (g)   carried on business under any name other than the name or names shown in this application? 

........................................... 

   (h)   been convicted of any offence other than a traffic offence in Zambia or elsewhere or are there any proceedings now pending which may lead to such a conviction? (If “Yes” attach annexure giving full details of the conviction(s) or proceeding(s

........................................... 

   (i)   had judgement including findings in relation to fraud, misrepresentation or dishonesty been given against him in any civil proceedings, in Zambia or elsewhere? (If “Yes” attach annexure giving full details, including whether judgment is unsatisfied.) 

........................................... 

   (j)   been censured or disciplined by any professional body, society or association of which he was or is a member? (If “Yes”, attach annexure giving full details, including name of the professional body, society or association.) 

........................................... 

   (k)   been declared bankrupt or compounded with or made an assignment for the benefit of his creditors in Zambia or elsewhere? 

........................................... 

   (l)   been engaged in the management of any corporations other than those referred to in answer to question 10? 

........................................... 

   (m)   been refused a fidelity or surety bond in Zambia or elsewhere? 

........................................... 

   (n)    been disqualified as a director, or been a director of a company that has gone into receivership or liquidation, in Zambia or elsewhere? 

...........................................

   

8. Set out below details of the applicant’s employment and business activities during the previous 10 years.

Name and address of employer (if self-employed, so state) 

Nature of business 

Description of duties in relation to the employment or activity 

Period of employment or activity (give exact dates)

9. Set out below details of two persons (who shall not be related to the applicant, and neither of whom shall have any interest in the success or otherwise of this application) with whom the applicant has had regular contact over the past 5 years and of whom the Commission may enquire regarding the applicant’s character and reputation.

Name 

Address 

Occupation

 

10. Set out any additional information (including any formal qualifications or training and the name of the institution that conducted the course) considered relevant to this application.

11. I am aware of the provisions of section 30 of the Act relating to fraudulent applications.

12. I declare that all information given in this application and in the attached annexures (if any) are true and correct.

Dated this........................................day of........................................19..........

Signature............................................................

FORM 4

[Section 21(1)]

SECURITIES ACT, LAWS OF ZAMBIA

APPLICATION BY A COMPANY FOR INVESTMENT ADVISER’S LICENSE

Application is hereby made for an Investment Adviser’s LICENSE under the Act and the following statements are made in respect thereof:

Notes:

   (1) If space is insufficient to provide details, where necessary, please attach annexure(s). Any such annexure should be identified as such and signed by the signatory to this application.

   (2) This application shall be accompanied by the last audited balance-sheet and profit and loss account certified as required by rule six of the Securities (Licensing and Fees) Rules, 1993.

PART 1 - INFORMATION ON THE APPLICANT

1. —

      (a)   Name of applicant:

      (b)   Registered office:

      (c)   Place of incorporation:

      (d)   Full address and telephone number of the principal place at which the business of the applicant is or is to be carried on:

      (e)   The authorised and paid-up capital of the applicant, including the types of shares issued or to be issued:

      (f)   The details of shareholders of the applicant, including the name, address, amount of shares being held and date of acquisition:

      (g)   Address of place at which applicant’s record under section 28 of the Act will be kept:

      (h)   Set out as an annexure hereto details of each director and secretary showing full name, residential address, date of birth, office held and date of appointment:

2.   State the nature of the principal business of the applicant.

3.

      (a)   Indicate areas of proposed business for which the applicant requires an Investment Adviser’s license:

      (i)   advisers others concerning securities.

      (ii)   issues or promulgates analyses or reports concerning securities.

      (iii)   pursuant to a contract or arrangement with a customer, undertakes on behalf of the customer (whether on a discretionary authority granted by the customer or otherwise) the management on behalf of customers of a portfolio of securities for the purpose of investment.

      (b)   For each indicated area of proposed business, state in detail the manner in which business will be conducted and the experience of the applicant and its management staff in that business.

      (c)   The type of customers with whom the applicant proposes to do business.

      (d)   Describe in detail the organisation structure and internal control procedures which the applicant has adopted or proposes to adopt in the conduct of its business.

4. Set out name and address of each person who directly or indirectly exercises or has power to exercise a controlling influence over the management and policies of the applicant other than those shown as directors.

5. Is any director or secretary of the applicant a director of any other corporation?

Using an annexure, answer “Yes” or “No” for each person; if “Yes”, give details of:

      (a)   names of corporation;

      (b)   places of incorporation; and

      (c)   dates of appointment.

(For questions 6 and 7 answer “Yes” or “No” in space provided. If “Yes” attach annexures giving all relevant particulars.)

6. Has the applicant or any director or secretary of the applicant within the past 10 years—

 

    

Answer 

   (a)   been licensed or registered in any place under any law which requires licensing or registration in relation to dealing in securities or acting as an investment adviser? 

……………… 

   (b)   been licensed, registered or otherwise authorised by law to carry on any trade, business or profession in any place? 

……………… 

   (c)   been refused the right or restricted in its or his right to carry on any trade, business or profession for which a specific LICENSE, registration or other authority is required by law in any place? 

………………

   

7. Has any director or secretary of the applicant within the past 10 years—

    

Answer 

   (a)   been a member or partner in a member firm of any securities exchange? 

……………… 

   (b)    been suspended from membership of any securities exchange or otherwise disciplined by a securities exchange? 

……………… 

   (c)    been refused membership of any securities exchange? 

……………… 

   (d)    been known by any name other than the name or names shown in this application? 

……………… 

   (e)    been convicted of any offence other than a traffic offence in Zambia or elsewhere or are there any proceedings now pending which may lead to such a conviction? 

……………… 

   (f)    had judgement including findings in relation to fraud, misrepresentation or dishonesty been given against him in any civil proceedings, in Zambia or elsewhere? (If “Yes”, using an annexure, give full details, including whether judgement is unsatisfied.) 

……………… 

   (g)    been declared bankrupt or compounded with or made an assignment for the benefit of his creditors, in Zambia or elsewhere? 

……………… 

   (h)   been engaged in the management of any corporation other than those referred to in answer to question 5? 

……………… 

   (i)    been refused a fidelity or surety bond in Zambia or elsewhere? 

……………… 

   (j)    been disqualified as a director, or been a director of a company that has gone into receivership or liquidation, in Zambia or elsewhere? 

………………

   

8. In relation to each director and secretary of the applicant, set out below details of the officer’s employment and business activities, during the previous 10 years:

Name of director or secretary 

Name and address of employer (if self-employed, so state) 

Nature of business 

Description of duties of relation to the employment or activity 

Period of employment or activity(give exact dates)

9. Set out any additional information (including any formal qualifications or training of the directors or secretary of the applicant ad the name of the institution that conducted the relevant course) considered relevant to this application.

10. Set out below details of two persons (who shall not be related to of whom shall have any interest in the success or otherwise of this application) with whom each director and the secretary of the applicant has had regular contact over the past 5 years and of whom the Commission may enquire regarding the character and reputation of the respective director or secretary.

Name of character referee 

Address of character referees 

Occupation of character referee 

Name of director or secretary in respect of whom enquiries may be made

PART 2
MISCELLANEOUS

1. We are aware of the provisions of section 30 of the Act relating to fraudulent applications.

2. We declare that all information given in this application and in the attached annexures (if any) are true and correct.

Dated this.........................................................day of..........................................................19............

*Signature..................................... 

Signature..................................... 

(Name of Director) 

(Name of Director/Secretary)** *This application is to be signed by two directors or a director and the secretary of the applicant.

**Delete whichever is inapplicable.

FORM 5

[Section 21(1)]

SECURITIES ACT, LAWS OF ZAMBIA

APPLICATION FOR RENEWAL OF DEALER’S LICENSE OR INVESTMENT ADVISER’S LICENSE

Application is hereby made for the renewal of—

A Dealer’s/An Investment Adviser’s* license and the following statements are made in respect of the applicant—

1. —

      (a)   Applicant’s name:

      (b)   Expiry date of license:

      (c)   LICENSE No.:

2. Where the applicant is a company to complete the following: (Answer “Yes” or “No” in space provided. If “Yes” attach annexures giving all relevant particulars.)

      (a)   Since the last application—

 

<TS:0.196528,NM,NO,0.39375,NM,NO,0.590278,NM,NO,0.7875,NM,NO,0.984028,NM,NO,1.18056,NM,NO,1.37778,NM,NO,1.575,NM,NO,1.77153,NM,NO,1.97917,NM,NO>Answer 

      (i)   Has there been a change in the shareholders of the applicant? 

..................................... 

      (ii)   Has there been a change in the applicant’s directors, secretary, senior management personnel or external auditor 

..................................... 

      (iii)   Has the applicant been convicted of any offence other than a traffic offence in Zambia or elsewhere or are there any proceedings now pending which may lead to such a conviction? 

..................................... 

      (iv)   Have any of the applicant’s directors been a director of any company other than those referred to in the last application 

..................................... 

      (v)   Has the applicant taken any disciplinary action against any of its representatives? 

..................................... 

      (vi)   Has the applicant received any complaint? 

..................................... 

      (vii)   Has the applicant undertaken to conduct any material new business activity, and if so, state the nature of the activity? 

.....................................

 

      (b)   Please furnish details of any other event which has occurred which is likely to
have a significant effect on the applicant’s business during the currency of the
LICENSE, if granted (including any legal claim against the applicant).

3. Where the applicant is an individual please complete the following:

(Answer “Yes” or “No” in space provided. If “Yes” attach annexures giving all relevant particulars.)

Since the last application has the applicant—

    

Answer 

   (a)   been suspended from membership of any securities exchange or other- wise disciplined by a securities exchange? 

.................................... 

   (b)   been convicted of any offence other than a traffic offence in Zambia or elsewhere or are there any proceedings now pending which may lead to such a conviction? 

.................................... 

   (c)   had judgement including findings in relation to fraud, misrepresentation or dishonesty been given against him in any civil proceedings, in Zambia elsewhere? (If “Yes”, using an annexure, give full details, including whether judgement is unsatisfied.) 

.................................... 

   (d)   been declared bankrupt or compounded with or made an assignment for the benefit of his creditors, in Zambia or elsewhere? 

.................................... 

   (e)   been engaged in the management of any company other than those referred to in the last application? 

.................................... 

   (f)   been refused a fidelity or surety bond in Zambia or elsewhere? 

.................................... 

   (g)   undertaken to conduct any material new business activity, and, if so, state the nature of the activity? 

.................................... 

   (h)   been disciplined by any professional body or other membership body? 

....................................

   

4. I am/We are* aware of the provisions of section 30 of the Act relating to fraudulent applications.

5. I/We* declare that all information given in this application and in the attached annexure (if any) are true and correct.

Dated this........................................................day of.........................................................19..............

**Signature......................................................................

....................................................................................................

(Name of Applicant/Director/Secretary*)

*Delete whichever is inapplicable.

**Where the applicant is a body corporate, this application is to be signed by a director or secretary of the applicant.

FORM 6

[Section 21(1)]

SECURITIES ACT, LAWS OF ZAMBIA

APPLICATION FOR REPRESENTATIVE’S LICENSE

Application is hereby made for—

A dealer’s representative’s/an investment representative’s* license and the following statements are made in respect of the application—

1.—

   (a)   Applicant’s name 

Other names 

   (b)   Residential address 

Tel: No. 

   (c)   Date of birth 

Place of birth 

   (d)   No. of years applicant has resided in Zambia 

Nationality 

   (e)   Occupation for which representative’s LICENSE is sought 

   (f)   Full name of principal 

   (g)    The full address at which the business of the principal is to be carried on 

   (h)   Nature of business of the principal 

   (i)   Address of place at which Record under section 28 of the Act will be kept 

   (j)   Present remuneration arrangement with principal: salary, commission or both

*Delete whichever is inapplicable. 

   (k)   Directorship in companies in Zambia or elsewhere 

   (l)   National Registration Card ID number

   

2. (Answer “Yes” or “No” in space provided. If “Yes” attach annexures giving all relevant particulars.) Has the applicant within the past 10 years—

 

Answer 

   (a)   been licensed or registered in any place under any law which requires licensing or registration to deal or trade in securities or act as investment adviser? 

……………… 

   (b)   been licensed, registered, or otherwise authorised by law to carry on any trade, business or profession in any place? 

……………… 

   (c)   been refused the right or restricted in his right to carry on any trade, business or profession for which a specific LICENSE, registration or other authority is required by law in any place? 

……………… 

   (d)   been a shareholder in a member firm of any securities exchange? 

……………… 

   (e)   been suspended from membership of any securities exchange or other- wise disciplined by a securities exchange? 

……………… 

   (f)   been refused membership of any securities exchange? 

……………… 

   (g)   carried on business under any name other than the name or names shown in this application in paragraph 1 (a)? 

……………… 

   (h)   been convicted of any offence, other than a traffic offence, in Zambia or elsewhere or are there any proceedings now pending which may lead to such a conviction? 

……………… 

   (i)   had judgement including findings in relation to fraud, misrepresentation, or dishonesty been given against him in any civil proceedings, in Zambia or elsewhere? (If “Yes” attach annexure giving full details, including whether judgement is unsatisfied.) 

……………… 

   (j)   been refused a fidelity or surety bond, in Zambia or elsewhere? 

……………… 

   (k)   been declared a bankrupt or compounded with or made an assignment for the benefit of his creditors in Zambia or elsewhere? 

……………… 

   (l)   been disqualified as a director of a company, or been a director of a company that has gone into receivership or liquidation, in Zambia or elsewhere? 

………………

3. Has the applicant had any experience in performing the functions of a dealer’s representative or an investment representative? (Answer “Yes” or “No”) If “Yes” attach annexures giving all relevant particulars.

4. Set out below details of the applicant’s employment and business activities during the previous 10 years:

Name and address of employer (if self-employed, so state) 

Nature of business 

Description of duties in relation to the employment or activity 

Period of employment or activity (give exact dates)

5. Set out below details of two persons (who shall not be related to the applicant, and neither of whom shall have any interest in the success or otherwise of this application) with whom the applicant has had regular contact over the past 5 years and of whom the Commission may enquire regarding the applicant’s character and reputation:

Name 

Address 

Occupation

6. Does the applicant have an interest in one or more shares in any company, the shares of which are quoted on a securities exchange, the aggregate of the nominal amount of which constitutes not less than 5% of the aggregate of the nominal amount of all issued shares of the company? (Answer “Yes” or “No”. If “Yes”, give full details of such interest including names of companies and percentage of interest).

7. Set out any additional information (including any formal qualifications or training of the applicant and the name of the institution that conducted the course) considered relevant to this application.

8. I am aware of the provisions of section 30 of the Act relating to fraudulent applications.

9. I declare that all information given in this application and in the attached annexure (if any) are true and correct.

Dated this..........................................................day of...........................................................19..........

Signature........................................................

(Signed by Applicant)

Note:

      (a)   This application should be accompanied by a certificate in or to the effect of the following form:

To the Commission:

On the basis of due and diligent enquiry of the background of the applicant named in this form who is in my direct employment or acting for or on behalf of me, and other information available, I believe him to be of good character and reputation and to have the competence and experience to perform the function of a representative.

Dated this..................................................day

of...................................................19..........

Signature:………………………………………..

Name:…………………………………………….

Capacity:…………………………………………

      (b)   Subject to paragraph (c) of this Note, the certificate should be signed by each licensee by whom the applicant is to be employed or for or by arrangement with whom he is to act.

      (c)   Where the applicant is to be employed by or to act for or by arrangement with—

      (i)   a firm, the individual partners of which are licensees-the certificate should be signed by one such partner on behalf of all the partners;

      (ii)   a licensee which is a company-by a director or the secretary of that company.

FORM 7

[Section 21(1)]

SECURITIES ACT, LAWS OF ZAMBIA

APPLICATION FOR RENEWAL OF REPRESENTATIVE’S LICENSE

Application is hereby made for the renewal of:

A dealer’s representative’s/an investment representative’s* license and the following statements are made in respect of the application—

*Delete whichever is inapplicable.

1. —

 

   (a)   Applicant’s name 

   (b)   Expiry date of license 

license No. 

   (c)   Residential Address 

Telephone No. 

   (d)   Present remuneration arrangement with principal; salary, commission or both

2. (Answer “Yes” or “No” in space provided. If “Yes” attach annexures giving all relevant particulars.) Since the last application has the applicant-

 

    

Answer 

   (a)   been suspended from membership of any securities exchange or otherwise disciplined by a securities exchange? 

………………. 

   (b)   been convicted of any offence other than a traffic offence in Zambia or elsewhere or are there any proceedings now pending which may lead to such a conviction? 

………………. 

   (c)   had judgement including findings in relation to fraud, misrepresentation or dishonesty been given against him in any civil proceedings, in Zambia or elsewhere? (If “Yes”, using an annexure, give full details, including whether judgement is unsatisfied.) 

………………. 

   (d)   been declared bankrupt or compounded with or made an assignment for the benefit of his creditors, in Zambia or elsewhere? 

………………. 

   (e)   been engaged in the management of any corporation other than those referred to in the last application? 

………………. 

   (f)   been a director of any corporation other than those referred to in the last application? 

………………. 

   (g)   been refused a fidelity or surety bond in Zambia or elsewhere 

………………. 

   (h)   been the subject of any disciplinary action taken by his firm? 

………………. 

   (i)   been disciplined by any professional or other membership body? 

……………….

   

3. I am aware of the provisions of section 30 of the Act relating to fraudulent applications.

4. I declare that all information given in this application and in the attached annexure (if any) are true and correct.

Dated this..........................................................day of...........................................................19..........

Signature............................................................

Name of Applicant................................................................................

Note:

      (a)   This application should be accompanied by a certificate in or to the effect of the following form:

To the Commission;

On the basis of due and diligent enquiry made of the background of the applicant named in this form who is in my direct employment or acting for or on behalf of me, and other information available, I believe him to be of good character and reputation and to have the competence and experience to perform the function of a representative.

Dated this..................................................... day of....................................................19................

Signature:......................................................

Name:.............................................................

Capacity:.........................................................

      (b)   Subject to paragraph (c) of this Note, the certificate should be signed by each licensee by whom the applicant is to be employed or for or by arrangement with whom he is to act.

      (c)   Where the applicant is to be employed by or to act for or by arrangement with-

      (i)   a firm, the individual partners of which are licensees-the certificate should be signed by one such partner on behalf of all the partners;

      (ii)   a licensee which is a company-by a director or the secretary of that company.

FORM 8

[Section 28]

SECURITIES ACT, 1993

RECORD OF SECURITIES

Name of person having an interest:

 

Particulars* 

Acquired 

Disposed of 

Balance 

Date 

Name of Security 

Unit Price 

No. of Units 

Cost 

No. of Units 

Proceeds 

in Units

*State how securities acquired or disposed of and if acquired or disposed of on the securities market, give broker’s name.

FORM 9

[Section 29(1)]

SECURITIES ACT, LAWS OF ZAMBIA

NOTICE OF PLACE AT WHICH RECORD IS TO BE KEPT

1. Name:

2. Capacity in which section 28 of the Act applies:

3. Residential address and telephone number of applicant:

4. Business address and telephone number:

5. Name of employer (if any):

6. Place at which record is to be kept:

7. Date of commencement of keeping record:

Dated this..........................................................day of...........................................................19..........

Signature:................................................................................................................

Name:................................................................................................................

Capacity:................................................................................................................

FORM 10

[Section 29(3)]

SECURITIES ACT, LAWS OF ZAMBIA

NOTICE OF CHANGE OF PLACE OF BUSINESS AND CHANGE OF PLACE AT WHICH RECORD IS KEPT

1. Name of licensee:

2. Type of LICENSE held and LICENSE number:

3. —

      (a)   Former address of place of business:

      (b)   New address of place of business:

      (c)   Date of change of place of business:

4. —

      (a)   Former address of place at which record was kept:

      (b)   New address of place at which record is kept:

      (c)   Date of change of address of place at which record is kept:

Dated this...........................................................day of..........................................................19..........

Signature:.........................................................

Name:.........................................................

Capacity:.........................................................

FORM 11

[Section 29(2)]

SECURITIES ACT, LAWS OF ZAMBIA

NOTIFICATION OF CESSATION OF BUSINESS

1. Name of licensee:

2. Type of LICENSE held and LICENSE number:

3. Notice is hereby given that on the..............................day of.............................19.........., business ceased to be carried on in Zambia by the above licensee in respect of which he was licensed to carry on business.

Dated this...........................................................day of..........................................................19..........

Signature:

Name:

Capacity:

FORM 12

[Section 11]

SECURITIES ACT, LAWS OF ZAMBIA

NOTICE OF CHANGE OF REPRESENTATIVE’S PRINCIPAL AND NOTICE OF CHANGE OF PLACE AT WHICH RECORD IS KEPT

1. Name of licensee:......................................................................................................................

2. Type of LICENSE held any LICENSE number:.....................................................................

3. Residential Address:...............................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................

4. Notice is hereby given that on the...................day of.......................19........the licensee will cease to be a representative of..........................................................and that from the.................................day of........................19.......the licensee will be a representative of.................................whose principal place of business is at.............................................................................................................................

5. —

      (a)   Former address of place at which record was kept:

      (b)   New address of place at which record is kept:

      (c)   Date of change of address of place at which record is kept:

Dated this.............................................................day of........................................................19..........

Signature: .......................................................

Name:............................................................................

THIRD SCHEDULE

[Rule 11]

[Third Sch subs by reg 2 of SI 20 of 2005;sub by reg 2 of SI 82 of 2013 ]

 

1. Application for a licence or renewal of licence as a dealer 

66,666 

2. Application fora licence or renewal of licence as an investment advisor 

33.334 

3. Application for a licence or renewal of licence as a dealer’s representative 

13.334 

4. Application for a licence or renewal of licence as an investment representative 

13.334 

5.(a) Application for a licence for a securities exchange 

333.334<FT:Verdana,SN> 

   (b) Renewal of licence for a securities exchange<FT:Verdana,SN> 

111,112<FT:Verdana,SN> 

6. Replacement of licence 

1112 

7. Inspection of or taking extracts from the record kept under section 28 of the Act 

1112 

Registration of securities and other matters 

 

   (a) Examination of prospectus or other offer documents 

111,112 

   (b) examination of documents not being prospectus, offer documents or documents issued pursuant to continuing obligations under ihe Act 

55,556 

   (c) initial public offer of securities 

0.25% of the share capital and revenue reserve 

   (d) any subsequent public offer by the same issuer 

0.25% of the share capital and revenue reserves over and above the reserves at (c) 

   (e) rights issue 

0.25% of the value of issue 

   (f) capitalisation issue 

0.25% of capitalisation value of issue and revenue reserves over and above reserves at (c) 

   (g) private placement 

0.25% of the value per issue 

   (h) registration of securities pursuant to notice under section 32 (3)(b

0.25% of share capital and revenue reserves 

   (i) authorisation of takeover or merger transaction 

0.25% of the value of the transaction 

   (j) grant of waiver under Rule 56 of the Securities
(Take Overs and Mergers) Rules 

500,000 

   (k) securities exchange buy side of the trade 

0.125% of the value of the trade 

   (l) securities exchange sell side of the trade 

0.125% of the value of the trade 

   (m) off-market buy side of the trade 

0.125% of the value of the trade 

   (n) off-market sell side of the trade 

222 222 

(2) The provision of clause S(l) shall apply to debt
securities, where applicable 

 

 

 

9. Authorisation of collective investment scheme 

222,222 

10. Annual fees: 

 

   (a) Issuers of securities, including collective investment schemes 

66,666 

   (b) Securities exchange 

1% of gross earnings excluding buy and sel trades 

11. Amendment of a licensing condition 

50% of applicable license category 

12. Application for exemption from any provision of the Act submitted with an application for a licence 

100% of license fees 

13. Inspection fee 

4,200 per hour (applicable to dealers and investment advisers 

14. Application for reprinting of licence/certificate 

3.334 

15. Levy on Collective Investment Scheme per
Portfolio/fund 

0.125% per fund (monthly) 

16. Levy on foreign Collective Investment Scheme 

0.125% per fund 

17. Levy for funding of compensation Fund 

11,112 annually 

18. Authorisation of Collective Investment Scheme-single portfolio/fund 

222,222 

19. Authorisation of Collective Investment Schememultiple portfolio/fund 

333.334 

20. Authorisation of Collective Investment Schemesingle
closed-end portfolio/fund 

222,222 

21. Authorisation of Collective Investment Schememultiple closed-end portfolio/fund 

333.334 

22. Authorisation of an intermediary 

66.666 annual fee 

23. Authorisation of transfer secretary 

66.666 annual fee 

24. Approval of securities depository 

66.666 annual fee 

25. Annual levy on securities depositories 

1% of turnover 

26. Approval for conducting a continuous professional development programme 

5,556 

27. Authorisation of asset management 

{mprestriction ids="1,2,3,5"}

66.666 annually 

28. Approval for custodial services 

66.666 annually 

29. Approval for trustee of a collective investment scheme 

66.666 

30. Approval of nominee company 

66.666

SECURITIES (REGISTRATION OF SECURITIES) RULES

[Section 32]

[Re-denominate the currency as stipulated under S 4 of Re-denomination Act, 8 of 2012, read with Bank of Zambia Act, 43 of 1996.]

Arrangement of Rules

PART I
PRELIMINARY

   Rule

   1.   Title

   2.   Interpretation

   3.   Application

PART II
REGISTRATION STATEMENT

   4.   Registration statement

   5.   Letter of application

   6.   Bankers, etc.

   7.   Declaration

   8.   Supporting documents

PART III
PROSPECTUS

   9.   Information to be contained in prospectus

   10.   False or misleading prospectus

PART IV
CONTINUING OBLIGATIONS OF ISSUERS OF REGISTERED SECURITIES

   11.   Corporate disclosure policy

   12.   Closure of books

   13.   Notice of general meeting

   14.   Distribution of directors’ report and annual accounts

   15.   Information to accompany directors’ report and annual accounts

   16.   Additional information if accounts do not give true and fair view

   17.   Interim reports, etc.

   18.   Board meetings

   19.   After board meetings

   20.   Commission to be notified of certain decisions

   21.   Basis of allotment

   22.   Winding-up and liquidation

   23.   Pre-emptive rights

   24.   Approval of documents

   25.   Directors’ service contracts

   26.   Subsequent registration

   27.   Proxy forms

   28.   Equality of treatment

   29.   Response to inquiries

   30.   Variation

      FIRST SCHEDULE

      SECOND SCHEDULE

      THIRD SCHEDULE

      FOURTH SCHEDULE

 

[Rules by the Securities and Exchange Commission]

SI 164 of 1993.

PART I
PRELIMINARY

 

1.   Title

These Rules may be cited as the Securities (Registration of Securities) Rules.

 

2.   Interpretation

   (1) Under these Rules, unless the context otherwise requires—

“articles” means articles of association;

“Chief Executive” means a person who either alone or together with one or more persons is or will be responsible under the immediate authority of the board of directors for the conduct of the business of a registered securities issuer;

“debt securities” means debenture or loan stock, debentures, bonds, notes and other securities or instruments acknowledging, evidencing or creating indebtedness, whether secured or unsecured and options, warrants or similar rights to subscribe or purchase any of the foregoing, and convertible debt securities;

“convertible debt securities” means debt securities convertible into or exchangeable for equity securities or other property;

“convertible equity securities” means equity securities convertible into or exchangeable for shares;

“director” includes any person who occupies the position of a director, by whatever name called;

“equity securities” means shares (including preference shares), convertible equity securities and options, warrants or similar rights to subscribe or purchase shares or convertible equity securities;

“issuer” means a company or other legal person any of whose equity or debt securities are the subject of an application for registration or some of whose equity or debt securities are already registered;

“new applicant” means, in the case of equity securities, an applicant for registration none of whose equity securities is already registered and, in the case of debt securities, means an applicant for registration none of whose equity or debt security is already registered;

“profit forecast” means any numerical or verbal indication of the level of profit for a future accounting period, or for a past accounting period for which results have not been announced to the public, including forms of words which may be used in conjunction with published data to arrive at an approximate figure for future profit by an arithmetical process;

“prospectus” means a prospectus, notice, circular, advertisement of other invitation to the public to acquire or apply for any securities;

“registered”, in relation to securities, means registered under Part V of the Act;

“reporting accountant” means the professional accountant who is responsible for the preparation of the accountants’ report required to be included in the prospectus;

“securities” has the same meaning as in section 2 of the Act;

“substantial shareholder” means, in relation to a company, a person who is entitled to exercise, or control the exercise of, ten per cent or more of the voting power at any general meeting of the company.

   (2) For the purposes of these Rules, a company is a subsidiary of another company if<FC:255,0,0>—

      (a)   that other company—

      (i)   controls the composition of the board of directors of the first-mentioned company;

      (ii)   controls more than half of the voting power of the first-mentioned company; or

      (iii)   holds more than half of the issued share capital of the first-mentioned company (excluding any part of it which carries no right to participate beyond a specified amount in a distribution of either profits or capital); or

      (b)   the first-mentioned company is a subsidiary of any company which is that other company’s subsidiary.

   (3) In these Rules, references to the certification of a document are references to its certification as a true copy or extract (as the case may be) by a director, the secretary or other authorised officer of the issuer or by a member of the issuer’s auditors or solicitors.

 

3.   Application

   (1) These Rules apply to all securities that are required to be registered under Part V of the Act.

   (2) The requirements of these Rules are not exhaustive in that an applicant for the registration of securities may be required by the Commission to supply such further documents and information as the Commission may require in any particular case or class of case.

PART II
REGISTRATION STATEMENT

 

4.   Registration statement

A registration statement for the purposes of section 32 of the Act shall consist of the following—

      (a)   a formal letter of application to the Commission signed by a duly authorised officer of the issuer whose securities are the subject of the application for registration, and which complies with the requirements of rules 5, 6 and 7;

      (b)   the various supporting documents specified in rule 8; and

      (c)   in the case of a public offer, a prospectus that complies with the content requirements set out in Part III.

 

5.   Letter of application

A formal letter of application for registration shall, in substantially the order given in the First Schedule to these Rules, embody the information indicated in that Schedule.

 

6.   Bankers, etc.

   The application shall also contain—-

      (a)   the names and addresses of the issuer’s principal bankers, authorised legal or other representatives; and

      (b)   the name, address and professional qualifications of the issuer’s auditors.

 

7.   Declaration

A letter of application must include a declaration, stated to be to the best of the issuer’s knowledge, information and belief—

      (a)   where a prospectus is required, that all information required to be included in the prospectus pursuant to Part III has been included; and

      (b)   that there are no other facts bearing on the issuer’s application for registration which, in the issuer’s opinion, should be disclosed to the Commission.

 

8.   Supporting documents

In support of its letter of application for registration the applicant must lodge with the Commission at the same time the following documents—

      (a)   a certified copy of its certificate of incorporation;

      (b)   a certified copy of its articles and all amendments to date;

      (c)   the annual report and accounts for each of the three completed financial years of the issuer and its subsidiaries, if any, immediately preceding the application or such shorter period as may be accepted by the Commission;

      (d)   a certified copy of—

      (i)   the resolution of the issuer in general meeting authorising the issue of all securities for which registration is sought; and

      (ii)   the resolution(s) of the board of directors authorising the issue and allotment of such securities, the making of the application for registration, and approving and authorising the issue of the prospectus is (where a prospectus is required).

      (e)   a certified copy of any resolution of the issuer in general meeting or of the board of directors authorising any alterations in the share capital of the company, or any mergers or amalgamations, within the period of five years preceding the date of the application for registration; and

      (f)   in addition, in the case of debt securities, a copy of the trust deed or other document securing or constituting the debt securities; and

      (g)   such other documentation as may be required by the Commission.

PART III
PROSPECTUS

 

9.   Information to be contained in prospectus

Where a prospectus is required, the prospectus shall contain the specific items of information specified in section A of the Second Schedule to these Rules with regard to equity securities, and in section B of that Schedule with regard to debt securities.

 

10.   False or misleading prospectus

If a prospectus issued for the purposes of Part V of the Act is false or misleading in a material particular, each of the directors of the issuer shall be guilty of an offence and shall be liable on conviction to a fine not exceeding five million kwacha or to imprisonment for a term not exceeding three years or to both.

PART IV
CONTINUING OBLIGATIONS OF ISSUERS OF REGISTERED SECURITIES

 

11.   Corporate disclosure policy

Generally and apart from compliance with all the specific requirements of this Part, the issuer shall keep the Commission, members of the issuer and other holders of its registered securities informed as soon as reasonably practicable of any information relating to the issuer and its subsidiaries, if any, that—

      (a)   is necessary to enable them and the public to appraise the financial position of the issuer and its subsidiaries, if any;

      (b)   is necessary to avoid the establishment of a false market in its securities; and

      (c)   might reasonably be expected materially to affect market activity in the price of its securities.

 

12.   Closure of books

The issuer shall publish in at least two newspapers circulating throughout Zambia notice of the closure of its register of members at least fourteen calendar days before such closure.

 

13.   Notice of general meeting

The issuer shall publish in at least two newspapers circulating throughout Zambia notice of every general meeting not less than fourteen calendar days before such meeting.

 

14.   Distribution of director’s report and annual accounts

The issuer shall send to every member of the issuer a copy of the directors’ report and its annual accounts (which must be prepared in accordance with the requirements of the Act), not less than twenty-one calendar days before the date of the issuer’s annual general meeting.

 

15.   Information to accompany directors’ report and annual accounts

   The issuer shall include in its directors’ report and accounts—

      (a)   a description of the principal activities of the issuer and its subsidiaries, if any, and, where two or more such activities are so described, a statement giving in respect of each such activity the turnover;

      (b)   a geographical analysis of consolidated turnover; and of its subsidiaries outside Zambia;

      (c)   a statement showing—

      (i)   the name of every subsidiary, its principal country of operation, its country of incorporation and its main business; and

      (ii)   particulars of the issued share capital and debt securities of every subsidiary:

Provided that if, in the opinion of the directors of the issuer, the number of them is such that compliance with this paragraph would result in particulars of excessive length being given, compliance with this paragraph shall not be required except in the case of subsidiaries carrying on a business the results of the carrying on of which, in the opinion of the directors, materially affected the amount of the profit or loss of the issuer and its subsidiaries, if any, or the amount of the assets of the issuer and its subsidiaries, if any—

      (d)   a statement as at the end of the relevant financial year showing—

      (i)   the interests of each director and chief executive of the issuer in the equity or debt securities of the issuer or any subsidiary; and

      (ii)   the details of any right to subscribe for equity or debt securities of the issuer granted to any director or chief executive of the issuer, and of the exercise of any such right;

      (e)   the statement required by paragraph (d) must—

      (i)   distinguish between beneficial and non-beneficial interests; and

      (ii)   specify the company in which securities are held, the class to which those securities belong and the number of such securities held;

      (f)   in the event of operating results shown by the accounts for the period under review differing materially from any published forecast made by the issuer, an explanation of the difference;

      (g)   a statement by the directors as to the reasons for any significant departure from applicable standard accounting practices in Zambia;

      (h)   a statement as at the end of the financial year showing as regards, first bank loans and overdrafts and, secondly, other borrowings of the issuer and its subsidiaries, if any, the aggregate amounts repayable—

      (i)   on demand or within a period not exceeding one year;

      (ii)   within a period of more than one year but not exceeding two years;

      (iii)   within a period of more than two years but not exceeding five years;

      (iv)   within a period of more than five years;

      (i)   in respect of the financial year, a statement of the amount of interest capitalised by the issuer and its subsidiaries, if any, during the year;

      (j)   a statement as to the period unexpired of any service contract, which is not determinable by the employer within one year without payment of compensation, (other than any statutory compensation), of any director proposed for election at the forthcoming annual general meeting or, if there are no service contracts, a statement of that fact;

      (k)   summary particulars of any contract of significance subsisting during or at the end of the financial year in which a director of the issuer is or was materially interested, either directly or indirectly, or, if there has been no such contract, a statement of that fact;

      (l)   summary particulars of any contract of significance between the issuer, or one of its subsidiary companies, and a controlling shareholder or any of its subsidiaries;

      (m)   summary particulars of any contract of significance for the provision of services to the issuer and its subsidiaries, if any, by a controlling shareholder or any of its subsidiaries;

      (n)   summary particulars of any arrangement under which a director has waived or agreed to waive any emoluments;

      (o)   summary particulars of any arrangement under which a shareholder has waived or agreed to waive any dividends;

      (q)   a summary, in the form of a comparative table, of the results and of the assets and liabilities of the issuer and its subsidiaries, if any, for the last five financial years, with any necessary explanations or adjustments for changes in capital to make the figures fully comparable one year with another.

 

16.   Additional information if accounts do not give true and fair view

If the relevant annual accounts do not give a true and fair view of the state of affairs and profit and loss of the issuer of the issuer and its subsidiaries, if any, more detailed and/or additional information must be provided.

 

17.   Interim reports etc.

   (1) The issuer shall prepare in respect of the first six months of each financial year of the issuer, unless that financial year is of six months or less, an interim report containing at least the information required by subrule(2) and, not later than four months after the end of that period of six months, the issuer shall—

      (a)   publish in the newspapers an announcement containing the information required by subrule(2) to be contained in the interim report, the day after approval by or on behalf of the board;

      (b)   supply the Commission immediately on publication with the names of the relevant newspapers and the date of the publication; and

      (c)   as soon as reasonably practicable after such publication, send to every member a copy of the interim report.

   (2) Each interim report referred to in subrule(1) shall contain at least the following information stated in respect of the issuer and its subsidiaries, if any, and such information must be published in the newspapers in accordance with subrule(1)(i)—

      (a)   turnover;

      (b)   profit (or loss) before taxation and extraordinary items, including the share of the profit (or loss) of associated companies with separate disclosure of any items included therein which are exceptional because of size and incidence;

      (c)   taxation on profits (Zambia and overseas) in each case indicating basis of computation with separate disclosure of the taxation on share of associated companies’ profits;

      (d)   profit (or loss) attributable to minority interests;

      (e)   profit (or loss) attributable to shareholders before extraordinary items;

      (f)   extraordinary items (net of taxation);

      (g)   profit (or loss) attributable to shareholders;

      (h)   amount of dividend paid or proposed on each class of share (with particulars of each such class) and amounts absorbed thereby (or an appropriate negative statement);

      (i)   transfers to and from reserves;

      (j)   earnings per share calculated on the basis of profits before extraordinary items; and

      (k)   comparative figures of the matters specified in paragraphs (a) to (j) inclusive for the corresponding previous period.

   (3) Where the accounting information given in an interim report has not been audited that fact must be stated. If the accounting information contained in an interim report has been audited by the issuer’s auditor, his report thereon including any qualifications must be set out in the interim report.

   (4) Any preliminary announcement of results for the full year must also contain the information required by subrule(2).

 

18.   Board meetings

The issuer shall inform the Commission at least three clear business days in advance of the date fixed for any board meeting at which the declaration, recommendation or payment of a dividend is expected to be decided or at which any announcement of the profits or losses for any year, half-year or other period is to be approved for publication.

 

19.   After board meetings

   The issuer shall inform the Commission immediately after approval by or on behalf of the board of—

      (a)   any decision to declare, recommend or pay any dividend or to make any other distribution on its listed securities and the rate and amount thereof;

      (b)   any decision not to declare, recommend or pay any dividend which would otherwise have been expected to have been declared, recommended or paid in due course;

      (c)   any preliminary announcement of profits or losses for any year, half-year or other period;

      (d)   any proposed change in the capital structure, including any redemption of its listed securities; and

      (e)   any decision to change the general character or nature of the business of the issuer or issuer and its subsidiaries, if any.

 

20.   Commission to be notified of certain decisions

The issuer shall inform the Commission immediately of any decisions made in regard to—

      (a)   any proposed alteration of the issuer’s articles;

      (b)   any change in the rights attaching to any class of listed securities and any change in the rights attaching to any shares into which any listed debt securities are convertible or exchangeable; and

      (c)   any changes in its secretary, auditors or registered address.

 

21.   Basis of allotment

The issuer shall inform the Commission of the basis of allotment of securities offered to the public for subscription or sale or an open offer and of the results of any rights issue and, if applicable, of the basis of any acceptance of excess applications, not later than the morning of the business day next after the allotment letters or other relevant documents of title are posted.

 

22.   Winding-up and liquidation

   (1) The issuer shall inform the Commission on the happening of any of the following events as soon as the same shall come to the attention of the issuer—

      (a)   the presentation of any winding-up petition, or equivalent application in the country of incorporation or other establishment, or the making of any winding-up order or the appointment of a provisional liquidator in respect of the issuer, its holding company or any major subsidiary;

      (b)   the passing of any resolution by the issuer, its holding company or any major subsidiary that it be wound-up by way of members’ or creditors’ voluntary winding-up;

      (c)   the entry into possession of or the sale by any mortgagee of a portion of the issuer’s assets which in aggregate value represents an amount in excess of 15 per cent of the consolidated net tangible assets of the issuer and its subsidiaries, if any; or

      (d)   the making of any judgement, declaration or order by any court or tribunal of competent jurisdiction whether on appeal or at first instance, which may adversely affect the issuer’s enjoyment of any portion of its assets which in aggregate value represents an amount in excess of 15 per cent of the consolidated net tangible assets of the issuer and its subsidiaries, if any.

   (2) For the purposes of subrule(1), a “major subsidiary” means a subsidiary representing 15 per cent or more of the consolidated net tangible assets or pre-tax trading profits of the issuer and its subsidiaries, if any.

 

23.   Pre-emptive rights

   (1) Except in the circumstances mentioned in subrule(3) the directors of the issuer shall obtain the consent of shareholders in general meeting prior to—

      (a)   allotting, issuing or granting—

      (i)   shares;

      (ii)   securities convertible into shares; and

      (iii)   options, warrants or similar rights to subscribe for any shares or for such convertible securities; and

      (b)   any major subsidiary of the issuer making any such allotment, issue or grant so as materially to dilute the percentage equity interest of the issuer and its shareholders in such subsidiary.

   (2) Notwithstanding subrule(3)(b), the directors of the issuer shall obtain consent of the shareholders in general meeting prior to allotting any voting shares if such allotment would effectively alter the control of the issuer.

   (3) No such consent as is referred to in subrule(1) shall be required—

      (a)   for the allotment, issue or grant of such securities pursuant to an offer made to the shareholders of the issuer, and, where appropriate, to holders of other equity securities of the issuer entitled to be offered them, pro rata (apart from fractional entitlements) to their existing holdings; or

      (b)   if, but only to that extent that, the existing shareholders of the issuer have by ordinary resolution in general meeting given a general mandate to the directors of the issuer, either unconditionally or subject to such terms and conditions as may be specified in the resolution, to allot or issue such securities or grant any offers, agreements or options which would or might require securities to be issued, allotted or disposed of, whether during the continuance of such mandate or thereafter, subject to a restriction that the aggregate number of shares allotted or agreed to be allotted must not exceed ten per cent of the existing issued share capital of the issuer.

   (4) A general mandate given under subrule(3)(b) shall only continue in force until—

      (a)   the conclusion of the first annual general meeting of the issuer following the passing of the resolution at which time it shall lapse unless, by ordinary resolution passed at that meeting, the mandate is renewed, either unconditionally or subject to conditions; or

      (b)   revoked or varied by ordinary resolution of the shareholders in general meeting, which occurs first.

   (5) For the purposes of subrule(1)(b) a “major subsidiary” has the same meaning as in subrule(2) of rule 22.

 

24.   Approval of documents

In Addition to the specific requirements set out in these Rules, the issuer shall submit to the Commission, for approval—

      (a)   copies of drafts, before they are issued, of any announcements or advertisements relating to the issue of new or further securities (other than pursuant to a capitalisation issue or a scrip dividend scheme) or any announcements or advertisements the subject matter of which may involve a change in or relate to or affect arrangements regarding trading in its registered securities (including a suspension of dealings);

      (b)   copies of drafts, before they are issued, of any documents issued in connection with takeovers, mergers or offers;

      (c)   copies of drafts, before they are issued, of any proposed amendments to its articles.

 

25.   Directors’ service contracts

The issuer shall procure that no service contract of ten years or longer duration shall be granted by the issuer or any of its subsidiaries to any director or proposed director of the issuer or to any director or proposed director of any subsidiary without the prior approval of the shareholders of the issuer in a general meeting at which the relevant director did not vote on the matter.

 

26.   Subsequent registration

The issuer shall apply for the registration of any further securities which are of the same class as securities already registered, prior to their issue, and shall not issue such securities unless it has applied for the registration of those securities.

 

27.   Proxy forms

The issuer shall send with the notice convening a meeting of holders of registered securities to all persons entitled to vote at the meeting proxy forms, with the provision for two- way voting on all resolutions intended to be proposed thereat.

 

28.   Equality of treatment

The issuer shall ensure equality of treatment for all holders of securities of the same class who are in the same position.

 

29.   Response to inquiries

The issuer shall respond promptly to any queries made of the issuer by the Commission concerning unusual movements in the price or trading volume of its registered securities or any other matters by giving such relevant information as is available to the issuer or, if appropriate, by issuing a statement to the effect that the issuer is not aware of any matter or development that is or may be relevant to the unusual price movement or trading volume of its registered securities and shall respond promptly to any inquiries made of the issuer by the Commission.

 

30.   Variation

The Commission shall be entitled to require the publication of further information by, and impose additional requirements on, the issuer, where it considers that circumstances so justify, but will allow representations by the issuer before imposing any additional requirements on it which are not imposed on registered issuers generally.

FIRST SCHEDULE

[Rule 5]

INFORMATION TO BE PROVIDED IN LETTER OF APPLICATION FOR REGISTRATION OF SECURITIES

   (1) Title page

      (a)   the name of the applicant and the date of incorporation;

      (b)   the address of the principal registered office and the address of each office at which a securities register is kept;

      (c)   the date of application and a formal request for the registration of the securities in respect of which application is made, specifying the amount, class and par value and whether they are to be fully paid;

      (d)   the estimated market value of the applicant (or total capitalisation, in the case of debt securities); and

      (e)   the estimated market capitalisation(or nominal amount in the case of debt securities) for which registration is sought.

   (2) Capitalisation

A list in tabular form of—

      (a)   the designation or title of each class of security;

      (b)   the number of securities authorised;

      (c)   the number of securities issued;

      (d)   the par value;

      (e)   the amount paid up;

      (f)   the names of directors and officers of the issuer and their respective shareholdings;

      (g)   so far as is known, or can be ascertained after reasonable inquiry, the names of substantial shareholders of the issuer and their respective shareholdings.

   (3) History and Nature of Business

A short introductory paragraph describing the general nature of the business and products of the applicant. A brief history of the issuer from inception to the date of application. A description of the business now carried on by the issuer and its subsidiaries, including principal goods and services, main markets and main sources of supply, and volume of output for the preceding three financial years and for the current financial year to the latest date available (either in physical terms or at constant prices).

   (4) Summary of earnings

A summary of earnings, on a consolidated basis if the applicant has subsidiaries, for the last three financial years, showing sales, earnings before charges for depreciation, interest and income tax, the amount of each of those charges, net income before extraordinary items, extraordinary items, net income and earnings per share.

   (5) Tabulation of Balance Sheet

A tabulation of its balance sheet for each of the last three financial years (on a consolidated basis if the company has subsidiaries). The tabulation should include a statement of the net tangible assets per share for each of the three financial years.

   (6) Employees

A statement as to the total number of persons regularly employed and, if subject to seasonal fluctuations, the maximum and minimum numbers employed during the preceding twelve months.

   (7) Subsidiaries

A tabular list of all subsidiaries showing in respect of each such company-

      (a)   the name of the company;

      (b)   a brief statement of the nature of its business and its relationship to the operations of the entire enterprise; and

      (c)   capital share issues by classes, showing the par value, amount authorised, amount issued and the amount owned by the holding company.

   (8) Dividend record

State the number of consecutive years in which dividends have been paid. State the amount of dividend (per share and in the aggregate) paid by the applicant (and its subsidiaries) for each of the three preceding years. Indicate whether dividends have been paid on a quarterly, semi- annual or annual basis. State the record date, payment date and the date of declaration with respect to each dividend paid during the past two years.

   (9) Properties

Describe briefly the general character of the properties of the applicant and its subsidiaries, including-

      (a)   location;

      (b)   land area and land use;

      (c)   number and type of buildings;

      (d)   aggregate floor area of buildings;

      (e)   whether the property is owned or leased, and if leased, state total rental paid for each of the three preceding financial years and average term of years.

   (10) Litigation

Particulars of any litigation or claims of material importance pending or threatened against the issuer or any member of a group to which the issuer belongs, or an appropriate negative statement.

   (11) Management

      (a)   the full name, residential or business address and description (being his qualification or area of expertise or responsibility) of every director or proposed director (or any such person who performs an important administrative, management or supervisory function) and particulars of the principal functions performed by each of them within the issuer and its subsidiaries, if any, if significant to the issuer and its subsidiaries, if any.

      (b)   the nature of any family relationship between the persons mentioned in (a);

      (c)   a brief account of the business experience of each of these persons during the last five years;

      (d)   indicate any other directorships held by each director or proposed director;

      (e)   state if any director or proposed director has been convicted in any criminal proceeding or has had a bankruptcy petition filed against him or any partnership in which he was a partner or anybody corporate of which he was a director.

SECOND SCHEDULE

[Rule 9]

INFORMATION TO BE CONTAINED IN PROSPECTUS

SECTION A - EQUITY SECURITIES

GENERAL INFORMATION ABOUT THE ISSUER, ITS ADVISERS AND THE PROSPECTUS

1. —

   (1) The full name, and address of the registered office, of the issuer.

   (2) A statement as follows—

   “The directors collectively and individually accept full responsibility for the accuracy of the information contained in this prospectus and confirm, having made all reasonable inquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.”

   (3) The names and addresses of the issuer’s principal bankers, sponsor, authorised representative, stockbroker, solicitors and registrars and of the solicitors to the issue.

   (4) The name, address and professional qualifications of the issuer’s auditors.

   (5) The date of incorporation.

   (6) The provisions, or a sufficient summary of the provisions, of the articles with regard to—

      (a)   any power enabling a director to vote on a proposal, arrangement or contact in which he is materially interested;

      (b)   any power enabling the directors to vote remuneration (including pension or other benefits) to themselves or any members of their body and any other provision as to the remuneration of the directors;

      (c)   borrowing powers exercisable by the directors and how such borrowing powers can be varied;

      (d)   retirement or non-retirement of directors under an age limit;

      (e)   directors’ qualification shares;

      (f)   changes in capital;

      (g)   any time limit after which entitlement to dividend lapses and an indication of the party in whose favour the time limit operates; and

      (h)   arrangements for transfer of the securities and (where permitted) any restrictions on their free transferability.

   (7) Where the prospectus includes a statement purporting to be made by an expert, a statement—

      (a)   specifying the qualifications of such expert and whether such expert has any shareholding in the issuer or any group to which the issuer belongs or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in the issuer or any such member and, if so, a full description thereof;

      (b)   that the expert has given and has not withdrawn his written consent, prior to the issue of the prospectus, to the issue of the prospectus with the expert’s statement included in the form and context in which it is in fact included; and

      (c)   of the date on which the expert’s statement was made and whether or not it was made by the expert for incorporation in the prospectus.

STATEMENT THAT APPLICATION MADE

2. A statement that application has been made to the Commission for registration of the securities.

INFORMATION ABOUT THE SECURITIES FOR WHICH REGISTRATION SOUGHT

3. —

   (1) The nature and amount of the issue including the number of securities which have been or will be created and issued and a full description of, including a summary of the terms attaching to, the securities for which listing is sought.

   (2) The following information, so far is appropriate, concerning the terms and conditions of the issue of the securities in respect of which the application for registration is made—

      (a)   the total amount of the issue and the number of securities offered, where applicable, by category;

      (b)   the issue price or offer price of each security, stating the nominal value of each security;

      (c)   the methods of payment of the issue or offer price, particularly as regards the paying-up of securities which are not fully paid;

      (d)   the procedure for the exercise of any right of pre-emption and the transferability of subscription rights;

      (e)   the period during which the issue or offer of securities will remain open after issue of the prospectus, the date and time of opening of the subscription list, and the names of the receiving bankers;

      (f)   the methods of and the time limits for delivery of the securities;

      (g)   the names, addresses and description of the persons underwriting the issue for the issuer; and

      (h)   in the case of an offer for sale of securities, the names, addresses and descriptions of the vendor(s) of the securities or, if there are more than ten vendors, such details of the ten principal vendors and a statement of the number of other vendors and particulars of any beneficial interest possessed by any director of the issuer in any securities so offered for sale.

PROFITS COVER

4. Where registration is sought for securities with a fixed income, particulars of the profits cover for payments in respect of bonds, preference shares or other fixed income securities.

NET TANGIBLE ASSETS

5. A statement of the net tangible asset backing for each class of security for which registration is sought, after making allowance for any new securities to be issued, as detailed in the prospectus.

INFORMATION ABOUT THE ISSUER’S CAPITAL

6. —

   (1) The authorised share capital of the issuer, the amount issued or agreed to be issued, the amount paid up, the nominal value and a description of the shares.

   (2) The amount of any outstanding convertible debt securities and particulars of the conditions governing, and the procedures for conversion, exchange or subscription of, such securities.

VOTING RIGHTS

7. —

   (1) The voting rights of shareholders.

   (2) If there is more than one class of share, the rights of each class of share as regards voting, dividend, capital, redemption, and the creation or issue of further shares ranking in priority to or paripassu with each class other than the lowest ranking equity.

   (3) a summary of the consent necessary for the variation of such rights.

ALTERATIONS IN CAPITAL

8. Particulars of any alterations in the capital of the issuer or any member of a group to which the issuer belongs within the two years immediately preceding the issue of the prospectus, including-

      (a)   where any such capital has been issued or is proposed to be issued as fully or partly paid up otherwise than in cash, particulars of the consideration for which the same has been or is proposed to be issued and in the latter case the extent to which they are so paid up; and

      (b)   where any such capital has been issued or is proposed to be issued for cash, particulars of the price and terms upon which the same has been or is proposed to be issued, details of any discounts or other special terms granted and (if not already fully paid) the dates when any installments are payable with the amount of all calls or installments in arrear, or an appropriate negative statement.

PARTICULARS OF ANY CAPITAL UNDER OPTION

9. Particulars of any capital of the issuer or any member of a group to which the issuer belongs which is under option, including the consideration for which the option was or will be granted and the price and duration of the option, and the name and address of the grantee, or an appropriate negative statement:

Provided that where options have been granted or agreed to be granted to all members or debenture holders or to any class thereof, or to employees under a share scheme, it shall be sufficient, so far as the names and addresses are concerned, to record that fact without giving the names and addresses of the grantees.

GENERAL INFORMATION ABOUT ACTIVITIES OF THE ISSUER AND ITS SUBSIDIARIES, IF ANY

10. —

   (1) A brief history and the general nature of the business of the issuer and its subsidiaries, if any, and, in cases where two or more activities are carried on which are material in terms of profits or losses, assets employed or any other factor, such figures and explanation as are necessary to demonstrate the relative importance of each such activity and details of the main categories of products sold and/or services performed and an indication of any significant new products and/or activities.

   (2) If the issuer and its subsidiaries, if any, trade outside Zambia a statement showing a geographical analysis of its trading operations, and where a material proportion of the assets of the issuer and its subsidiaries, if any, are situated outside Zambia, a statement giving the best practicable indication of the amount and situation of such assets and the amount of assets situated in Zambia.

   (3) If the issuer is a member of a group, a brief description of that group covering the issuer’s position within that group and, if a subsidiary, the names of and the number of shares held (directly or indirectly) by each holding company of the issuer.

   (4) Particulars of any LICENSEs, concessions, trademarks, patents or other intellectual or industrial property rights which are material in relation to the business of the issuer and its subsidiaries, if any, and, where such factors are of fundamental importance to the business or profitability of the issuer and its subsidiaries, if any, a statement regarding the extent to which the issuer and its subsidiaries, if any, are dependent on such factors.

   (5) Information concerning the policy of the issuer and its subsidiaries, if any, on the research and development of new products and processes over the past five financial years where significant.

   (6) Particulars of any interruptions in the business of the issuer and its subsidiaries, if any, which may have or have had a significant effect on the financial position in the last twelve months.

   (7) The number of people employed by the issuer and its subsidiaries, if any, and changes therein in the last financial year, if such changes are material in the context of the group with, if possible, a breakdown of persons employed by main categories of activity.

   (8) Particulars, including location, of the principal investments (if any), including such investments as new plant, factories and research and development, being made or planned by the issuer and its subsidiaries, if any.

PARTICULARS OF SUBSIDIARIES, ETC.

11. —

   (1) In regard to every subsidiary company the whole of, or a substantial proportion of, whose capital is held or intended to be held (either directly or indirectly) by the issuer, or whose profits or assets make or will make a material contribution to the figures in the accountants’ report or the next published accounts, particulars of the name, date and country of incorporation, general nature of business, issued capital and the proportion thereof held or intended to be held.

   (2) In regard to the issuer and its subsidiaries, if any, particulars of the location of the principal establishments.

FINANCIAL INFORMATION ABOUT THE ISSUER AND ITS SUBSIDIARIES, IF ANY

12. Details of Indebtedness

   (1) A report by the reporting accountants prepared in accordance with the Third Schedule to these Rules.

   (2) A statement of whether or not the accountants’ report is qualified by the reporting accountants and if so, such qualifications must be produced in full and the reasons for such qualifications given.

13. TURNOVER, ETC.

A statement as at the most recent practicable date, which must be stated, of the following on a consolidated basis—

      (a)   the total amount of any debt securities of the issuer and its subsidiaries, if any, issued and outstanding, and authorised or otherwise created but unissued, and term loans, distinguishing between guaranteed, unguaranteed, secured (whether the security is provided by the issuer or by third parties) and unsecured, or an appropriate negative statement;

      (b)   the total amount of all other borrowings or indebtedness in the nature of borrowing of the issuer and its subsidiaries, if any, including bank overdrafts and liabilities under acceptances (other than normal trade bills) or acceptance credits or hire purchase commitments, distinguishing between guaranteed, unguaranteed, secured and unsecured borrowings and debt, or an appropriate negative statement;

      (c)   all mortgages and charges of the issuer and its subsidiaries, if any, or an appropriate negatives statement; and

      (d)   the total amount of any contingent liabilities or guarantees of the issuer and its subsidiaries, if any, or an appropriate negative statement.

14. A statement showing the sales turnover figures or gross trading income of the issuer and its subsidiaries, if any, during the three financial years immediately preceding the issue of the prospectus which should contain an explanation of the method used for computation of such turnover or income and a reasonable breakdown between the more important trading activities.

FINANCIAL AND TRADING PROSPECTS

15. —

   (1) General information on the trend of the business of the issuer and its subsidiaries, if any, since the date to which the latest audited accounts of the issuer were made up.

   (2) A statement as to the financial and trading prospects of the issuer and its subsidiaries, if any for at least the current financial year, together with any material information which may be relevant thereto, including all special trade factors or risks (if any) which are not mentioned elsewhere in the prospectus and which are unlikely to be known or anticipated by the general public, and which could materially affect the profits.

   (3) Where a profit forecast appears in the prospectus the principal assumptions, including commercial assumptions, upon which it is based, must be stated and the accounting policies and calculations for the forecast must be examined and reported on by the reporting accountants and their report must be set out.

   (4) The reporting accountant, financial adviser or sponsor, in the case of a new applicant, must report in addition that they have satisfied themselves that the forecast has been stated by the directors after due and careful inquiry, and such report must be set out.

SUFFICIENCY OF WORKING CAPITAL

16. A statement by the directors that in their opinion the working capital available to the issuer and its subsidiaries, if any, is sufficient or, if not, how it is proposed to provide the additional working capital thought by the directors to be necessary.

MATERIAL ADVERSE CHANGES

17. A statement by the directors of any material adverse change in the financial or trading position of the issuer and its subsidiaries, if any, since the end of the period reported on in the accountants’ report, or an appropriate negative statement.

VALUATION REPORTS

18. In the case of a property investment or development company, or where property interests account for more than thirty per cent of the net asset value of the issuer, a valuation report on the issuer’s interests in land or buildings prepared in accordance with the Fourth Schedule to these Rules.

LITIGATION

19. Particulars of any litigation or claims of material importance pending or threatened against the issuer or any member of a group to which the issuer belongs, or an appropriate negative statement.

INFORMATION ABOUT THE ISSUER’S MANAGEMENT

20. The full name, nationality, residential or business address and description (being his qualifications or area of expertise or responsibility) of every director or proposed director.

SECRETARY

21. The full name and professional qualification, if any, of the secretary of the issuer.

REGISTERED OFFICE

22. The address of the registered office and, if different, the head office and transfer office.

DIRECTORS’ INTERESTS

23. —

   (1) A statement showing the interests (distinguishing between beneficial and non-beneficial interests) of each director and chief executive of the issuer in the equity or debt securities of the issuer or any associated corporation.

   (2) A statement showing the name, so far as is known to any director or chief executive of the issuer, of each person, other than a director or chief executive of the issuer, who is, directly or indirectly, interested in ten per cent or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the issuer or any member of a group to which the issuer belongs, and the amount of each person’s interest in such securities, together with particulars of any options in respect of such capital, or, if there are no such interests, an appropriate negative statement.

DIRECTORS’ CONTRACTS

24. —

   (1) Particulars of directors’ existing or proposed service contracts with the issuer or any member of a group to which the issuer belongs (excluding contracts expiring or determinable by the employer within one year without payment of compensation), or an appropriate negative statement.

   (2) The aggregate of the remuneration paid and benefits in kind granted to the directors of the issuer by the issuer or any member of a group to which the issuer belongs in respect of the last completed financial year under any description whatsoever.

   (3) An estimate of the aggregate remuneration payable to, and benefits in kind receivable by, the directors or any proposed directors of the issuer by the issuer or any member of a group to which the issuer belongs in respect of the current financial year under the arrangements in force at the date of the prospectus.

DIRECTORS’ INTERESTS IN CONTRACTS

25. Full particulars of any contract or arrangement subsisting at the date of the prospectus in which a director of the issuer is materially interested and which is significant in relation to the business of the issuer and its subsidiaries, if any, or an appropriate negative statement.

USE OF PROCEEDS

26. In the case of issue of new shares, an estimate of the net proceeds of the issue and details of the intended use of such proceeds.

MATERIAL CONTRACTS

27. The dates of and parties to all material contracts (not being contracts entered into in the ordinary course of business) entered into by the issuer or any member of a group to which the issuer belongs within the two years immediately preceding the issue of the prospectus together with a summary of the principal contents of such contracts and particulars of any consideration passing to or from any member of a group to which the issuer belongs.

DOCUMENTS FOR INSPECTION

28. Details of a reasonable period of time, being not less than fourteen calendar days, during which, and a place in Zambia at which, the following documents, or copies thereof, where applicable may be inspected—

      (a)   the articles of incorporation of the issuer;

      (b)   each contract disclosed pursuant to paragraphs twenty-four and thirty-seven and or, in the case of a contract not reduced into writing, a memorandum giving full particulars thereof;

      (c)   all reports, letters or other documents, balance sheets, valuations and statements by any expert any part of which is extracted or referred to in the prospectus;

      (d)   a written statement signed by the reporting accountants setting out the adjustment made by them in arriving at the figures shown in their report and giving the reasons therefor;

      (e)   the audited accounts of the issuer or, in the case of a group, the consolidated audited accounts of the issuer and its subsidiaries for each of the two financial years immediately preceding the issue of the prospectus.

SECTION B - DEBT SECURITIES

GENERAL INFORMATION ABOUT THE ISSUER, ITS ADVISERS AND THE PROSPECTUS

29. —

   (1) The full name and nationality of the issuer.

   (2) A statement as follows-

“The directors collectively and individually accept full responsibility for the accuracy of the information contained in this prospectus and confirm, having made all reasonable inquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.”

   (3) The names and addresses of the issuer’s principal bankers, sponsor, authorised representative, stockbroker, solicitors and registrars and of the solicitors to the issue.

   (4) The name, address and professional qualifications of the issuer’s auditors;

   (5) The date of incorporation;

   (6) Where the prospectus includes a statement purporting to be made by an expert, a statement—

      (a)   specifying the qualifications of such expert and whether such expert has any shareholding in the issuer or any member of a group to which the issuer belongs or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in the issuer or any member of a group to which the issuer belongs and, if so, a full description thereof;

      (b)   that the expert has given and has not withdrawn his written consent, prior to the issue of the prospectus, to the issue of the prospectus with the expert’s statement included in the form and context in which it is in fact included; and

      (c)   of the date on which the expert’s statement was made and whether or not it was made by the expert for incorporation in the prospectus.

STATEMENT THAT APPLICATION MADE

30. A statement that application has been made to the Commission for the registration of the securities.

ESTIMATED EXPENSES OF ISSUE

31. The estimated amount of the expenses of the issue and of the application for listing and by whom the same are payable.

ESTIMATED NET PROCEEDS OF ISSUE

32. An estimate of the net proceeds of the issue and a statement as to how such proceeds are intended to be applied.

TERMS AND CONDITIONS OF ISSUE

33. A description of or the text of the terms and conditions of the issue containing—

      (a)   the nominal amount of the issue or if this amount is not fixed, a statement to that effect, the nature and number of the debt securities and the denomination(s);

      (b)   a summary of the rights conferred upon holders and particulars of the security;

      (c)   except in the case of continuous issues, the issue price (or if different, offer price) and redemption prices and the nominal interests rate and if floating, how is it calculated; if several interest rates are provided for, an indication of the conditions for changes in the rate; if in any issue a discount is allowed or a premium is payable, a statement describing this; if any expenses of the issue are specifically charged to subscribers or purchasers, a statement describing this;

      (d)   details of the method of payment of the issue price (or if different, the offer price) including a description of any installment arrangement;

      (e)   details of the arrangements for the amortisation or early redemption of the issue, including procedures to be adopted;

      (f)   the names and addresses of the paying agent(s) and any registrar and transfer agent(s) for the debt securities in Zambia;

      (g)   details of the arrangements for transfer of the securities (if not in bearer form);

      (h)   details of the following time limits;

      (i)   final repayment date and early repayment dates, specifying whether exercisable at the issuer’s or the holder’s option;

      (ii)   the date from which interest accrues and the interest payments fall due; and

      (iii)   prescription period for claims for payment of interest and repayment of principal;

      (iv)   procedures and time limits for delivery of the debt securities, whether there will be temporary documents of title and, if so, the procedures for the delivery and exchange thereof; and

      (i)   except in the case of continuous issues, an indication of yield and the method whereby that yield is calculated should also be described in summary form.

LEGAL INFORMATION

34. The following legal information—

      (a)   an indication of the resolutions, authorisation and approvals by virtue of which debt securities have been or will be created and/or issued and of the number of debt securities which have been or will be created and/or issued, if predetermined;

      (b)   the nature and scope of the guarantees, sureties, and commitments (if any) intended to ensure that the issue will be duly serviced with regard to both the principal of and the interest on the debt securities and an indication of the places where the public may have access to copies of such guarantees, sureties and commitments;

      (c)   details of the trustee, fiscal agent or any other representative for the debt securities holders as a whole, the name and function or description and head office of such representative of the debt securities holders, the conditions under which the representative may be replaced together with an indication of where the public may inspect copies of the documents detailing how the representative is to act;

      (d)   a description of any subordination of the issue to other debts of the issuer already incurred or to be incurred;

      (e)   an indication of any legislation under which the debt securities have been created, the governing law and of the competent courts in the event of litigation;

      (f)   details of any restrictions on the free transferability of the debt securities (e.g. provisions requiring transfers to be approved); and

      (g)   details of any material guarantees or covenants relating to borrowings.

ALTERATIONS IN CAPITAL

   35. Particulars of any alterations in the capital of the issuer or any member of a group to which the issuer belongs within the two years immediately preceding the issue of the prospectus, including—

      (a)   where any such capital has been issued or is proposed to be issued as fully or partly paid up otherwise than in cash, particulars of the consideration for which the same has been or is proposed to be issued and in the latter case the extent to which they are so paid up, and

      (b)   where any such capital has been issued or is proposed to be issued for cash, particulars of the price and terms upon which the same has been or is proposed to be issued, details of any discounts or other special terms granted and (if not already fully paid) the dates when any installments are payable with the amount of all calls or installments in arrear, or an appropriate negative statement.

PARTICULARS OF ANY CAPITAL UNDER OPTION

36. Particulars of any capital of the issuer or any member of a group to which the issuer belongs which is under option, including the consideration for which the option was or will be granted and the price and duration of the option, and the name and address of the grantee, or an appropriate negative statement:

Provided that where options have been granted or agreed to be granted to all the members or debenture holders or to any class thereof, or to employees under a share scheme, it shall be sufficient, so far as the names and addresses are concerned, to record that fact without giving the names and addresses of the grantees.

OWN SHARES

37. Number, book value and nominal value or, in the absence of a nominal value, the accounting par value of any of its own shares which the issuer or any of its subsidiaries (being a company) has acquired and is holding, if such shares do not appear as a separate item in the balance sheet.

GENERAL INFORMATION ABOUT ACTIVITIES OF THE ISSUER AND ITS SUBSIDIARIES, IF ANY

38. —

(1) The general nature of the business of the issuer and its subsidiaries, if any, and, in cases where two or more activities are carried on which are material in terms of profits or losses, assets employed or any other factor, such figures and explanation as are necessary to demonstrate the relative importance of each such activity and details of the main categories of products sold and/or services performed and an indication of any significant new products and/or activities. If the issuer and its subsidiaries, if any, trade outside Zambia a statement showing a geographical analysis of its trading operations. Where a material proportion of the assets of the issuer and its subsidiaries, if any, are situated outside Zambia, a statement giving the best practicable indication of the amount and situation of such assets and the amount of the assets situated in Zambia.

   (2) If the issuer is a member of a group, a brief description of that group covering the issuer’s position within that group and, if a subsidiary, the names of and the number of shares held (directly or indirectly) by each holding company of the issuer.

   (3) Particulars of any LICENSEs, concessions, trademarks, patents or other intellectual or industrial property rights which are material in relation to business of the issuer and its subsidiaries, if any and, where such factors are of fundamental importance to the business or profitability of the issuer and its subsidiaries, if any, a statement regarding the extent to which the issuer and its subsidiaries, if any, are dependent on such factors.

   (4) Information concerning the policy of the issuer and its subsidiaries, if any, on the research and development of new products and processes over the past three financial years where significant.

   (5) particulars of any interruptions in the business of the issue and its subsidiaries, if any, which may have or had a significant effect on the financial position in the last twelve months.

   (6) The number of people employed by the issuer and its subsidiaries, if any, and changes therein in the last financial year, if such changes are material in the context of the issuer and its subsidiaries, if any, with, if possible, a breakdown of persons employed by main categories of activity.

   (7) Particulars, including location, of the principal investments (if any), including such investments as new plant, factories and research and development, being made or planned by the issuer and its subsidiaries, if any.

PARTICULARS OF MATERIAL SUBSIDIARIES

39. —

   (1) In regard to every material subsidiary, particulars of the name, date and country of incorporation, general nature of business, issued capital and the proportion held or intended to be held by the issuer.

   (2) In regard to the issuer and every material subsidiary, particulars of the location of the principal establishments.

FINANCIAL INFORMATION ABOUT THE ISSUER AND ITS SUBSIDIARIES, IF ANY, AND PROSPECTS

40. A consolidated capitalisation statement and indebtedness statement for the issuer made up to a recent date acceptable to the Commission (normally not earlier than three months prior to the issue of the prospectus) giving information on short, medium and long-term debt (distinguishing between actual and contingent liabilities and including details of any debt securities issued and, if appropriate, the terms and conditions of any conversion, exchange or subscription rights) and shareholders’ equity (including an indication of authorised and issued share capital by class, if appropriate, and the amount paid-up) duly adjusted to reflect the issue of the debt securities for which registration is sought accompanied by particulars of any material changes since that date, or an appropriate negative statement.

41. A statement showing the sales turnover figures or gross trading income of the issuer and its subsidiaries, if any, during the three financial years immediately proceeding the issue of the prospectus which should contain an explanation of the method used for computation of such turnover or income and a reasonable breakdown between the more important trading activities.

FINANCIAL AND TRADING PROSPECTS

42. —

   (1) General information on the trend of the business of the issuer and its subsidiaries, if any, since the date to which the latest audited accounts of the issuer were made up.

   (2) A statement as to the financial and trading prospects of the issuer and its subsidiaries, if any, for at least the current financial year, together with any material information which may be relevant thereto, including all special trade factors or risks (if any) which are not mentioned elsewhere in the prospectus and which are unlikely to be known or anticipated by the general public and which could materially affect the profits.

   (3) Where a forecast appears in the prospectus the principal assumptions, including commercial assumptions, upon which it is based, must be stated, the accounting policies and calculations for the forecast must be examined and reported on by the reporting accountants and their report must be set out. The reporting accountants, in the case of a new applicant, must report in addition that they have satisfied themselves that the forecast has been stated by the directors after due and careful inquiry, and such report must be set out.

   (4) Particulars of the profits cover for interest payments and of the net tangible assets.

ACCOUNTANTS’ REPORTS

43. —

   (1) A report by the reporting accountants prepared in accordance with the Third Schedule to these Rules. If more than nine months have elapsed since the date to which the latest published audited accounts of the issuer were made up, an interim financial statement covering at least the first six months must be included in the prospectus or appended to it. If the interim financial statement is unaudited, this fact must be stated.

   (2) A statement of whether or not the accountants’ report is qualified by the reporting accountants and if so, such qualification must be produced in full and the reasons for such qualification given.

MATERIAL ADVERSE CHANGES

44. A statement by the directors of any material adverse change in the financial or trading position of the issuer and its subsidiaries, if any, since the end of the period reported on in the accountants’ report, or an appropriate negative statement.

VALUATION REPORTS

45. In the case of a property investment or development company, or where property interests account for more than thirty per cent of the net asset value of the issuer, a valuation report on the issuer’s interests in land or buildings prepared in accordance with the Fourth Schedule to these Rules.

LITIGATION

46. Particulars of any litigation or claims of material importance pending or threatened against the issuer or any member of a group to which the issuer belongs, or an appropriate negative statement.

 

INFORMATION ABOUT THE ISSUER’S MANAGEMENT

47. The full name, residential or business address and description (being his qualifications or area of expertise or responsibility) of every director or proposed director.

SECRETARY

48. The full name and professional qualification, if any, of the secretary of the issuer.

REGISTERED OFFICE

49. The address of the registered office and, if different, the head office and transfer office.

DIRECTORS’ INTERESTS

50. —

   (1) A statement showing the interests (distinguishing between beneficial and non- benefincial interests) of each director and chief executive of the issuer in the equity or debt securities of the issuer or any associated corporation

   (2) A statement showing the name, so far as is known to any director or chief executive of the issuer, of each person, other than a director or chief executive of the issuer, who is, directly or indirectly, interested in ten per cent or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the issuer or any member of a group to which the issuer belongs and the amount of each person’s interest in such securities, together with particulars of any options in respect of such capital, or, if there are no such interests, an appropriate negative statement.

DIRECTORS’ INTERESTS IN CONTRACTS

51. Full particulars of any contract or arrangement subsisting at the date of the prospectus in which a director of the issuer is materially interested and which is significant in relation to the business of the issuer and its subsidiaries, if any, or an appropriate negative statement.

CONTRACTS PERTAINING TO THE ISSUE

52. The dates of and parties to all documents pertaining to the issue entered into by the issuer or any member of a group to which the issue belongs within the two years immediately preceding the issue of the prospectus, together with a summary of the principal contents of such contracts.

AVAILABILITY OF REPORTS

53. Details of where annual and any interim reports are available and how often interim reports are published.

DOCUMENTS FOR INSPECTION

54. Details of a reasonable period of time (being not less than fourteen calendar days) during which, and a place in Zambia at which, the following documents (or copies thereof) where applicable may be inspected—

      (a)   the articles of the issuer;

      (b)   any trust deed, fiscal agency agreement or other document constituting the debt securities;

      (c)   all reports, letters or other documents, balance sheets, valuations and statements by any expert a part of which is extracted or referred to in the prospectus;

      (d)   a written statement signed by the reporting accountants setting out the adjustments made by them in arriving at the figures shown in their report and giving the reasons therefor;

      (e)   the audited accounts of the issuer or, in the case of a group, the consolidated audited accounts of the issuer and its subsidiaries for each of the two financial years immediately preceding the issue of the prospectus.

THIRD SCHEDULE

ACCOUNTS REPORTS PRELIMINARY

1. This Schedule sets out the detailed requirements for accountants’ reports on the profits and losses, assets and liabilities of, and other financial information on, an issuer which must be contained in a prospectus.

REPORTING ACCOUNTANTS

2. Accountants’ reports must be prepared by professional accountants who are qualified for appointment as auditors of a company and who are independent of the issuer.

BASIC CONTENTS

3.An accountants’ report must include—

Three year history of results

   (1) The results of the issuer or, if the issuer is a holding company, the consolidated results of the issuer and its subsidiaries in respect of each of the three financial years immediately preceding the issue of the prospectus or such shorter period as may be acceptable to the Commission.

   (2) The results of any business or subsidiary acquired, agreed to be acquired or proposed to be acquired since the date to which the latest audited accounts of the issuer have been made up (on the same basis, where the subsidiary is itself a holding company, as in (1) above) in respect of each of the three financial years immediately preceding the issue of the prospectus or in respect of each of the financial years since commencement of such business or the incorporation of such subsidiary (as the case may be) if this occurred less than three years prior to such issue, or such shorter period as may be acceptable to the Commission.

   (3) The report on results under paragraph (1) and (2) must disclose separately the following information—

      (a)   turnover;

      (b)   profit (or loss) before taxation and extraordinary items, including the share of the profit (or loss) of associated companies, with separate disclosure of any items included therein which are exceptional because of size or incidence;

      (c)   taxation on profits (Zambian and foreign) in each case indicating the basis of computation, with separate disclosure of the taxation on its shares of associated companies’ profits;

      (d)   profit (or loss) attributable to minority interests;

      (e)   profit (or loss) attributable to shareholders before extraordinary items;

      (f)   extraordinary items (net of taxation);

      (g)   profit (or loss) attributable to shareholders; and

      (h)   rates of dividend paid or proposed on each class of shares (with particulars of each such class) and amounts absorbed thereby and any waivers of dividend except that the accountants’ report need not disclose this information if the accountants’ report relates to an issue of debt securities.

ASSETS AND LIABILITIES

   (4) The assets and liabilities (including contingent liabilities) of the issuer and, if the issuer is itself a holding company, the consolidated assets and liabilities of the issuer and its subsidiaries in each case as at the date to which the latest audited accounts of the issuer have been made up.

   (5) The assets and liabilities (including contingent liabilities) of any business or subsidiary acquired, agreed to be acquired or proposed to be acquired since the date to which the latest audited accounts of the issuer have been made up (on the same basis, where the subsidiary is itself a holding company, as in (3) above) in each case as at the date to which the latest audited accounts of such business or subsidiary (as the case may be) have been made up.

OTHER MATTERS

   (6) The earnings per share and the basis of computation in respect of each of the financial years referred to in (1) and (2) above except that the accountants’ report need not include this information if, in the opinion of the reporting accountants, such information is not meaningful having regard to the purpose of the accountants’ report or if the accountants’ report relates to an issue of debt securities.

   (7) Transfers to and from any reserves arising on—

      (a)   consolidation or acquisition (i.e. the write off of good will/establishment of a capital reserve);

      (b)   the revaluation of assets; or

      (c)   the translation of accounts denominated in foreign currencies, if those transfers are not reflected in the results of each of the financial years referred to in (1) and (2) above.

   (8) A statement of the indebtedness as at the end of the period reported on showing, as regards bank loans and overdrafts and separately as regards other borrowings of the issuer (or of the issuer and its subsidiaries, including any company which will become a subsidiary by reason of any acquisition falling within paragraphs (2) and (4) of item three, the aggregate amounts repayable—

      (a)   on demand or within a period not exceeding one year;

      (b)   within a period of more than one year but not exceeding two years;

      (c)   within a period of more than two years but not exceeding five years.

   (9) The details of the principal accounting policies which have been applied in respect of the period reported on.

   (10) A statement of any significant subsequent events which have occurred to any business or company or within any group covered by the accountants’ report since the end of the period reported on or, if there are not such events, a statement of that fact.

   (11) Any capital commitments.

   (12) Any other matters which appear to the reporting accountants to be relevant having regard to the purpose of the accountants’ report.

4. In all cases the accountants’ report must—

      (a)   state whether or not the accounts for the period reported on have been audited and, if so, by whom; and

      (b)   state whether or not any audited accounts have been made up since the end of the last financial period reported on;

      (c)   express an opinion as to whether or not the relevant information given, for the purposes of the accountants’ report, a true and fair view of the results for the period reported on and of the assets and liabilities at the end of that period;

      (d)   state that it has been prepared in accordance with item six below.

      (e)   name the reporting accountants; and

      (f)   be dated.

DISCLOSURE

5. The information to be disclosed in respect of items three and four must conform to the accounting standards and guidelines formulated by an accounting body approved by the Commission.

ACCOUNTING STANDARDS

6. The financial history of results and the statement of assets and liabilities included in the accountants’ report must be drawn up in conformity with accounting standards and guidelines formulated by an accounting body approved by the Commission.

7. Any significant departure from such accounting standards must be disclosed and explained and, if it is both relevant and practical, the financial effects of such departure quantified.

8. The relevant standards will be those current in relation to the last financial year reported on and, wherever possible, appropriate adjustments should be made to show profits for all periods in accordance with such standard.

STATEMENT OF ADJUSTMENTS

9. —

   (1) In preparing the accountants’ report, the reporting accountants (if any) as are in their opinion appropriate for the purposes of the accountants’ report and state therein that all adjustments considered necessary have been made, or (where appropriate) that no adjustments were considered necessary. Where adjustments are made, a written statement (the statement of adjustments) must be made available for public inspection, and should be signed by the reporting accountants (see subparagraph (d) of paragraph 28 and sub-paragraph (d) of paragraph 54 of the Second Schedule).

   (2) The statement of adjustments must set out, for each of the years reported upon, each adjustment made and be sufficiently detailed so as to reconcile the figures in the accountants’ report with the corresponding figures in the audited accounts and must give the reasons therefor.

OTHER REPORTS

10. Where the reporting accountants refer to reports, confirmations or opinions of valuers, accountants or other experts, the names, addresses and professional qualifications of such other persons or firms should be stated in the report. In any case, the prospectus will be required to include a statement that such other persons or firms have given and have not withdrawn their written consent to its issue with the inclusion of such references in the form and context in which they are included.

QUALIFIED REPORTS

11. Where the reporting accountants qualify their accountants’ report, they should refer to all material matters about which they have reservations. All reasons for the qualifications should be given and its effect quantified if this is both relevant and practical. A qualified accountants’ report in respect of a new applicant may be acceptable where the qualification does not relate to a matter of significance to investors but will not be acceptable where the qualification does relate to a matter of significance to investors.

12. It is emphasised that these requirements are not exhaustive and that further information may be required or the required information varied, by the Commission where it considers it necessary. In cases of doubt or difficulty the reporting accountants should consult the Commission through the issuer’s authorised representative.

FOURTH SCHEDULE

PROPERTY VALUATION REPORTS

PRELIMINARY

1. Valuations of and information on all the issuer’s interests in land or buildings (“properties”) are required to be included in a prospectus issued by a new applicant.

BASIC CONTENTS

2. Valuation reports shall contain all material details of the basis of valuation, which must be prepared in conformity with the standards and guidelines adopted or approved by the Surveyors’ Institute of Zambia.

3. A valuation report shall contain the following information—

   (1) a description of each property including—

      (a)   an address sufficient to identify the property, which should generally include the postal address and such further designation as is registered with the appropriate government authorities in the jurisdiction in which the property is located;

      (b)   a brief description (e.g. whether land or building, approximate area, etc.);

      (c)   the existing use (e.g. shops, offices, factories, residential etc.);

      (d)   the ground rent;

      (e)   a summary of the terms of tenants’ leases or under leases (including repairing obligations, were material);

      (f)   the approximate age of buildings;

      (g)   the terms of tenure;

      (h)   the terms of any intra-group lease granted by a holding company to a subsidiary on property occupied by the group (identifying the properties);

      (i)   the capital value in existing state at the effective date as at which the property was valued;

      (j)   the current planning or zoning use;

      (k)   the options or rights of pre-emption concerning or affecting the property; and

      (l)   any other matters which may materially affect the value.

   (2) Where the property is not in the process of being developed, details of rentals of the property including—

      (a)   the existing monthly rental if the property is wholly or partly let together with the amount and a description of any outgoings or disbursements from the rent, and, if materially different, the estimated current monthly market rental obtainable, on the basis that the property were available to let on the effective date as at which the property was valued;

      (b)   a summary of any rent review provisions, where material; and

      (c)   the amount of vacant space, where material.

   (3) Where the property is in the process of being developed the following additional details, where available—

      (a)   details of development potential and whether architectural plans have been approved or planning consent has been obtained and whether any conditions have been imposed in respect of such approval;

      (b)   any material restrictions on development including building covenants and time limits for completion of the development;

      (c)   existing stage of development;

      (d)   estimated completion date;

      (e)   estimated cost of carrying out the development or (where part of the development has already been carried out) the estimated cost of completing the development;

      (f)   estimated capital value in existing state at the effective date as at which the property was valued;

      (g)   estimated capital value after completion;

      (h)   any material special or general conditions affecting the development of the property;

      (i)   any conditions imposed as to construction of roadways, pathways, drainage, sewage and other facilities or services for public use, if material;

      (j)   any sales arrangements and/or letting arrangements existing at the effective date as at which the property was valued; and

      (k)   any construction costs incurred up to the effective date as at which the property was valued.

   (4) Where the property is held for future development purposes the following additional details, where available—

      (a)   details of development potential and whether architectural plans have been approved or planning consent has been obtained and whether any conditions have been imposed in respect of such approval;

      (b)   any material special or general conditions affecting the development of the property including building covenants and time limits for completion or the development; and

      (c)   any conditions imposed as to construction of roadways, pathways, drainage, sewage and other facilities or services for public use, if material.

   (5) A classification of the property according to the purpose for which it is held. The acceptable categories are—

      (a)   property held for development;

      (b)   property held for investment;

      (c)   property held for owner occupation; and

      (d)   property held for sale.

   (6) details of any agreement or proposals as to any proposed transaction regarding the property between the issuer and any other member of a group to which the issuer belongs;

   (7) the name of the valuer, his address and professional qualification;

   (8) the effective date as at which the property was valued and the date of the valuation; and

   (9) such other information as the Exchange may require.

EFFECTIVE DATE

4. The effective date as at which the property was valued must not be more than three months before the date on which the prospectus is issued and if such effective date is not the same as the end of the last period reported on by the reporting accountants (see the Third Schedule), it will be necessary for the prospectus to include a statement reconciling the valuation figure included in the balance sheet as at the end of that period.

INDEPENDENCE OF VALUER

5. Unless dispensation is obtained from the Exchange, all valuations of properties must be prepared by an independent qualified valuer.

SECURITIES (ACCOUNTING AND FINANCIAL REQUIREMENTS) RULES

[Section 45]

Arrangement of Rules

   Rule

PART I
PRELIMINARY

   1.   Title

   2.   Interpretation

   3.   Application

PART II
ACCOUNTING RECORDS

   4.   Duty to keep accounting records

   5.   Reconciliation of customer money

   6.   Records to be up to date

   7.   Audit trail

   8.   Conformity with accounting standards

   9.   Retention of records

   10.   Inspection of records

   11.   Exchange may impose additional requirements on members

PART III
FINANCIAL STATEMENTS

   12.   Duty to prepare annual financial statements

   13.   Balance sheet to give a true and fair view

   14.   Profit and loss account to give a true and fair view

   15.   Form and content of financial statements

   16.   Licensee to obtain auditor’s report etc.

   17.   Annual financial statements to be submitted to Commission

   18.   Contents of auditor’s report

   19.   Qualified reports

PART IV
CUSTOMER MONEY

   20.   Application

   21.   Customer money

   22.   Duty to segregate

   23.   Duty to keep customer money safe

   24.   Customer money to be held on trust

   25.   Accounting for and use of customer money

   26.   Customer bank accounts

   27.   Payment out of a customer bank account

PART V
FINANCIAL RESOURCES

   28.   Minimum net capital

   29.   Minimum liquidity margin

   30.   Duty of licensed dealer

   31.   Interpretation

PART VI
APPOINTMENT OF AUDITORS

   32.   Auditor required

   33.   Qualification for appointment as auditor

   34.   Ineligibility on ground of lack of independence

   35.   Engagement letters

   36.   Powers and duties of auditors

   37.   Notification to Commission

   38.   Resignation or removal of auditors

PART VII
OFFENCES

   39.   Offences

      SCHEDULE

[Rules by the Securities and Exchange Commission]

SI 163 of 1993,

SI 152 of 1995.

PART I
PRELIMINARY

 

1.   Title

These Rules may be cited as the Securities (Accounting and Financial Requirements) Rules.

 

2.   Interpretation

In these Rules, unless the context otherwise requires—

“auditor”, in relation to a licensee, means the person appointed by the licensee to be his auditor for the purpose of these Rules;

“customer bank account” means a bank account established for the purposes of rule 22;

“financial year”, in relation to a licensee, means—

      (a)   the period of twelve months beginning with the day on which the licensee commences to carry on the business to which the LICENSE relates; and

      (b)   each subsequent period of twelve months beginning with the day following the day as at which an annual balance sheet of the licensee is prepared for the purposes of these Rules;

“licensee” means a dealer or investment adviser, as the case may be, who is licensed under Part IV of the Act, and

“licensed dealer” shall be construed accordingly;

“licensed bank” means a bank registered under the Banking and Financial Services Act, or licensed or registered under any Act amending or replacing that Act;

“money” includes any form of money, whether represented by a cheque, or other payable order, or otherwise; and

“securities exchange” means a securities exchange established and operated by a company licensed to do so under the Act.

 

3.   Application

These Rules apply in relation to all dealers and investment advisers who are licensed under Part IV of the Act.

PART II
ACCOUNTING RECORDS

 

4.   Duty to keep accounting records

   (1) A licensee shall, in respect of his securities business, keep accounting records which are sufficient to show and explain the licensee’s transactions (whether effected on his own behalf or on behalf of others) and shall be such as to—

      (a)   disclose with reasonable accuracy, at any time, the financial position of the licensee at that time;

      (b)   demonstrate whether or not the licensee is at that time complying with any requirements of or made under Part V of these Rules; and

      (c)   enable the licensee to prepare a balance sheet and a profit and loss account as at any time and which comply with the requirements of these Rules.

   (2) The accounting records shall in particular contain—

      (a)   entries from day to day of all sums of money received and expended by the licensee, and the matters in respect of which the receipt and expenditure takes place;

      (b)   a record of all assets and liabilities of the licensee including any commitments or contingent liabilities;

      (c)   entries from day to day of all purchases and sales of securities by the licensee distinguishing those which are made by the licensee on his own account and those which are made by the licensee on behalf of others;

      (d)   entries from day to day of the receipt and dispatch of documents of title, or documents evidencing title, to securities which are in possession or control of the licensee;

      (e)   entries from day to day of—

      (i)   all money which is paid into or out of a customer bank account maintained for the purposes of these Rules;

      (ii)   receipts and payments of customer money not passed through such a customer bank account, identifying the persons to whom each such receipt or payment relates;

      (f)   a record of—

      (i)   balances on individual customer bank accounts;

      (ii)   balances with individual customers stating the name of each customer and the amount held or received for that customer; and

      (iii)   reconciliations made pursuant to rule five; and

      (g)   details of all securities—

      (i)   which are the property of the licensee, showing by whom they are held and whether, if held otherwise than by the licensee himself, they are so held as collateral against loans or advances; and

      (ii)   which are not the property of the licensee but for which the licensee is accountable, showing by whom and for whom they are held distinguishing those which are deposited with a third party whether as security for loans or advances made to the licensee or any related person or for any other purpose.

 

5.   Reconciliation of customer money

   (1) A licensee shall, at least once every two months, reconcile the balance on each customer bank account (as recorded by the licensee) with the balance on that account (as set out on the statement issued by the bank).

   (2) Where a customer bank account contains the money of more than one customer a licensee shall, in addition to the reconciliation made under sub-rule (1), at least once every two months reconcile the balance on that account with the total of the credit balances in respect of each customer (both totals as recorded by the licensee).

   (3) Where any difference arises on reconciliation under sub-rule (1) or (2), the licensee shall correct it forthwith unless the difference arises solely as a result of timing differences between the accounting systems of the relevant bank and of the licensee.

 

6.   Records to be up to date

The obligations under these Rules are continuing obligations and continuous performance of them is required so as to ensure that records are updated daily.

 

7.   Audit trail

   (1) Information required by these Rules to be recorded shall be recorded in such a way as to enable a particular transaction to be identified at any time and traced through from initiation of the order to final settlement.

   (2) All records shall be arranged, filed, indexed and cross referenced so as to permit prompt access to any particular record.

 

8.   Conformity with accounting standards

The accounting records required to be kept by a licensee shall conform with statements of standard accounting practice issued by the Zambian Institute of Certified Accountants.

 

9.   Retention of Records

A licensee shall preserve the accounting records which it is required to keep under rule four for six years from the date on which they are made.

 

10.   Inspection of records

Accounting records which are required to be kept under rule four shall, at any time during the period in which they are required to be preserved, be produced to the Commission, or to any person with the authority of the Commission, on demand at such reasonable time and place as may be specified by the Commission or that person.

 

11.   Exchange may impose additional requirements on members

Nothing in this Part (or in Part III) shall prevent a licensed securities exchange from imposing on licensees who are members of the exchange any further obligations or requirements which it thinks necessary with respect to—

      (a)   the keeping of accounts, books and records;

      (b)   the making of periodic financial reports to the exchange in the form and manner required by the exchange;

      (c)   the audit of accounts; or

      (d)   the information to be given in reports by auditors.

PART III
FINANCIAL STATEMENTS

 

12.   Duty to prepare annual financial statements

A licensee shall, in respect of his securities business, prepare for each of his financial years annual financial statements which shall consist of—

      (a)   a balance sheet as at the last day of the financial year;

      (b)   a profit and loss account for the financial year.

 

13.   Balance sheet to give a true and fair view

The balance sheet shall give a true and fair view of the state of affairs of the licensee as at the end of the financial year.

 

14.   Profit and loss account to give a true and fair view

The profit and loss account shall give a true and fair view of the profit and loss of the licensee for the financial year.

 

15.   Form and content of financial statements

   (1) The financial statements of a licensee shall comply with the provisions of the Schedule (so far as applicable) with respect to the form and content of the balance sheet, the profit and loss account and any additional information to be provided by way of notes to the financial statements.

   (2) Where compliance with the provisions of the Schedule, and the other provisions of these Rules as to the matters to be included in the licensee’s balance sheet or profit and loss account or in notes to them, would not be sufficient to give a true and fair view, the necessary additional information shall be given in the balance sheet or profit and loss account or in a note to them.

   (3) If in special circumstances compliance with any of these provisions is inconsistent with the requirements to give a true and fair view, the licensee shall depart from that provision to the extent necessary to give a true and fair view.

   (4) If the licensee departs under sub-rule (3) from any such provision, particulars of the departure, the reasons for it and its effect shall be given in a note to the financial statements.

 

16.   Licensee to obtain auditor’s report, etc.

   (1) A licensee shall submit its annual financial statements to its auditor for audit and shall obtain an auditor’s report thereon which report shall comply with the requirements of rule 18.

   (2) A licensee shall submit his auditor’s report to the Commission together with—

      (a)   the annual financial statements in accordance with rule 17; and

      (b)   confirmation in writing that he has complied with each and every one of these Rules with which he is required to comply and such further information or confirmation as the Commission may by rules require from time to time.

   (3) Where the auditor’s report is qualified on the grounds of the auditor’s uncertainty as to the completeness or accuracy of the accounting records, that report shall when submitted by the licensee to the Commission be accompanied by a written document (signed in the case of a company, by two directors, and in the case of an individual, by the licensee) stating—

      (a)   whether all the accounting records of the licensee have been made available to the auditor for the purposes of his audit;

      (b)   whether all transactions undertaken by the licensee have been properly reflected and recorded in the licensee’s accounting records; and

      (c)   whether all other records of the licensee and related information have been made available to the auditor.

 

17.   Annual financial statements to be submitted to Commission

Each financial year a licensee shall submit his audited annual financial statements to the Commission within four months after the end of the financial year to which the annual financial statements relate.

 

18.   Contents of auditor’s report

   (1) The auditor’s report shall be addressed to the Commission and shall state whether the annual financial statements of the licensee have been audited in accordance with approved auditing standards.

   (2) The auditor’s report shall also state whether in the opinion of the auditor—

      (a)   the annual financial statements of the licensee have been properly prepared in accordance with these Rules;

      (b)   in the case of the balance sheet, a true and fair view is given of the state of affairs of the licensee as at the end of the financial year;

      (c)   in the case of the profit and loss account, a true and fair view is given of the profit or loss of the licensee for the financial year;

      (d)   the licensee has, throughout the financial year, kept proper accounting records in accordance with the requirements of these Rules;

      (e)   the licensee has, throughout the financial year, kept customer money properly segregated in accordance with Part IV;

      (f)   the balance sheet and the profit and loss account are in agreement with the licensee’s accounting records;

      (g)   he has obtained all the information and explanations which, to the best of his knowledge and belief, are necessary for the purposes of his audit;

      (h)   the licensee has maintained throughout the financial year systems adequate to enable him to identify documents of title, or documents evidencing title, to securities held in safekeeping for the licensee’s customers in accordance with rule 29 of the Securities (Conduct of Business) Rules, 1993; and

      (i)   the licensee was in compliance with the requirements of rule 29 of the Securities (Conduct of Business) Rules, 1993 as at the date on which the balance sheet was prepared.

 

19.   Qualified reports

   (1) If the auditor is of the opinion that one or more of the requirements of rule 18 have not been met, he shall state that fact in his report and shall specify the relevant requirements and the respects in which they have not been met.

   (2) If the auditor fails to obtain all the information and explanations which, to the best of his knowledge and belief, are necessary for the purposes of his audit, he shall state that fact in his report.

   (3) If the auditor is unable to form an opinion as to whether one or more of the requirements of rule 18 have been met, he shall state that fact in his report and shall specify those requirements and give the reasons why he has been unable to form an opinion.

PART IV
CUSTOMER MONEY

 

20.   Application

This Part applies to any customer money held or received by a licensee in the course of carrying on securities business.

 

21.   Customer money

For the purposes of these Rules customer money is money of any currency which, in the course of carrying on securities business, a licensee holds or receives on behalf of a customer or which a licensee owes to a customer.

 

22.   Duty to segregate

A licensee shall pay all customer money coming into his hands for or from a customer into a specially created customer bank account which is segregated from any account holding money belonging to the licensee.

 

23.   Duty to keep customer money safe

Customer money, unless paid out to or for a customer, must be kept in an account at a licensed bank on trust for the customer.

 

24.   Customer money to be held on trust

Customer money shall be held by the licensee on trust for the respective customers for whom that customer money is received or held according to their respective shares in it.

 

25.   Accounting for and use of customer money

A licensee shall account properly and promptly for customer money and, in particular, shall ensure that—

      (a)   customer money and other money do not become mixed;

      (b)   the licensee can at all times be sure how much customer money stands to the credit of each customer; and

      (c)   money belonging to one customer is not used for another customer.

 

26.   Customer bank account

A licensee who receives or holds customer money shall open one or more customer bank accounts with a licensed bank.

 

27.   Payment only of a customer bank account

   (1) Subject to sub-rule (2), money may be withdrawn from a customer bank account only if—

      (a)   it is not customer money;

      (b)   it is properly required for payment to or on behalf of a customer; or

      (c)   it is properly transferred to another customer bank account or into a bank account in the customer’s own name.

   (2) A licensee may withdraw money from a customer bank account for or towards payment of its own fees or commission only if the fees or commissions accord with the arrangements agreed with the customer.

PART V

FINANCIAL RESOURCES

 

28.   Minimum net capital

A licensed dealer shall provide and at all times maintain in his business as a dealer a net capital of not less than K50,000,000.

[Am by SI 152 of 1995.]

 

29.   Minimum liquidity margin

A licensed dealer shall maintain at all times in his business as a dealer a liquidity margin of not less than 10 per centum of the minimum net capital requirement specified in rule 28 as the case may be.

 

30.   Duty of licensed dealer

If a licensed dealer becomes aware of his inability to comply with the minimum net capital or liquidity margin requirements, he shall forthwith—

      (a)   notify the Commission, and any securities exchange of which he is a member; and

      (b)   cease dealing in securities otherwise than for the purpose of giving effect to any agreement or arrangement entered into before the time when he becomes so aware.

 

31.   Interpretation

   (1) For the purposes of this Part—

“approved assets” and “ranking liabilities” means such assets and liabilities as are specified to be approved assets and ranking liabilities by the Commission by notice;

“liquid assets” means such of the approved assets as are specified as liquid assets by the Commission by notice;

“liquidity margin” means the excess of liquid assets over ranking liabilities;

“net capital” means the excess of approved assets over ranking liabilities.

   (2) Where the Commission specifies any assets as approved assets or liquid assets, it may also specify the percentage of the value of the assets that may be taken into account, or the percentage of the minimum net capital or liquid assets that the assets may comprise, in computing the net capital or the liquidity margin as the case may be.

PART VI
APPOINTMENT OF AUDITORS

 

32.   Auditor required

A licensee shall not commence securities business until he has appointed an auditor in accordance with these Rules.

 

33.   Qualification for appointment as auditor

A person shall not be qualified for appointment as the auditor of a licensee unless he is a member of the Zambia Institute of Certified Accountants and holds a valid practising certificate pursuant to sections 24 and 25 of the Accountants Act.

 

34.   Ineligibility on ground of lack of independence

   (1) No person shall act as an auditor to a licensee if he is ineligible for appointment to the office.

   (2) A person is ineligible for appointment as auditor to a licensee if he is—

      (a)   a director, officer, employee, shareholder or partner of the licensee; or

      (b)   a partner or employee of such a person.

   (3) For the purposes of this rule an auditor of a licensee shall not be regarded as an officer or employee of the licensee.

 

35.   Engagement letters

A licensee shall ensure that the auditor appointed under these Rules has the powers and duties specified in rule 36 and that—

      (a)   those powers and duties are set out in an engagement letter;

      (b)   the engagement letter is signed by the licensee and the auditor; and

      (c)   the licensee retains a copy of the engagement letter.

 

36.   Powers and duties of auditors

   (1) An auditor shall have—

      (a)   a right of access at all times to the accounting and other records of the licensee and all other documents relating to his business; and

      (b)   a right to require from the licensee such information and explanations as he thinks necessary for the performance of his duties as auditor.

   (2) An auditor shall submit a report to the Commission on the annual financial statements in accordance with these Rules and the report shall state the matters specified in rule 18.

   (3) In preparing an auditor’s report for the purposes of these Rules, the auditor shall carry out such investigations as will enable him to form an opinion as to the matters required by rule eighteen to be stated in his report.

 

37.   Notification to Commission

A licensee shall, within seven days, give written notice to the Commission of the appointment, removal or resignation of an auditor.

 

38.   Resignation or removal of auditors

   (1) Where an auditor resigns or is removed by a licensee, a notice to that effect sent to the Commission under rule 37 shall contain either—

      (a)   a statement signed by the auditor to the effect that there are no circumstances connected with his resignation or removal which the auditor considers should be brought to the attention of the Commission; or

      (b)   a statement signed by the auditor of such circumstances as are mentioned in (a).

   (2) For the purposes of these Rules, a failure to appoint an auditor at the end of his term of office shall be deemed to be removal of that auditor.

PART VII
OFFENCES

 

39.   Offences

Any person who contravenes any of the provisions of these Rules shall be guilty of an offence and shall be liable on conviction to a fine not exceeding twenty thousand penalty units or to imprisonment for a term not exceeding twelve months or to both.

[Am by Act 13 of 1994.]

SCHEDULE

[Rule 15]

FORM AND CONTENT OF FINANCIAL STATEMENTS

PART I
GENERAL RULES

1. Subject to the provisions of this Schedule, the annual financial statements of a licensee shall—

      (a)   in the case of the balance sheet show the items listed in the balance sheet format set out in Appendix 1 to this Schedule; and

      (b)   in the case of the profit and loss account show the items listed in the profit and loss account format set out in Appendix 2 to this Schedule.

2.

(1) In respect of every item shown in a licensee’s balance sheet or profit and loss account or in notes thereto, the corresponding amount for the immediately preceding financial year shall also be shown.

(2) Where the corresponding amount is not comparable with the amount to be shown for the item in question in respect of the financial year to which the balance sheet or profit and loss account relates, the former amount shall be adjusted and particulars of the adjustment and the reasons for it shall be disclosed in a note to the accounts.

3. In the case of a licensee who is sole proprietor, the items to be included in his financial statements prepared in accordance with these Rules shall be those which arise in the course of the securities business of that licensee.

PART 2
ACCOUNTING PRINCIPLES AND RULES

4. Subject to paragraph 6, the amounts to be included in respect of all items shown in a licensee’s balance sheet and profit and loss account shall be determined in accordance with the accounting standards and guidelines as approved or accepted by the Zambia Institute of Certified Accountants which are in force from time to time and with the following rules.

5. Subject to paragraph 4, items shall be included in such a way as to reflect the substance and not merely the form of the underlying transactions and balances.

6. If it appears to the licensee that there are special reasons for departing from any of the principles and rules stated above in preparing the licensee’s financial statements in respect of any financial year the licensee may do so, but particulars of the departure, the reasons for it and its effect shall be given in a note to the financial statements.

APPENDIX 1

BALANCE SHEET FORMAT

A. FIXED ASSETS

      I.   Intangible Assets

      1.   Development costs

      2.   Goodwill (1)

      3.   Other

      II.   Tangible Assets

      1.   Freehold land and buildings

      2.   Leasehold land and buildings

      3.   Motor vehicles

      4.   Office equipment and computers

      5.   Fixtures and fittings

      6.   Payments on account

      7.   Other tangible assets

      III.   Investments

      1.   Loans to and shares in group companies and connected companies

      2.   Other listed investments

      3.   Other unlisted investments

B. CURRENT ASSETS

      I.   Physical stocks

      II.   Debtors (2)

      1.    Trade debtors (3)

      2.   Other debtors

      3.    Amounts due from connected and group companies

      4.    Prepayments and accrued income

   III.   Investments

   IV.   Cash at bank and in hand

C. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

      1.   Bank loans and overdrafts

      2.   Subordinated loans (4)

      3.   Other debenture loans

      4.   Trade creditors (5)

      5.   Investments (short positions)

      6.   Income tax

      7.   Amount due to group and connected companies

      8.   Other creditors

      9.   Accruals and deferred income

D. NET CURRENT ASSETS (LIABILITIES)

E. TOTAL ASSETS LESS CURRENT LIABILITIES

F. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

      1.   Bank loans and overdrafts

      2.   Subordinated loans (4)

      3.   Other debenture loans

      4.   Trade creditors (5)

      5.   Income tax

      6.   Amounts due to group and connected companies

      7.   Other creditors

      8.   Accruals and deferred income

G. PROVISIONS FOR LIABILITIES AND CHARGES

      1.   Commissions on indemnity terms

      2.   Pension and similar obligations

      3.   Taxation including deferred taxation

      4.   Other provisions

H. TOTAL ASSETS LESS TOTAL LIABILITIES

I. CAPITAL AND RESERVES

      1.   Called up share capital

      2.   Share premium account

      3.   Partners’ or proprietor’s capital accounts

      4.   Partners’ or proprietor’s current accounts

      5.   Revaluation reserve

      6.   Other reserves

      7.   Profit and loss account

Notes on the Balance Sheet Format

(1) GOODWILL

      Goodwill shall be included only in so far as it was acquired for valuable consideration.

(2) DEBTOR’S

      The amount falling due after more than one year shall be shown separately for each item included under debtors.

(3) TRADE DEBTORS

      (a)   Fees

         Outstanding for more than 30 days

         Outstanding for 30 days or less.

      (b)   Commissions

         Outstanding for more than 30 days

         Outstanding for 30 days or less.

      (c)   Other

         Amounts outstanding for more than 30 days

         Amount outstanding for 30 days or less.

(4) SUBORDINATED LOANS

      (a)   Long term subordinated loans

      (b)   Short term subordinated loans

      (c)   Committed undrawn subordinated loan facilities

      (d)   Bank Undertakings

(5) TRADE CREDITORS

      (a)   Amounts due to be paid against delivery of securities

      (b)   Amounts due to be paid in respect of securities transactions otherwise than against delivery of securities

      (c)   Others

APPENDIX 2

PROFIT AND LOSS ACCOUNT FORMAT

A. DEALING

      Gains/losses on principal dealings (trading)

      1. equities

   2. debt instruments

   3. units in collective investment schemes

   4. foreign exchange

   5. other - specify

 

B. REVENUE

      I.   Commissions on transactions in collective investment schemes

      1.   authorised mutual fund and unit trust schemes

      2.   other - specify

      II.   Commissions on securities transactions

      1.   equities

      2.   debt instruments

      3.   other - specify

      III.   Investment management fees

      IV.    Fee income in respect of financial advice

      V.   Company management fees

      VI.    Trustee fees

      VII.   Interest and dividends

      1.   investments positions

      2.   loan accounts and margin accounts

      3.   in respect of balances in customer bank accounts

      4.   other - specify

      VIII.   Dealing and settlement services

      IX.   Revenue from research and consulting services

      X.   Retained underwriting and placing commissions

      XI.   Other revenue - specify if material

C. EXPENDITURE

I. Commissions

      1.   paid to staff

      2.   paid to other investment businesses

      3.   other (specify)

II. Salaries and other employment costs (exclusive of commission)

III. Directors’ emoluments

IV. Staff bonuses

V. Interest charges

      1.   payable to customer in respect of customer’s money balances

      2.   other (specify)

VI. Establishment costs

VII.   Communications and marketing

VIII.   Office equipment and services

IX.   Provisions for losses, bad and doubtful debts

X.   Professional charges

XI.   Securities exchange and clearing house charges

XII.   Regulatory fees and expenses

XIII.   Audit fees (including expenses)

XIV.   Miscellaneous office expenses

XV.   Other expenditure - specify if material

D. PROFIT OR LOSS BEFORE TAXATION

E. TAXATION

F. PROFIT OR LOSS AFTER TAXATION

G. EXTRAORDINARY ITEMS

H. PROFIT OR LOSS FOR THE FINANCIAL YEAR

SECURITIES (SPECIFICATION OF APPROVED ASSETS, LIQUID ASSETS AND RANKING LIABILITIES) NOTICE

[Rule 31]

Arrangement of Notices

   Notice

   1.   Title

   2.   Interpretation

   3.   Approved assests

   4.   Liquid assests

   5.   Ranking liabilities

   6.   Valuation of approved and liquid assets

 

[Notice under Securities (Accounting and Financial Requirements) Rules ]

SI 171 of 1993.

 

1.   Title

This Notice may be cited as the Securities (Specification of Approved Assets, Liquid Assets and Ranking Liabilities) Notice.

 

2.   Interpretation

In this Notice, unless the context otherwise requires—

“licensed bank” means a bank registered under the Banking Act or licensed or registered under any Act amending or replacing that Act;

“the Rules” means the Securities (Accounting and Financial Requirements) Rules, 1993.

 

3.   Approved assets

The following assets of a licensed dealer or investment adviser, which form part of his business of dealing in securities and are beneficially owned by the dealer or investment adviser, as the case may be, are hereby specified as approved assets for the purposes of rule 31 of the Rules, to the extent of their valuation in accordance with clause 6—

      (a)   cash and foreign currency in hand;

      (b)   money or foreign currency on account with a licensed bank;

      (c)   certificates of deposit, acceptances and floating-rate notes issued by a licensed bank;

      (d)   amounts receivable in the ordinary course of business of dealing in securities, but excluding amounts receivable which are due to be settled against delivery of securities and remain outstanding for more than five bank trading days;

      (e)   prepaid expenses;

      (f)   shares in a licensed securities exchange at nominal value;

      (g)   treasury bills issued by the government;

      (h)   eighty per cent by value of net investment in bonds issued by the government with a remaining term of five years or more, ninety per cent by value of those with a remaining term of less than five years but not more than one year, one hundred per cent by value of those with a remaining term of one year or less;

      (i)   sixty per cent by value of net investment in shares traded on a licensed securities exchange;

      (j)   sixty per cent by value of net investment in a collective investment scheme authorised under Part X of the Act;

      (k)   gold bullion and coins; and

      (l)   certificates representing any of the assets included in paragraph (g), (h), (i) or (j), valued consistently with the prices ascribed to those assets under this notice;

      (m)   repurchase agreements with the Bank of Zambia; and

      (n)   interests in immovable (real) property in Zambia, subject to a maximum value of twenty-five per cent of the requisite minimum net capital required under rule 28 of the Rules.

 

4.   Liquid assets

The following approved assets of a licensed dealer or investment adviser are hereby specified as liquid assets for the purposes of rule 31 of the Rules to the extent of their valuation in accordance with clause 6—

      (a)   cash and foreign currency in hand;

      (b)   money or foreign currency on account with a licensed bank;

      (c)   certificates of deposit, acceptances and floating-rate notes issued by a licensed bank;

      (d)   amounts receivable in the ordinary course of dealing in securities, but excluding amounts receivable which are due to be settled against delivery of securities and remain outstanding for more than five bank trading days;

      (e)   treasury bills issued by the government;

      (f)   eighty per cent by value of net investment in bonds issued by the government with a remaining term of five years or more, ninety per cent by value of those with a remaining term of less than five years but not more than one year, one hundred per cent by value of those with a remaining term of one year or less;

      (g)   sixty per cent by value of net investment in shares traded on a licensed securities exchange;

      (h)   sixty per cent by value of net investment in a collective investment scheme authorised under Part X of the Act;

      (i)   gold bullion and coins;

      (j)   certificates representing any of the assets included in paragraph (e), (f), (g) or (h), valued consistently with the prices ascribed to those assets under this notice; and

      (k)   repurchase agreements with the Bank of Zambia.

 

5.   Ranking liabilities

   (1) Subject to sub-clause (2), the following liabilities of a licensed dealer or investment adviser are hereby specified as ranking liabilities for the purposes of rule 31 of the Rules—

      (a)   amounts payable in the ordinary course of business of dealing in securities;

      (b)   overdrafts and loans from licensed banks or overseas banks;

      (c)   accrued expenses;

      (d)   tax payable or provided for, including that on current year profits;

      (e)   any liability that is secured on an approved asset within the meaning of clause 3;

      (f)   all other liabilities that are regarded as liabilities under generally accepted accounting principles; and

      (g)   provision for contingent liabilities in accordance with generally accepted accounting principles.

   (2) Notwithstanding sub-clause (1) where a licensed dealer or investment adviser in the acquisition of any fixed asset that is used in the ordinary course of business of dealing in securities, incurs any liability that is not required to be settled within twelve months, the liability shall not, to the extent of the net book value of the asset, be included as a ranking liability for the purposes of calculating the liquidity margin of the dealer or investment adviser, as the case may be.

 

6.   Valuation of approved and liquid assets

   (1)Subject to sub-clauses (2) and (3), all approved and liquid assets shall be valued in accordance with generally accepted accounting principles

   (2) The following assets shall be valued at the market value of each such asset—

      (a)   shares traded on a licensed securities exchange;

      (b)   investment in a collective investment scheme authorised under Part X of the Act; and

      (c)   gold bullion and coins.

   (3) An interest in immovable (real) property shall be valued at market value by an independent valuer accepted to the Commission.

SECURITIES (REGISTRATION OF SECURITIES)(INVESTMENT COMPANIES) RULES

[Sections 32, 38 and 78]

Arrangement of Rules

   Rule

   1.   Title

   2.   Interpretation

   3.   Application

   4.   Additional conditions for registration

   5.   Additional Prospectus requirements where no securities registered

   6.   Additional Prospectus requirements where some securities already registered

   7.   Continuing obligations of investment companies

[Rules by the Securities and Exchange Commission]

SI 167 of 1993.

 

1.   Title

These Rules may be cited as the Securities (Registration of Securities)(Investment Companies) Rules.

 

2.   Interpretation

<TS:0.197222,NM,NO,0.39375,NM,NO,0.590278,NM,NO,0.786806,NM,NO,0.984028,NM,NO,7.5,RT,NO>“associate” means

   (1) In these Rules, unless the context otherwise requires—

      (a)   in relation to any director, chief executive or substantial shareholder (being an individual)—

      (i)   his spouse, and any child or step-child under the age of twenty-one years, of the director, chief executive or substantial shareholder or of his spouse;

      (ii)   the trustees, acting in their capacity as such trustees, of any trust of which he or any of his close relations is a beneficiary or, in the case of a discretionary trust, is a discretionary object; or

      (iii)   any company in the equity capital of which he or his close relations taken together are directly or indirectly interested so as to exercise or control the exercise of twenty per cent or more of the voting power at general meetings, or to control the composition of a majority of the board of directors and any other company which is its subsidiary or holding company or a fellow subsidiary of any such holding company; and

      (b)   in relation to a company, any other company which is its subsidiary or holding company or is a fellow subsidiary of any such holding company or one in the equity capital of which it or such other company taken together are directly or indirectly interested so as to exercise or control the exercise of twenty per cent or more of the voting power at general meetings, or to control the composition of a majority of the board of directors;

“chief executive” means a person who either alone or together with one or more other persons is responsible under the immediate authority of the board of directors for the conduct of business of the company;

“connected person” in relation to a company means a director, chief executive or substantial shareholder of the company or any of its subsidiaries or an associate of any of them;

“director” includes any person who occupies the position of a director, by whatever name called;

“investment company” means a company having as its purpose the investment of its funds with the aim of spreading investment risk and giving its members the benefit of the results of the management of those funds by or on behalf of the company;

“substantial shareholder” means a person who is entitled to exercise, or control the exercise of, ten per cent or more of the voting power at any general meeting of a company.

   (2) For the purposes of these Rules, a company is a subsidiary of another company if—

      (a)   that other company—

      (i)   controls the composition of the board of directors of the first-mentioned company;

      (ii)   controls more than half of the voting power of the first-mentioned company; or

      (iii)   holds more than half of the issued share capital of the first-mentioned company (excluding any part of it which carries no right to participate beyond a specified amount in a distribution of either profits or capital); or

      (b)   the first-mentioned company is a subsidiary of any company which is that other company’s subsidiary.

 

3.   Application

   (1) Subject to clause (2), these Rules, which are additional to the requirements of the Securities (Registration of Securities) Rules 1993, apply to an investment company any of whose securities are registered, or are required to be registered, under the Act.

   (2) These Rules apply to an investment company in respect of such of its activities as are not regulated by the provisions of the Securities (Collective Investment Schemes) Rules, 1993.

 

4.   Additional conditions for registration

The following additional conditions for registration apply in respect of investment companies—

      (a)   the Commission must be satisfied as to the fitness and competence of the directors of an investment company and its management company or investment adviser, if any, and must be satisfied that they have had satisfactory experience in the management of investments or other appropriate business experience;

      (b)   an investment company shall have a custodian or trustee which shall be independent from the company and must be acceptable to the Commission;

      (c)   an investment company and its management must normally be bound, either in its articles of association or equivalent constitutive document or in such other manner as is acceptable to the Commission, to ensure compliance with the following requirements—

      (i)   that the investment company will not either on its own or in conjunction with any connected person take legal, or effective, management control of underlying investments and that in any event the investment company will not own or control more than thirty-five per cent (or such lower percentage as may from time to time be specified in the Takeover Code as being the level at which a general offer becomes mandatory) of the voting rights in any one company;

      (ii)   that a reasonable spread of investments will be maintained by the investment company which means generally that the value of its holding of investments issued by any one company or body shall not exceed twenty per cent of the investment company’s net asset value at the time when such investment is made;

      (iii)   that, in the case of a newly formed investment company, it will not change its stated investment objectives and policies for a minimum period of three years, without shareholders’ consent;

      (iv)   that shareholders’ meetings are convened and conducted in a manner which is acceptable to the Commission;

      (v)   that any custodian, management company, any of their connected persons and every director of any investment company and management company is prohibited from voting their own shares at, or being part of a quorum for, any meeting to the extent that they have or any of their associates has, a material interest in the business to be conducted;

      (vi)   that the investment company’s auditors are independent of the investment company, any management company and any custodian, to the same extent as that required of an auditor under the Securities (Accounting and Financial Requirements) Rules, 1993, and that, in the case of an overseas investment company, the accounts of the investment company are audited to a standard comparable to that required in Zambia and all reports conform to international accounting standards as promulgated from time to time by the International Accounting Standards Committee;

      (d)   it will normally be a condition of registration that, in the case of a newly formed investment company, at the conclusion of the initial offering of shares, and in the case of an existing investment vehicle, at the time of the issue of the prospectus, no person shall control thirty-five per cent (or such lower amount as may from time to time be specified in the Takeover Code as being the level at which a general offer becomes mandatory) or more of the votes exercisable at any general meeting of the investment company.

 

5.   Additional prospectus requirements where no securities registered

In addition to the requirements of the Securities (Registration) Rules, 1993, every prospectus issued by or on behalf of an investment company no part of whose securities is already registered must contain the following—

      (a)   details of all costs and charges and in particular the fees of any management company payable from the investment company’s assets which an investor would be likely to consider material, and all deductions made from money subscribed for securities;

      (b)   a statement of any costs of establishing the investment company which are to be paid by the investment company together with an estimate of their size and the period over which they are to be amortised;

      (c)   details of the investment objectives, including capital and income objectives, and the investment policy, including a summary of the restrictions which will be observed on the investment of the investment company’s assets and the intended diversification of assets by country or region and, in the case of a newly formed investment company, a statement that such investment policy will be adhered to for at least three years following the issue of the prospectus, unless otherwise agreed by the shareholders on the investment company in general meeting; and in particular, the prospectus must disclose the extent to which it is intended to invest in options, warrants, commodities, futures contracts, unlisted securities, and precious metals and must include an appropriate negative statement if there is an intention not to invest in any such investments;

      (d)   details of the principal taxes levied on the investment company’s income and capital (including taxes withheld at source on distributions received by the investment company) and tax, if any, deducted on distributions to shareholders;

      (e)   a summary of the borrowing powers of the investment company, if any, stating that at no time will it exceed a certain amount, and stating the circumstances under which borrowing might take place;

      (f)   a statement as to whether certificates for securities will be issued in registered or bearer form, or in both forms;

      (g)   the name, address and description of any management company, custodian, investment adviser, and any alternate custodian;

      (h)   the full names, addresses and descriptions of every director of the investment company and every director of the management company;

      (i)   a description of the relevant experience of any management company, investment adviser and the directors of the investment company;

      (j)   particulars of what reports will be sent to registered shareholders and when;

      (k)   a statement as to whether or not the directors of the investment company, the management company or any investment adviser, or any associate of any of those persons, is or will become entitled to receive any part of any brokerage charged to the investment company, or any re-allowance of other types on purchases charged to the investment company;

      (l)   a warning that an investment in the investment company is subject to abnormal risks, if the nature of the investment policy so dictates;

      (m)   a statement that the investment company will not change its stated investment objectives and policies for a minimum period of three years, without shareholders’ consent;

      (n)   details of the investment company’s foreign exchange policy and in particular details of any foreign exchange controls or restrictions of relevance to the investment company or its investment policy or objectives;

      (o)   in the case of an existing investment company, full details of all exchange-traded investments and all other investments with a value of more than five per cent of the investment company’s gross assets, and details of at least the ten largest investments, stating, in respect of each such investment—

      (i)   a brief description of the business;

      (ii)   proportion of the share capital owned;

      (iii)   cost;

      (iv)   directors’ valuation and, in the case of listed investments, market value;

      (v)   dividends or other income received during the year from such investment (indicating any abnormal dividends);

      (vi)   dividend cover or underlying earnings;

      (vii)   any extraordinary items; and

      (viii)   net assets attributable to the investment; and

      (p)   in the case of an existing investment company, an analysis of any provision for diminution in value of investments, naming the investments against which provision has been made and stating for each investment—

      (i)   cost;

      (ii)   provision made;

      (iii)   book value; and

      (iv)   reason for the provision.

 

6.   Additional prospectus requirements where some securities already registered

In addition to the information required by the Securities (Registration of Securities) Rules, 1993, every prospectus issued by or on behalf of an investment company some part of whose securities is already registered must contain the information required in rule five with the exception of that required by paragraphs (b), (g), (j) and (k) of that rule.

 

7.   Continuing obligations of investment companies

An investment company shall, in addition to the continuing obligations imposed by the Securities (Registration of Securities) Rules, comply with the following continuing obligations—

      (a)   the annual report and accounts shall include—

      (i)   a list of all investments with a value greater than five per cent of the investment company’s gross assets, and at least the ten largest investments stating, with comparative figures where relevant—

      (aa)   a brief description of the business;

      (bb)   proportion of share capital owned;

      (cc)   costs;

      (dd)   directors’ valuation and, in the case of listed investments, market value;

      (ee)   dividends received during the year (indicating any abnormal dividends);

      (ff)   dividend cover or underlying earnings;

      (gg)   any extraordinary items; and

      (hh)   net assets attributable to investment;

      (ii)   an analysis of any provision for diminution in the value of investments, naming the investments against which provision has been made and stating for each investment-

      (aa)   cost;

      (bb)   provision made; and

      (cc)   book value; and

      (iii)   an analysis of realised and unrealised surpluses, stating separately profits and losses as between investments which are traded on a regulated securities exchange which is recongised by the Commission and those investments which are not so traded;

      (b)   the interim report and any preliminary announcement of results for the full year shall include a division of income between-

      (i)   dividend and interest received; and

      (ii)   other forms of income (which may be income of associated companies);

distinguishing where significant between underwriting income and the results of dealings by subsidiaries;

      (c)   the investment company must adhere to the investment policy set out in the prospectus for at least three years following the issue of the prospectus except as sanctioned by shareholders in a general meeting of the investment company; and

      (d)   the investment company must publish, in at least one leading newspaper which is published daily and circulates generally in Zambia, a statement of its net asset value as at the end of each month within fifteen days of that date.

SECURITIES (COLLECTIVE INVESTMENT SCHEMES)

[Section 23]

[Re-denominate the currency as stipulated under S 4 of Re-denomination Act, 8 of 2012, read with Bank of Zambia Act, 43 of 1996.]

Arrangement of Rules

   Rule

   1.   Title

   2.   Interpretation

   3.   Application of rules

   4.   Scheme established in Zambia or elsewhere

   5.   Application to Commission for authorization

   6.   Authorisation of schemes

   7.   Withdrawal of authorisation

      SCHEDULE

 

[Rules by the Securities and Exchange Commission]

SI 161 of 1993.

 

1.   Title

These Rules may be cited as the Securities (Collective Investment Schemes) Rules.

 

2.   Interpretation

In these Rules, unless the context otherwise requires—

“bond scheme” means a scheme, the primary objective of which is to invest in debt securities which have a remaining term to maturity of one year or more;

“collective investment scheme” or “scheme” means a collective investment scheme as defined in section 72 of the Act;

“connected person”, in relation to a company, means—

      (a)   any person or company beneficially owning, directly or indirectly, twenty per cent or more of the ordinary share capital of that company or able to exercise, directly or indirectly, twenty per cent or more of the total votes in that company;

      (b)   any person or company controlled by a person who meets one or both of the descriptions given in paragraph (a);

      (c)   any member of the group of which that company forms part;

      (d)   any director or officer of that company or of any of its connected persons as defined in paragraph (a), (b) or (c);

“constitutive documents” means the principal documents governing the formation of the scheme, and includes the trust deed in the case of a unit trust and the articles of association of an investment company and all material agreements;

“distribution function” refers generally to those functions described in clause 83(a)-(d) of the Schedule;

“eligible nominee” means a person approved by the Commission to act as a nominee;

“holder”, in relation to a unit or share in a scheme, means the person who is entered in the register as the holder of that unit or share or the bearer of a bearer certificate representing that unit or share;

“investment company” has the same meaning as in section 72 of the Act;

“investment plan” means an arrangement under which an investor undertakes to make a series of contributions to a scheme of a specified minimum value over a period of time;

“offering document” means that document, or documents issued together, containing information on a scheme calculated to invite offers by the public to subscribe for or purchase units or shares in the scheme;

“open-ended investment company” has the same meaning as in section 72 of the Act;

“real estate scheme” means a collective investment scheme which invests more than twenty- five per cent of its net assets in any type of real estate (including buildings) or interests in real estate (including options or rights but excluding shares in real estate companies);

“recognised market” means any stock exchange, over-the-counter market or other organised securities market that operates regularly, is open to the international public, and is recognised by the Commission;

“Schedule” includes the Appendices to the Schedule;

“these Rules” includes the Schedule to these Rules;

“trustee/custodian”, “trustee” or “custodian” means the entity appointed pursuant to Part I of the Schedule.

 

3.   Application of Rules

These Rules apply to all collective investment schemes owned by, or managed by or on behalf of, open-ended investment companies.

 

4.   Schemes established in Zambia or elsewhere

   (1) Collective investment schemes established or to be established in Zambia or elsewhere shall comply with the provisions of the Schedule to these Rules in order to be authorised in Zambia.

   (2) Collective investment schemes established or to be established outside Zambia which are to be promoted in Zambia shall in addition appoint a Zambian representative and also conform with part III of the Schedule to these Rules.

   (3) An application for authorisation which seeks a waiver of any of the provisions of these Rules shall give detailed reasons as to why a waiver is sought.

 

5.   Application to Commission for authorisation

   (1) An application to the Commission for the authorisation of a collective investment scheme shall be made by a dealer or investment adviser licensed under Part IV of the Act who shall submit a written application containing the information specified in Appendix I to the Schedule to these Rules.

   (2) The application shall be accompanied by the following—

      (a)   the scheme’s offering and constitutive documents;

      (b)   the scheme’s latest audited report (if any) and if more recent, the latest unaudited report;

      (c)   the management company’s latest audited report and resumes of its directors (if required by Appendix I);

      (d)   the trustee/custodian’s latest audited report (if required by Appendix I);

      (e)   a letter of consent to the appointment from the trustee/custodian; and

      (f)   the prescribed application fee.

   (3) In addition to the documents specified in sub-rules (1) and (2), an application for the authorisation of a non-Zambian based scheme shall include the following—

      (a)   a Zambian representative agreement; and

      (b)   a Zambian covering Document,

in accordance with Part III of the Schedule to these Rules.

 

6.   Authorisation of schemes

The Commission may authorise collective investment schemes which comply with the requirements specified in the Schedule to these Rules.

 

7.   Withdrawal of authorisation

   (1) In so far as the Schedule to these Rules imposes continuing obligations with regard to an authorised scheme, in the event of a failure to comply with any such obligation the Commission may—

      (a)   suspend its authorisation of the scheme for such time, or until the happening of such event, as it may determine; or

      (b)   withdraw its authorisation of the scheme.

   (2) Where the Commission suspends or withdraws its authorisation under sub-rule (2), the scheme shall be taken for the purposes of the Act not be authorised.

SCHEDULE

[Rules 4-7]

PART I
STRUCTURE AND OPERATION OF A COLLECTIVE INVESTMENT SCHEME

SECTION A - ROLE OF THE TRUSTEE/CUSTODIAN

1.   Appointment of trustee/custodian

Every collective investment scheme for which authorisation is requested shall appoint a trustee/custodian acceptable to the Commission.

(NOTE: Scheme established under trust must have a trustee, and all other collective investment schemes must have a custodian. This Part of the Schedule lists the general obligations of the trustee/custodian, whichever is appointed. Trustees are expected to fulfil the duties imposed on them by the general law of trusts. The responsibilities of a custodian, which are the same as those of a trustee, should be reflected in a constitutive document such as a Custodian Agreement (see Appendix III))

2.   Qualifications for appointment

A trustee/custodian shall be—

      (a)   a bank registered under the Banking Act, or licensed or registered under any Act amending or replacing that Act; or

      (b)   a trust company which is a subsidiary of such a bank; or

      (c)   a trust company registered under the Companies Act; or

      (d)   a banking institution or trust company incorporated outside Zambia, which has a subsidiary incorporated in Zambia, and which is acceptable to the Commission.

3.   Independent audit and liquidity

A trustee/custodian shall be independently audited and have minimum issued and paid-up capital and non-distributable capital reserves of fifty million kwacha or its equivalent in foreign currency.

4.   General obligations of trustee/custodian

The trustee/custodian shall—

      (a)   take into his custody or under his control all the property of the scheme and hold it in trust for the holders (in the case of a unit trust) or the scheme (in the case of any other type of collective investment scheme) in accordance with the provisions of the constitutive documents; cash and registrable assets shall be registered in the name of or the order of the trustee/custodian;

      (b)   be liable for any act or omission of any agent with whom any investments in bearer form are deposited as if they were the act or omission of any nominee in relation to any investment forming part of the property of the scheme;

      (c)   take reasonable care to ensure that the sale, issue, repurchase, redemption and cancellation of units/shares effected by a collective investments scheme are carried out in accordance with the provisions of the constitutive documents;

      (d)   take reasonable care to ensure that the methods adopted by the management company in calculating the value of units or shares are adequate to ensure that the sale, issue, repurchase, redemption and cancellation prices are calculated in accordance with the provisions of the constitutive documents;

      (e)   carry out the instructions of the management company in respect of investments unless they are in conflict with the provisions of the offering or constitutive documents;

      (f)   take reasonable care to ensure that the investment and borrowing limitations set out in the constitutive documents, and the conditions under which the scheme was authorised, are complied with;

      (g)   issue a report to the holders to be included in the annual report on whether in the trustee/custodian’s opinion, the management company has in all material respects managed the scheme in accordance with the provisions of the constitutive documents; if the management company has not done so, the respect in which it has not done so and the steps which the trustee/custodian has taken in respect thereof;

      (h)   take reasonable care to ensure that unit or share certificates are not issued until subscription moneys have been paid;

      (i)   ensure that any registrable investments which are held for shareholders or unit holders in the scheme are properly registered in the names of the shareholders or unit holders or, with the consent of the shareholder or unit holder, in the name of an eligible nominee; and

      (j)   where title to investments is recorded electronically, to ensure that entitlements are separately identified from those of the manager of the scheme in the records of the person maintaining records of entitlement.

5.   Retirement of trustee/custodian

   (1) The trustee/custodian shall not be entitled to retire except upon the appointment of a new trustee/custodian and subject to the prior approval of the Commission.

   (2) The retirement of the trustee/custodian shall take effect at the same time as the new trustee/custodian takes up office.

6.   Independence of trustee/custodian and the management company

The trustee/custodian and the management company shall not be connected persons and shall be persons who are independent of each other.

SECTION B - ROLE OF THE MANAGEMENT COMPANY AND AUDITOR

7.   Appointment of the management company

Every collective investment scheme for which authorisation is requested shall appoint a management company acceptable to the Commission, except as provided for self-managed schemes below.

8.   Requirements for management company

A management company shall—

      (a)   be engaged primarily in the business of fund management;

      (b)   have sufficient financial resources at its disposal to enable it to conduct its business effectively and meet its liabilities; in particular, it shall have a minimum issued and paid-up capital and capital reserves of ten million kwacha or its equivalent in foreign currency;

      (c)   not lend to a material extent; and

      (d)   maintain at all times a positive net asset position.

9.   Qualifications of directors

The directors of the management company shall be of good repute ad in the opinion of the Commission possess the necessary experience for the performance of their duties.

10.   Management company employees

   (1) In determining the acceptability of the management company, the Commission may also consider the qualifications and experience of persons employed by the management company.

   (2) Biographical details and an account of the professional qualifications and experience of the directors and of every person succeeding them in office shall be supplied to the Commission.

11.   Investment adviser

If the management company appoints an investment adviser, the Commission may require evidence that the investment adviser is appropriately qualified for the performance of his functions.

12.   License requirement

   (1) The type of LICENSE required depends on the functions performed by the management company in Zambia.

   (2) Except as provided by subclause(3), a management company that is incorporated in Zambia shall be licensed as an investment adviser under the Act.

   (3) However, should it undertake the distribution function in Zambia or otherwise deal in securities, it shall be licensed as a dealer.

13.   Self-managed schemes

   (1) Notwithstanding clause 7, a scheme could be managed by its own board of directors who are to perform the functions of a management company.

   (2) In this case, references in this Schedule to the directors of a management company shall be deemed to be references to the directors of a self-managed scheme.

14.   Directors of self-managed scheme not to deal as principal

The directors of a self-managed scheme are prohibited from dealing with the scheme as principals.

15.   Requirements for self-managed schemes

In addition to compliance with clause forty-seven, a self-managed scheme shall contain the following provisions—

      (a)   that holders may convene a meeting and, by way of an ordinary resolution, remove any of the directors considered no longer fit and proper to manage the scheme’s assets; and

      (b)   that the directors’ fees and remuneration shall be fixed by the holders at a general meeting.

16.   General obligations of a management company

A management company shall—

      (a)   manage the scheme in accordance with the scheme’ constitutive documents in the exclusive interest of the holders and fulfil the duties imposed on it by the general law;

      (b)   maintain or cause to be maintained the books and records of the scheme and prepare the scheme’s accounts and reports, including at least two reports to be published in respect of each financial year and sent to all registered holders in accordance with clause 49; and

      (c)   ensure that the constitutive documents are made available for inspection by the public in Zambia, free of charge at all times during normal office hours at its place of business or that of its Zambia representative and make copies of such documents available upon the payment of a reasonable fee.

17.   Retirement of a management company

The management company shall be subject to removal by notice in writing from the trustee or custodian in any of the following events—

      (a)   the management company goes into liquidation, becomes bankrupt or has a receiver appointed over its assets;

      (b)   for good and sufficient reason, the trustee or custodian is of the opinion and so states in writing that a change in management company is desirable in the interest of the holders; or

      (c)   in the case of a unit trust, holders representing at least fifty per cent in value of its units outstanding (excluding those held or deemed to be held by the management company), deliver to the trustee a written request to dismiss the management company.

18.   Other causes of retirement

In addition, the management company shall retire—

      (a) in all other cases provided for in the constitutive documents; or

      (b)   when the Commission withdraws its approval of the management company.

19.   Commission to be informed of retirements

The Commission shall be informed by the trustee or the custodian of any decision to remove the management company.

20.   Appointment of new management company

Upon the retirement or dismissal of the management company, the trustee or the custodian shall appoint a new management company as soon as possible, subject to the approval of the Commission.

21.   Appointment of Auditor

The management company shall, at the outset and upon any vacancy, appoint an auditor for the scheme.

22.   Qualifications of auditor

   (1) A person shall not be qualified for appointment as auditor unless he is a member of the Zambia Institute of Certified Accountants and holds a valid practising certificate under the Accountants Act.

   (2) The auditor shall be independent of the management company and of the trustee/custodian.

23.   Audit of annual report

The management company shall cause the scheme’s annual report to be audited by the auditor, and such report shall contain the information provided for in Appendix IV.

SECTION C - OPERATIONAL REQUIREMENTS

1. SCHEME DOCUMENTATION

24.   Matters to be disclosed in offering document

Schemes shall issue an up-to-date offering document, which shall be equivalent so far as is applicable to a prospectus issued under the Securities (Registration) Rules, 1993, and shall contain all the information necessary for investors to be able to make an informed judgement of the investment proposed to them, and in particular shall contain the information listed in Appendix II.

25.   Accompaniment to offering document

The offering document shall be accompanied by the scheme’s most recent audited annual report and accounts, together with its semi-annual report if published after the annual report.

26.   Offering document accompaniment application form

No application form may be supplied to any person not a holder unless accompanied by the offering document, except that an advertisement or report containing all the requirements of Appendix II may be allowed to incorporate an application form.

27.   Inclusion performance data

   (1) If performance data or estimated yield is quoted in an offering document, advertisement or any other invitation to the public to invest, the Commission may require justification of the calculation.

   (2) No forecast of the scheme’s performance may be made.

   (3) The publication of a prospective yield does not constitute a forecast of performance.

28.   Constitutive documents

   (1) The constitutive documents of a scheme shall contain the information listed in Appendix III.

   (2) Nothing in the constitutive documents may provide that the trustee/custodian, management company or directors of the scheme be exempted from any liability to holders, imposed under the law of Zambia or the law of the scheme’s place of domicile, or breaches of trust through fraud or negligence, nor may they be indemnified against such liability by holders or at holders’ expense.

29.   Constitutive documents may be altered by company

   (1) The constitutive documents may be altered by the management company and trustee/custodian without consulting holders, provided that the trustee/custodian certifies in writing that in its opinion the proposed alteration-

      (a)   is necessary to enable compliance with fiscal or other statutory or official requirements; or

      (b)   does not materially prejudice holders’ interests, does not to any material extent release the trustee/custodian, management company or any other person from any liability to holders and does not increase the costs and charges payable from the scheme property; or

      (c)   is necessary to correct a manifest error.

   (2) In all other cases no alteration may be made except by a special or extraordinary resolution of holders.

30.   Alterations to Constitutive documents to be approved by Commission

   (1) All proposed alterations or additions to the offering constitutive documents shall be submitted to the Commission for prior approval.

   (2) The Commission shall determine whether holders should be notified and the period of notice (if any) that should be applied before the changes are to take effect.

   (3) Such notice period shall not exceed three months unless the Commission, having regard to the merits of the case, otherwise determines.

2. INVESTMENT PLANS

31.   Requirements for investment plan

If investment plans are offered—

      (a)   before contracting for a plan, a prospective plan holder shall be given full details in writing of his rights and obligations, of all costs and charges levied on planholders and of the consequences of terminating his plan;

      (b)   unless he has requested to the contrary, each planholder shall be advised at least once a year of the opening balance of units, latest transaction details and closing balance of units;

      (c)   the plan shall include a direction to potential investors that they should refer to the offering document of the scheme to which they are considering linking their plan;

      (d)   an investment plan leaflet to be distributed in Zambia shall not solicit investment in schemes which have not been authorised by the Commission; and

      (e)   in respect of any increase of initial fee of investment plans up to the maximum permitted level, at least three months prior notice shall be given to holders concerned.

3. PRICING, ISSUE AND REDEMPTION OF UNITS/SHARES

32.   Initial offers

If an initial offer is made, no investment of subscription money can be made until the conclusion of the first issue of units or shares at the initial price.

33.   Valuation and pricing

   (1) Offer and redemption prices shall be calculated on the basis of the scheme’s net assets value divided by the number of units or shares outstanding.

   (2) Such prices may be adjusted by fees and charges for management of the scheme, which shall first be charged against investment income, next against dealing profits from the issue and redemption of units or shares in the scheme, and lastly against the capital value of the investments of the fund.

   (3) The amount or method of calculating such fees and charges shall be clearly disclosed in the offering document.

34.   Valuation of unquoted securities

The value of investments not listed or quoted on a recognised market shall be determined on a regular basis by a professional person approved by the trustee/custodian as qualified to value such investments.

35.   Dealing

   (1) There shall be at least one regular dealing day per month.

   (2) Any price offer which the management company or the distribution company quotes or publishes shall be the maximum price payable on purchase and any redemption price shall be the net price receivable on redemption.

36.   Redemptions to be prompt

The maximum interval between the receipt of a properly documented request for redemption of units or shares and the payment of the redemption money to the holder may not exceed one calendar month.

37.   Changes to dealing

Where a scheme deals at a known price and where, based on information available, the price exceeds or falls short of the current value of the underlying assets by more than two per cent, the management company shall defer dealing and calculate a new price as soon as possible.

38.   Notice of change in method of dealing

A permanent change in the method of dealing may only be made after one month’s notice to holders.

39.   Temporary changes

A temporary change may only be made—

      (a)   in exceptional circumstances, having regard to the interests of holders;

      (b)   if the possibility of a change and the circumstances in which it can be made have been fully disclosed in the offering document; and

      (c)   with the approval of the trustee/custodian.

40.   Suspension and deferral of dealings

Suspension of dealings may be provided for only in exceptional circumstances, having regard to the interests of holders.

41.   Commission to be notified of cessation or suspension

   (1) The management company or the Zambia representative shall immediately notify the Commission if dealing in units or share ceases or is suspended.

   (2) The fact that dealing is suspended shall be published immediately following such decision and at least once a month during the period of suspension, in the newspaper in which the scheme’s prices are normally published.

42.   Deferral of redemptions

Where redemption requests on any one dealing day exceed ten per cent of the total number of units or shares in issue, redemption requests in excess of ten per cent may be deferred to the next dealing day.

4. TRANSACTIONS WITH CONNECTED PERSONS

43.   Underwriting contracts

No person shall be allowed to enter on behalf of the scheme into underwriting or sub- underwriting contracts without the prior consent of the trustee/custodian and unless the scheme or the management company provides in writing that all commissions and fees payable to the management company under such contracts and all investments acquired pursuant to such contracts shall form part of the scheme’s assets.

44.   Interest on deposits

If cash forming part of the scheme’s assets is deposited with the trustee/custodian, the management company, the investment adviser or with any connected person of these companies (being an institution authorised to accept deposits), interest shall be received on the deposit at a rate not lower than the prevailing commercial rate for a deposit of that size and term.

45.   Transaction to be at arm’s length

   (1) All transactions carried out by or on behalf of the scheme shall be at arm’s length.

   (2) In particular, any transactions between the scheme and the management company, investment adviser, the directors of the scheme or any of their connected persons as principal may only be made with the prior consent of the trustee/custodian.

   (3) All such transactions shall be disclosed in the scheme’s annual report.

46.   Diversity of dealers

   (1) No single connected dealer shall account for fifty per cent or more of the scheme’s transactions in value in any one financial year of the scheme.

   (2) The Commission may consider each case on its merits and may permit the fifty per cent to be exceeded if the connected dealer offers advantages to the scheme not available elsewhere.

   (3) The annual report shall disclose that one dealer accounted for fifty per cent or more of the scheme’s transactions in value in any one financial year.

5. MEETINGS

47.   Requirements for meetings

A scheme shall arrange to conduct general meetings of holders as follows—

      (a)   holders shall be able to appoint proxies;

      (b)   votes shall be proportionate to the number of units or shares held, or to the value of units or shares held where there are accumulation units or shares.

      (c)   The quorum for meetings at which a special or extraordinary resolution is to be considered shall be the holders of twenty-five per cent of the units or shares in issue, and ten per cent if only an ordinary resolution is to be considered;

      (d)   if within half an hour from the time appointed for the meeting a quorum is not present, the meeting shall stand adjourned for not less than fifteen days. The quorum at an adjourned meeting shall be those persons present in person or by proxy;

      (e)   if the possibility exists of a conflict of interests between different classes of holder there shall be provisions for class meetings;

      (f)   an Extraordinary General Meeting shall be called for the following purposes—

      (i)   to modify, alter or add to the constitutive documents, except as provided in clause 29;

      (ii)   to terminate the scheme (unless the means of termination of the scheme are stipulated in the constitutive documents, in which case termination shall be effected in accordance with the provisions of the constitutive documents);

      (iii)   to increase the maximum fees paid to the management company, trustee/custodian or directors of the scheme; or

      (iv)   to impose other types of fee.

      (g)   where bearer units are in issue, proper provision shall be made for notification to bearer holders in Zambia of the timing and agenda of forthcoming meetings and voting arrangements;

      (h)   the directors of the scheme, the trustee/custodian, the management company, investment adviser and their connected persons are prohibited from voting their beneficially owned shares at, or counted in the quorum for, a meeting at which they have a material interest in the business to be conducted;

      (i)   an ordinary resolution may be passed by a simple majority of the votes of those present and entitled to vote in person or by proxy at a duly convened meeting; and

      (j)   a special or extraordinary resolution may only be passed by seventy-five per cent or more or the votes of those present and entitled to vote in person or by proxy at a duly convened meeting.

<PS:"Centered1,Bold6. MEMBERS REGISTER

48.   Maintenance of register

   (1) A scheme shall maintain a register of holders.

   (2) The Commission shall be advised on request of the address where the register is kept.

   (3) The register may be formed, in whole or in part, of records maintained by a securities depository approved by the Commission.

7. REPORTING REQUIREMENTS

49.   Report to holders

   (1) At least two reports shall be published in respect of each financial year.

   (2) Annual reports shall be published and distributed to holders within four months of the end of the scheme’s financial year and interim reports shall be published and distributed to holders within two months of the end of the period they cover.

50.   Notice of changes to documents

Notification to holders shall be made in respect of any changes to the offering or constitutive documents as determined by the Commission pursuant to clause thirty.

51.   Reports on prices and asset values

   (1) The scheme’s latest available offer and redemption prices or net asset value shall be published at least once a month in at least one leading Zambia daily newspaper.

   (2) If dealing is suspended, notice of this fact shall be published in accordance with clause 41.

52.   Reporting to Commission

Subsequent to the authorisation of the scheme, all financial reports produced by or for the scheme, its management company and trustee/custodian shall be filed with the Commission.

53.   Commission may require further information

The management company shall supply to the Commission, upon request, all information relevant to the scheme’s financial reports and accounts.

54.   Changes to data in application form

The management company shall notify the Commission as soon as possible of any change to the data in the application form.

8. FEES

55.   Statement as to costs and charges

The level/basis of calculation of all costs and charges payable from the scheme’s property shall be clearly stated, with percentages expressed on a per annum basis (see Appendix II).

56.   Sales agents commission

Commission to sales agents in respect of dealing in units or shares of the scheme shall not be payable from the scheme’s property.

57.   Notice of increase of management fee

In respect of any increase of the management fee up to the maximum level permitted under the scheme, at least three months prior notice shall be given to all holders.

9. ADVERTISING AND PUBLIC ANNOUNCEMENTS

58.   Commission to approve advertisements

   (1) Advertisements and other invitations to the public in Zambia to invest in a scheme, including public announcements, shall be submitted to the Commission for approval prior to their issue or publication in Zambia.

   (2) Any publication submitted for approval which concerns the trustee shall be accompanied by its written consent.

   (3) The approval so granted may be varied or withdrawn by the Commission as it deems fit.

   (4) Once authorised, the advertisement may be used for a maximum period of six months, provided there are no material changes in that period to the scheme or to the advertisement itself.

   (5) Unless the Commission disapproves submitted material within fourteen calendar days of its submission, the Commission shall be deemed to have approved it.

59.   Statements as to authorisation of scheme

   (1) If a scheme is described as having been authorised by the Commission it shall be stated that, in giving this authorisation, the Commission does not take responsibility for the financial soundness of the scheme or for the correctness of any statements made or opinions expressed in this regard.

   (2) Such a statement shall comply with the requirements of clause 62.

60.   Mention of unauthorised schemes

Advertisements and other invitations to the public in Zambia shall not refer to any scheme which has not obtained authorisation from the Commission.

61.   Warning statements

Advertisements shall include a warning statement that—

      (a)   the price of units or shares, and the income from them (if the scheme pays a dividend), may go down as well as up; and

      (b)   Investors are reminded that in certain circumstances their right to redeem their units or shares may be suspended.

62.   Format of warning statements

   (1) Warning statements shall be printed in type of the same size as the rest of the text in the advertisement.

   (2) Notwithstanding sub-clause (1), they may be in smaller text if printed in bold type or prominently outlined.

   (3) In all cases the warning shall be capable of being read with reasonable ease by anyone scanning the advertisement.

PART II
INVESTMENT OF A COLLECTIVE INVESTMENT SCHEME

(NOTE: this Part sets out the core requirements of the investment limitations and prohibitions of a collective investment scheme.)

63.   Spread of investments

The value of a scheme’s holding of securities issued by any single issuer may not exceed twenty per cent at book value nor twenty-five per cent at market value.

64.   Class of securities

A scheme may not hold more than ten per cent of any class of security issued by any single issuer.

65.   Unlisted securities

The value of a scheme’s holding of securities not listed or quoted on a recognised market may not exceed fifteen per cent of its total net asset value.

66.   Government securities

   (1) Clauses 63 and 64 shall not apply to Government securities.

   (2) Up to thirty per cent of a scheme’s total net asset value may be invested in Government Securities of the same issue.

67.   Futures and commodities

A scheme may not enter into any financial futures contracts save in respect of currencies for hedging purposes.

68.   Commodities

The only physical commodities that may be held by a Scheme are gold, silver, platinum and copper which may not exceed in aggregate twenty per cent of its total net asset value.

69.   Investment in other schemes

   (1) The value of a scheme’s holding of units or shares in other collective investment schemes may not in aggregate exceed ten per cent of its total net value.

   (2) In addition, such scheme’s objective may not be to invest primarily in any investment prohibited by this Chapter and where such scheme’s objective is to invest primarily in investments restricted by this Chapter, such holdings may not be in contravention of the relevant limitation.

70.   Feeder funds

   (1) Notwithstanding clause 69, a scheme may invest all of its assets in a single collective investment scheme and be authorised as a feeder fund.

   (2) In such a case—

      (a)   the underlying scheme shall be authorised by the Commission;

      (b)   the offering document shall state that the scheme is a feeder fund into the underlying scheme; and

      (c)   the borrowing of the feeder fund may not exceed ten per cent of its total net asset value and shall be restricted to facilitating redemptions or defraying operating expenses.

71.   Limitation on overall costs and charges

No increase in the overall total of initial charges, management company’s annual fee or any other costs and charges borne by the holders or by the scheme shall result, if the schemes in which a scheme invests are managed by the same management company or by a connected person of that company.

72.   Restriction on real estate investments

   (1) A real estate scheme shall not, at any time after the commencement of these Rules, be operated as an open-ended scheme, except as provided by clause (2).

   (2) A real estate scheme that was operated, immediately before the commencement of these Rules, as an open-ended scheme may continue to be so operated for a period of six months after the commencement of these rules.

   (3) A real estate scheme shall comply with the following additional requirements—

      (a)   the provisions of Part IV; and

      (b)   the provisions of Appendix V.

73.   Limitations on making loans

A scheme may not lend, assume, guarantee, endorse or otherwise become directly or contingently liable for or in connection with any obligation or indebtedness of any person without the prior written consent of the trustee/custodian.

74.   Unlimited liability

A scheme may not acquire any asset which involves the assumption of any liability which is unlimited.

75.   Limitations on securities in which directors/officers have interests

A scheme may not invest in any security of any class in any company or body if any director or officer of the management company owns more than one-half of one percent of the total nominal amount of all issued securities of that class, or, collectively the directors and officers of the management company own more than five per cent of those securities.

76.   Limitations on nil-paid/partly paid securities

The portfolio of a scheme may not include any security where a call is to be made for any sum unpaid on that security unless that call could be met in full out of cash or near cash by the scheme’s portfolio.

77.   Borrowing prohibition

A scheme may not borrow.

78.   Applicability of restrictions to umbrella funds

   (1) The provisions of this Part shall not, unless the contrary is provided, apply to an umbrella fund as if it were a single scheme, but shall apply to each sub-fund of the umbrella fund as if each such separate part were a single scheme.

   (2) Notwithstanding sub-clause (1), clause 64 shall apply so that the total collective investment by the sub-funds in any class of security issued by any one issuer shall not exceed ten per cent of that class.

79.   Breach of investment limits

If the investment limits in this Part are breached, the management company shall take as a priority objective all such steps as are necessary within a reasonable period of time to remedy the situation, taking due account of the interests of the holders.

80.   Name of scheme

If the name of the scheme indicates a particular objective, geographic region or market, the scheme shall invest at least seventy per cent of its non-cash assets in securities and other investments to reflect the particular objective or geographic region or market the scheme represents.

PART III
ADDITIONAL REQUIREMENTS FOR NON-ZAMBIA BASED SCHEMES

SECTION A - APPOINTMENT OF A ZAMBIA REPRESENTATIVE

81.   When representative to be appointed

A scheme shall be required to appoint a representative in Zambia if its management company is not incorporated and does not have a place of business in Zambia.

82.   Maintenance of representative

If a representative is appointed, the scheme has to maintain the representative throughout the period it is authorised in Zambia.

83.   Functions of a representative

   (1) The representative is not required to take responsibility for the acts and omissions of the management company or in the case of the scheme being a company, the directors of the scheme.

   (2) It shall however, be authorised on behalf of the scheme and the management company to—

      (a)   receive applications and money for units or shares from persons in Zambia;

      (b)   issue receipts in respect of the application moneys received in accordance with paragraph (a);

      (c)   issue contract notes to the applicants in accordance with the terms of the scheme;

      (d)   receive redemption notices, transfer instructions and conversion notices from holders for immediate transmission to the management company or the scheme;

      (e)   accept any notices or correspondence, including service of process, which holders may wish to serve on the scheme, trustee/custodian or the management company;

      (f)   notify the Commission immediately if redemption of units or shares ceases, or is suspended;

      (g)   make available for public inspection in Zambia, free of charge, and offer for sale at a reasonable price to holders, all constitutive documents of the scheme;

      (h)   provide holders with information on the scheme including the scheme’s financial reports and sales literature;

      (i)   deliver to the Commission, if it so requests, all accounts and records relating to the sale and redemption of units or shares of the scheme in Zambia; and

      (j)   represent the scheme and the management company in relation to all matters in which any holder normally resident in Zambia has a pecuniary interest or which relates to units or shares sold in Zambia.

84.   Criteria for appointment

The distribution function of the representative amounts to dealing in securities, and therefore the representative shall be licensed as a dealer under the Act.

85.   Representative to be duly authorised

The representative shall be properly appointed to represent the scheme and the management company.

86.   Written undertaking

The representative shall provide the Commission with a written undertaking that it will perform the duties required of a representative under this Schedule.

87.   Retirement and replacement of the representative

Should the representative retire or be dismissed, it shall be replaced as soon as possible, by another representative whose appointment is subject to the approval of the Commission.

88.   Zambia representative agreement

   (1) Details of all contracts between the representative, the scheme and or the management company shall be supplied to the Commission.

   (2) Any subsequent amendments of these contracts shall be notified to the Commission.

SECTION B - ADMINISTRATIVE REQUIREMENTS

89.   Zambia covering document

   (1) The Zambia covering document of a scheme shall contain the information required in Appendix II.

   (2) A scheme that is not based in Zambia may supplement the information contained in the overseas offering document with a Zambia covering document supplied with the overseas offering document.

90.   Investment plans

Where investment plans are offered, the provisions of clause thirty-one shall be complied with.

SECTION C - REPORTING, FEES AND ADVERTISING

91.   Continuing obligations

A scheme shall in all cases comply with the requirements of clauses 49 to 62, which provide for the continuing obligations of all schemes with respect to reporting, fees, advertising and public announcements in Zambia.

SECTION D - JURISDICTION

92.   Jurisdiction not capable of exclusion

Nothing in the constitutive documents may exclude the jurisdiction of the courts of Zambia to entertain an action concerning the scheme.

PART IV
ADDITIONAL REQUIREMENTS FOR REAL ESTATE COLLECTIVE INVESTMENT SCHEMES

93.   Application to Commission for authorisation

In addition to the documents specified in rule five, an application for authorisation of a real estate scheme shall be accompanied by a property valuation report.

94.   Offering document

In addition to the requirements of clause 24, the offering documents for a real estate scheme shall include a property valuation report which shall contain the information listed in Appendix V.

95.   Valuation of real estate agents

The valuation of real estate assets shall be determined quarterly by an independent professional person approved by the trustee/custodian as qualified to value real estate.

96.   Redemption

The maximum interval between the receipt of a properly documented request for redemption of units or shares in a real estate scheme shall not exceed twelve calendar months.

97.   Deferment of redemptions

Deferment of payment beyond one calendar month shall be subject to the approval of the Commission which shall only be given if the scheme’s cash resources cannot be maintained at an adequate level by orderly disposal of real estate assets.

98.   Apportionment of losses

If payment is deferred and the properties being sold realise less than the price upon which the redemption request was based, the redemption payment shall be scaled down proportionately so that there is equitable treatment of the continuing holders of the shares or units and those who have sold.

99.   Warning statements

Advertisements shall include a warning statement that—

      (a)   the price of units or shares, and the income from them (if the scheme pays a dividend), may go down as well as up;

      (b)   investors are reminded that in certain circumstances their right to their units or shares may be suspended; and

      (c)   money for redemption of units or shares may not be paid for twelve months and may not be paid in full.

100.   Restriction on investments

A real estate scheme may invest up to a maximum of eighty per cent of its net asset value in any type of real estate provided that at all times a minimum of twenty per cent of its net asset value shall be invested in cash or government treasury bills.

APPENDIX I

INFORMATION TO BE CONTAINED IN THE APPLICATION FOR AUTHORISATION

General details of the scheme

1. Name of the scheme.

2. Names of the sub-funds (if any).

3. Structure of the scheme.

4. Applicable law and the date and country of incorporation.

5. Quotation on any securities exchange and authorisation granted by other regulatory bodies.

6. Undertakings given to other regulatory bodies.

7. Launch: date and place.

8. Dealing: daily/weekly/other.

9. Valuation of assets: daily/weekly/other.

10. Pricing: forward/historic/other.

11. Investment plans to be offered in Zambia. For each scheme or sub-fund

12.

      (a)   Fee structure—

      (i)   level of all charges payable by investor; and

      (ii)   level/basis of calculation of all charges payable by the scheme.

      (b)   For equity/bond funds—

      (i)   investment objective and borrowing powers; and

      (ii)   Currency of denomination.

      (c)   Minimum initial subscription and the minimum subsequent holding. Details of the parties to the scheme

13. The management company (Section B of Part 1 of the Schedule)—-

      (b)   Registered/business address.

      (c)   Name of the ultimate holding company.

      (d)   Previously approved by the Commission to manage authorised schemes? If no, the resumes of the directors and most recent audited financial report.

      (e)   Person(s) for contact with the Commission.

14. In the case of a self-managed scheme, the resumes of the directors of the scheme and person(s) for contact.

15. The trustee/custodian (Section A of Part 1 of the Schedule)—

      (a)   Name.

      (b)   Registered/business address.

      (c)   Name of the ultimate holding company.

      (d)   Previously approved by the Commission as trustee/custodian of authorised schemes? If no, names of the directors and most recent audited financial report.

      (e)   Person(s) for contact with the Commission.

16. The investment adviser (if any)—

      (a)   Name.

      (b)   Registered/business address.

      (c)   Name of the ultimate holding company.

17. For the trustee/custodian, management company and investment adviser—

      (a)   which, if any, of these companies are connected persons.

      (b)   name anyone who holds appointments, as director or offer, with more than one of these companies.

18. The Zambia representative/distribution company (Part III of the Schedule)—

      (a)   Name.

      (b)   Registered/business address.

      (c)   Name of the ultimate company.

      (d)   Person(s) for contacts with the Commission.

      (e)   If a separate distribution company is appointed in Zambia—

      (i)   name; and

      (ii)   registered/business address.

19. The auditor—

      (a)   Name.

      (b)   Registered/business address.

20. The principal dealer (if any)—

      (a)   Name.

      (b)   Registered/business address.

      (c)   The approximate percentage of the scheme’s transactions in value of securities carried out by the principal broker within the latest financial year of the scheme.

      (d)   Whether the trustee/custodian, the directors of the scheme, the management company or the investment adviser is a connected person of the principal broker.

21. Legal representatives in Zambia (if any)—

      (a)   Name.

      (b)   Person(s) for contacts with the Commission.

APPENDIX II

INFORMATION TO BE DISCLOSED IN THE OFFERING DOCUMENT

(Note: This list is not intended to be exhaustive. The directors of the scheme or the management company are obliged to disclose any information which may be necessary for investors to make an informed judgement.)

Constitution of the scheme

1. Investment objectives and restrictions

Name, registered address and place and date of creation of the scheme, with an indication of its duration if limited.

2. Operators and principals

Details of investment objectives and policy, including summary of the investment and borrowing restrictions.

If the nature of the investment policy so dictates, a warning that investment in the scheme is subject to abnormal risks, and a description of the risks involved.

3. Characteristics of units or shares

The names and registered addresses of the following parties (where applicable)—

      (a)   the directors of the scheme/management company and its board of directors;

      (b)   the trustee/custodian;

      (c)   the investment adviser;

      (d)   the Zambia representative;

      (e)   the Zambia distribution company, if different from (d) above;

      (f)   the auditors;

      (g)   the registrar; and

      (h)   the lawyers to the scheme.

4. Minimum investment (if any).

5. A description of the different types of units or shares, including their currency of denomination.

6. Form of certification.

7. Frequency of valuation and dealing, including dealing days. Application and redemption procedures

8. The name(s) of the Zambia daily newspaper(s) in which prices will be published.

9. Procedure for subscribing/redeeming units or shares, and in the case of umbrella funds, conversion of units or shares.

10. The maximum interval between the request for redemption and the despatch of the redemption proceeds.

11. A summary of the circumstances in which dealing in units or shares may be deferred or suspended.

12. Distribution policy

It shall be stated that no money should be paid to any intermediary in Zambia who is not a licensed dealer or investment adviser.

13. Fees and charges

The distribution policy and the approximate dates on which dividends (if any) will be paid (if applicable).

14.

      (a)   The level of all fees and charges payable by an investor, including all charges levied on subscription and redemption, and conversion (in the case of umbrella funds); and

      (b)   The level of all fees and charges payable by the scheme, including management fees, custodian fees and start-up expenses.

15. Taxation

Disclosure of entitlement to brokerage or other transactions benefits of any connected persons to the scheme.

16. Reports and accounts

Details of Zambian and principal taxes levied on the scheme’s income and capital, including tax, if any, deducted on distribution to holders.

17. The date of the scheme’s financial year.

18. Warnings

Particulars of what reports will be sent to registered holders and when. If there are bearer units in issue, information shall be given on where in Zambia reports can be obtained.

19. General information

The following statements/warnings shall be prominently displayed in the offering document—

      (a)   “Important-if you are in any doubt about the contents of this offering document, you should consult your stockbroker, bank manager, lawyer, accountant or other financial adviser”;

      (b)   a warning that the price of units or shares and the income from them (where income is distributed) may go down as well as up.

20. A list of constitutive documents and an address in Zambia where they can be inspected free of charge or purchased.

21. The date of publication of the offering document.

22. A statement that the directors of the scheme or the management company accept responsibility for the information contained in the offering document as being accurate as at the date of publication.

23. Termination of scheme

Details of schemes not authorised shall not be shown in the offering document. Where names of such schemes are mentioned, these shall be clearly marked as unauthorised and not available to Zambian residents.

24. A summary of the circumstances in which the scheme can be terminated.

APPENDIX III

REQUIRED CONTENTS OF THE CONSTITUTIVE DOCUMENTS

1. Name of scheme

2. Participating parties

A statement to specify the participating parties including the management company, trustee/custodian, and investment adviser (if appointed).

3. For unit trusts only—

      (a)   A statement that the deed is binding on each holder as if he had been a party to it and so to be bound by its provisions and authorises and requires the trustee and the management company to do as required of them by the terms of the deed.

      (b)   A provision that a holder is not liable to make any further payment after he has paid the purchase price of his units and that no further liability can be imposed on him in respect of the units which he holds.

      (c)   A declaration that the property of the scheme is held by the trustee on trust for the holders of the units paripassuaccording to the number of units held by each holder. (This may be modified as appropriate for schemes offering income and accumulation units).

      (d)   A statement that the trustee will report to holders in accordance with paragraph (f) of clause 4 of the Schedule.

      (e)   A statement that the trustee should retire in the manner as stipulated in clause 5 of the Schedule.

4. For all other collective investment schemes—

      (a)   A declaration that the property of the scheme is held by the custodian on trust for the scheme.

      (b)   A statement to list the obligations of the custodian as set out in clause four of the Schedule.

      (c)   A statement that the custodian should retire in the manner as stipulated in clause 5 of the Schedule.

5. Role of management company—

      (a)   a statement to list the obligations of the management company as set out in clause 16 of the Schedule.

      (b)   a statement that the management company should retire in the manner as stipulated in clause 17 of the Schedule.

6. Investment and borrowing restrictions—

A statement to list the restrictions on the investment of the deposited property and the maximum borrowing limit of the scheme.

7. Valuation of property and pricing-

The following requirements on valuation of property and pricing shall be stipulated—

      (a)   the method of determining the value of the assets and liabilities of the property of the scheme and the net asset value accordingly;

      (b)   the relationship between the prices at which the management company bids or offers units or shares and the most recent net asset value per unit or share;

      (c)   the permitted spread between bid and offer prices;

      (d)   the circumstances under which the relationship to asset value or the spread may change; and

      (e)   the front-end load management charge to purchase units or shares and, if different, the charge to investors to re-invest the proceeds of realising a holding in the scheme.

8. Dealing, suspension and deferral of dealing—

The following shall be stated—

      (a)   the circumstances under which the dealing of units or shares can be deferred or suspended; and

      (b)   the maximum interval between the receipt of a properly documented request for redemption of units or shares and the payment of the redemption money to the holder should not exceed one calendar month.

9. Fees and charges—

The following shall be stated—

      (a)   the maximum percentage of the initial charge payable to the management company out of the issue price of a unit or share;

      (b)   the maximum fee payable to the management company out of the property of the scheme, expressed as an annual percentage;

      (c)   fee payable to trustee/custodian;

      (d)   preliminary expenses to be amortized against the property of the scheme; and

      (e)   all other material fees and charges payable out of the property of the scheme.

10. Meeting-Provision shall be made as to the manner in which holders’ meetings are to be conducted in accordance with clause 47of the Schedule.

11. Transactions with connected persons—

The following shall be stated—

      (a)   cash forming part of the property of the scheme may be placed as deposits with the trustee/custodian, management company, the investment adviser or with any connected persons of these companies (being an institution authorised to accept deposits) so long as that institution pays interest thereon at no lower rate than is, in accordance with normal banking practice, the commercial rate for deposits of the size of the deposit in question negotiated at arm’s length.

      (b)   money can be borrowed from the trustee/custodian, management company, the investment adviser or any of their connected persons (being a bank) so long as that bank charges interest at no higher rate, and any fee for arranging or terminating the loan is of no greater amount than is in accordance with normal banking practice, the commercial rate for a loan of the size and nature of the loan in question negotiated at arm’s length.

      (c)   any transactions between the scheme and the management company, the investment adviser, directors of the scheme or any of their connected persons as principal may only be made with the prior written consent of the trustee/custodian.

12. Distribution policy and date-

The approximate date(s) in the calendar year on which annual income, if any, will be distributed.

13. Annual accounting period-The date in the calendar year on which the annual accounting period ends. In the case of an umbrella fund, the accounting period shall be the same for all constituent funds.

14. Base currency-A statement of the base currency of the scheme.

15. Modification of the constitutive documents-A statement of the means by which modification to the constitutive documents can be effected.

16. Termination of scheme-A statement of the circumstances in which the scheme can be terminated.

APPENDIX IV

[Schedule, Clause 23]

CONTENTS OF FINANCIAL REPORTS

General

1. Annual reports shall contain all the information required in this Appendix. Interim reports shall at least contain the Statement of Assets and Liabilities and the Investment Portfolio. Where the scheme has paid or proposes to pay an interim dividend, the amount of dividend shall be disclosed.

2. All reports shall contain comparative figures for the previous period except for the investment Portfolio.

3. The mention of any unauthorised schemes in the reports shall be indicated as “Not authorised in Zambia and not available to Zambian Residents”.

4. The items listed under the Statement of Assets and Liabilities, Revenue Statement, Distribution Statement, Statement of Movements in Capital Account and the Notes to the Accounts, where applicable, shall be disclosed. It is however, not mandatory to adopt the format as shown or to disclose the items in the same order.

Statement of Assets and Liabilities

5. The following shall be separately disclosed—

   (1) total value of investments

   (2) bank balances

   (3) formation costs

   (4) dividends and other receivables

   (5) amounts receivable on subscription

   (6) bank loans and overdrafts or other forms of borrowing

   (7) amounts payable on redemption

   (8) distributions payable

   (9) total value of all assets

   (10) total value of all liabilities

   (11) net asset value

   (12) number of units or shares in issue

   (13) net asset value per unit or share Revenue Statement

6. Distribution Statement

The following shall be separately disclosed—

   (1)    total investment income net of withholding tax, broken down by category

   (2)    total other income, broken down by category

   (3)    equalisation on issue and cancellation of units or shares

   <TS:0.196528,NM,NO,0.597917,NM,NO,0.897917,NM,NO,1.29514,NM,NO,1.69653,NM,NO,2.19653,NM,NO,6.07847,NM,NO>(4)    an itemised list of various costs which have been debited to the scheme including—

* fees paid to the management company

* remuneration of the trustee/custodian

* amortization of formation costs

* directors’ fee and remuneration

* safe custody and bank charges

* auditors’ remuneration

* interest on borrowings

* fees paid to investment adviser, if any

* other amounts paid to any connected persons of the scheme

* legal and other professional fees

* any other expenses borne by the scheme

   (5) taxes

   (6) amounts transferred to and from the capital account

   (7) net income to be carried forward for distribution

7. Statement of Movements in Capital Account

The following shall be separately disclosed—

   (1) amount brought forward at the beginning of the period

   (2) net income for the period

   (3) interim distribution per unit or share and date of distribution

   (4) final distribution per unit or share and date of distribution

   (5) undistributed income carried forward

8. Notes to the Accounts

The following shall be separately disclosed—

   (1) value of the scheme as at the beginning of the period

   (2) number of units or shares issued and the amounts received upon such issuance (after equalization if applicable)

   (3) number of units or shares redeemed and the amount paid on redemption (after equalisation if applicable)

   (4) any items resulting in an increase/decrease in value of the scheme including—

-surplus/loss on sale of investments

-exchange gain/loss

-unrealised appreciation/diminution in value of investments

-net income for the period less distribution

   (5) amounts transferred to and from the revenue account

   (6) value of the scheme as at the end of the period

9. Transactions with Connected Persons

The following matters shall be set out in the notes to the accounts-Principal accounting policies, including—

      (a)   the basis of valuation of the assets of the scheme including the basis of valuation of unquoted and unlisted securities;

      (b)   the revenue recognition policy regarding dividend income and other income;

      (c)   foreign currency translation;

      (d)   the basis of valuation of forward foreign exchange and futures contracts;

      (e)   the basis of amortization of formation costs;

      (f)   taxation;

      (g)   any other accounting policy adopted to deal with items which are judged material or critical in determining the transactions and in stating the disposition of the scheme.

Any changes to the above accounting policies and their financial effects upon the accounts shall also be disclosed.

10. Borrowings

The following transactions shall be disclosed—

      (a)   details of all transactions entered into during the period between the scheme and the management company, investment adviser, the directors of the scheme or any entity in which these parties or their connected persons have a material interest; and

      (b)   name of any director of the scheme or any connected person of such a director if any such person becomes entitled to profits from transactions in shares or from management of the scheme and the amount of profits to which such person becomes entitled.

11. Contingent Liabilities and Commitments

It shall be stated whether the borrowings are secured or unsecured and the duration of the borrowings.

12. Details of any contingent liabilities and commitments of the scheme shall be made available.

13. Commissions, etc.

If the free negotiability of any asset is restricted by statutory or contractual requirements, this shall be stated.

14. The total commission paid to dealers in connection with portfolio transactions during the period reported on shall be stated.

15. Legal Proceedings

The total compensation, other than commissions, paid to dealers in connection with portfolio transactions during the period reported on shall be stated and, where the figure provided is an estimate, the basis for calculating the compensation, and where compensation to a dealer for the sale of shares or units in the scheme includes an allocation of the execution of portfolio transactions to that dealer, the compensation so allocated.

16. Contents of Auditors’ Reports

Any legal proceedings material to the operation of the scheme to which the operator is a party or of which any of the property of the scheme is the subject shall be briefly described. A similar statement shall be made as to any such proceedings known to be contemplated (including the date instituted, the principal parties, the nature of the claim, the amount claimed, whether the proceedings are being contested and the present status of the proceedings).

17. Investment Portfolio

The report of the Auditor shall state—

      (a)   whether in the Auditor’s opinion, the accounts prepared for that period have been properly prepared in accordance with the relevant provisions of the trust deed (if a unit trust) and this Schedule;

      (b)   whether in the auditor’s opinion, all persons involved with the conduct and operation of the scheme have acted properly and in accordance with the requirements of this Schedule;

      (c)   without prejudice to the foregoing, whether in the auditor’s opinion, a true and fair view is given of the disposition of the scheme at the end of the period then ended, and whether the reports and valuations produced on behalf of the scheme during the year were produced on a basis consistent with the figures at the end of the year and with the provisions of this Schedule;

      (d)   if the auditor is of the opinion that proper books and records have not been kept by the scheme, or the accounts prepared are not in agreement with the scheme’s books and records, that fact (which shall be reported forthwith by the auditor to the Commission); and

      (e)   if the auditor has failed to obtain all the information and explanations which, to the best of his knowledge and belief, are necessary for the purposes of the audit, that fact (which shall be reported forthwith by the auditor to the Commission).

18. Performance Table

The following shall be stated—

   (1) Number of quantity of each holding together with the description and market value. Distinguish between listed and unlisted and categorise by country.

   (2) The total investment stated at cost.

   (3) The value of each holding as a percentage of net asset value.

   (4) Statement of movements in portfolio holdings since the end of the preceding accounting period.

19. The following shall be provided—

   (1) A comparative table covering the last three financial years and including, for each financial year, at the end of the financial year—

      (a)   the total net asset value;

      (b)   the net asset value per unit or share.

   (2) A performance record over the last ten financial years or, if the scheme has not been in existence during the whole of that period, over the whole period in which it has been in existence, showing the highest issue price and the lowest redemption price of the units or shares during each of those years.

APPENDIX V

ADDITIONAL INFORMATION TO BE DISCLOSED IN THE OFFERING DOCUMENT FOR A REAL ESTATE SCHEME

   1. A description of each property, including—

      (a)   an address sufficient to identify the property;

      (b)   a brief description (e.g. whether land or building, approximate area etc.);

      (c)   existing use (e.g. shops, offices, factories, residential, etc.);

      (d)   ground rent;

      (e)   summary of terms of headleases, and underleases, (including repairing obligations where material);

      (f)   the approximate age of the buildings;

      (g)   capital value in existing state;

      (h)   current planning or zoning use;

      (i)   options or rights of pre-empting concerning the property; and

      (j)   other matters which may materially affect the value.

2. Where the property is not in the process of being developed, details of rentals of the property.

3. Where the property is being developed—

      (a)   details of development potential;

      (b)   material restrictions on development;

      (c)   existing stage of development;

      (d)   estimated completion date;

      (e)   estimated cost of completing the development;

      (f)   estimated capital value in existing state;

      (g)   estimated capital value after completion;

      (h)   material or special conditions affecting the development;

      (i)   any conditions imposed as to construction of facilities for public use;

      (j)   any sales arrangements or letting arrangements; and

      (k)   any construction costs incurred so far.

4. Where the property is held for future development the following details (where available)—

      (a)   details of development potential;

      (b)   material or special conditions affecting development;

      (c)   any conditions imposed as to constructing facilities for public use.

5. A classification of the properties according to the purpose for which they are held, as follows—

      (a)   for development;

      (b)   for investment;

      (c)   for owner occupation;

      (d)   for sale.

6. Details of any agreement or proposals as to any proposed transaction regarding the property between the management company and any other member of a group to which the management company belongs.

7. The name of the valuer, his address and professional qualifications.

8. The effective date of valuation.

SECURITIES (TAKEOVERS AND MERGERS) RULES

[Section 39]

[Re-denominate the currency as stipulated under S 4 of Re-denomination Act, 8 of 2012, read with Bank of Zambia Act, 43 of 1996.]

Arrangement of Rules

   Rule

   1.   Title

   2.   Interpretation

   3.   Objects of Rules

   4.   Application

   5.   —

      FIRST SCHEDULE

      SECOND SCHEDULE

      THIRD SCHEDULE

[Rules by the Securities and Exchange Commission]

SI 170 of 1993.

 

1.   Title

These Rules may be cited as the Securities (Takeovers and Mergers) Rules, 1993.

 

2.   Interpretation

   (1) In these Rules, unless the context otherwise requires—-

“acquisition of voting rights” includes the exercise of control or direction over voting rights other than by way of a revocable proxy given for no consideration for the purpose of one meeting of shareholders only;

“acting in concert” means persons who, pursuant to an agreement or understanding, actively co-operate to obtain or consolidate control of a company through the acquisition of voting rights of the company;

“control” shall be deemed to mean a holding, or aggregate holdings, of thirty-five percent or more of the voting rights of a company, irrespective of whether that holding or holdings gives de facto control;

“director” includes any person who occupies the position of a director by whatever name called;

“document” includes any announcement, advertisement or offer document issued or published by any party to an offer or possible offer in connection with such offer or possible offer;

“offer” includes—

      (a)   takeover and merger transactions however effected, including schemes of arrangement which have similar commercial effect to takeovers and mergers, and offers by a parent company for shares in its subsidiary;

      (b)   partial offers; and

      (c)   mandatory offers;

“offer period” means the period from the date when an announcement is made of a proposed or possible offer (with or without terms) until the first closing date or (if this later) the date when such offer becomes or is declared unconditional in all respects or is declared to have lapsed;

“person” includes an individual and a company;

“rights over shares” include any rights acquired by a person by virtue of an agreement to purchase shares or an option to acquire shares or an irrevocable commitment to accept an offer to be made by him;

“these Rules” includes the general principles set out in the Second Schedule and the provisions set forth in the Third Schedule;

“securities exchange offer” means an offer in which the consideration includes securities of the offeror or any other corporate body;

“substantial shareholder” means a person who holds ten per cent or more of the voting rights of a company;

“Stock Exchange” means any securities exchange on which the offeror or offeree company is listed; and

“voting rights” means all the voting rights currently exercisable at a general meeting of a company whether or not attributable to the share capital of the company.

   (2) For the purposes of these Rules, persons falling within each of the following classes will be presumed to be acting in concert with others in the same class unless the contrary is established—

      (a)   a company, its parent, its subsidiaries, its fellow subsidiaries, associated companies of any of the foregoing, and companies of which such companies are associated companies;

      (b)   a company with any of its directors (together with their close relatives, related trusts and companies controlled by any of the directors, their close relatives and related trusts);

      (c)   a company with any of its pension funds, provident funds and employee share schemes;

      (d)   a fund manager with any collective investment scheme, or other body, whose investments such fund manager manages on a discretionary basis, in respect of the relevant investment accounts;

      (e)   a financial or other professional adviser, including a dealer, with its client in respect of the shareholdings of the adviser and persons controlling, controlled by or under the same control as the adviser;

      (f)   directors of a company (together with their close relatives, related trusts and companies controlled by such directors, their close relatives and related trusts) which is subject to an offer or where the directors have reason to believe a bona fide offer for their company may be imminent;

      (g)   partners; and

      (h)   an individual with his close relatives, related trusts and companies controlled by him, his close relatives or related trusts.

   (3) For the purposes of these Rules, a company shall be deemed to be an associated company of another company if one of them owns or controls twenty per cent or more of the voting rights of the other or if both are associated companies of the same company.

 

3.   Objects of Rules

The objects of these Rules are set out in the First Schedule hereto.

 

4.   Application

   (1) These Rules shall apply to all takeover and merger transactions affecting public companies.

   (2) All persons engaged in takeover or merger transactions shall observe the general principles set out in the Second Schedule hereto and shall comply with the provisions of the Third Schedule hereto.

 

5.   —

Any person who contravenes any of the provisions of the Third Schedule shall be guilty of an offence and shall be liable on conviction to a fine not exceeding ten million kwacha or to imprisonment for a term not exceeding twelve months or to both.

FIRST SCHEDULE

[Rule 3]

OBJECTS OF RULES

1.   Spirit of the Rules

   (1) The primary purpose of these Rules is to afford fair treatment for shareholders who are affected by takeover and merger transactions.

   (2) The Rules seek to achieve fair treatment by requiring equality of treatment of shareholders, requiring the disclosure of timely and adequate information to enable shareholders to make an informed decision as to the merits of an offer and ensuring that there is a fair and informed market in the shares of companies affected by takeover and merger transactions.

   (3) The Rules also provide an orderly framework within which takeovers and mergers are to be conducted.

2.   Sanctions on conduct

   (1) Those who wish to take advantage of the securities markets in Zambia shall conduct themselves in matters relating to takeovers and mergers and in accordance with the Rules.

   (2) If they do not do so they may find, by way of sanction, that the facilities of such markets are withheld.

   (3) The Rules Governing the Listing of Securities on the Lusaka Stock Exchange Limited require compliance with the Rules.

   (4) Where a breach of these Rules amounts to a contravention of any of the provisions of the Securities Act, 1993, or of subsidiary legislation made under that Act, sanctions under such provisions will apply and be enforced.

3.   Scope of Rules

The responsibilities provided for in the Rules apply to—

      (a)   directors of public companies;

      (b)   persons or groups who seek to gain or consolidate control of public companies;

      (c)   their professional advisers; and

      (d)   those who are actively engaged in the securities market in all its aspects.

4.   Promoters

In addition, any other persons who issue circulars or advertisements to shareholders in connection with takeovers and mergers must observe the highest standards of care and consult with the Commission prior to the release thereof.

5.   Advisers

The role and responsibility of financial and other professional advisers is of particular importance, and it is part of their responsibility to use all reasonable efforts, subject to any relevant requirements of professional conduct, to ensure that their clients understand, and abide by, the requirements of these Rules and to cooperate to that end by responding to enquiries from the commission.

6.   Commercial Considerations

These Rules are not concerned with the financial or commercial advantages or disadvantages of a takeover or merger, as the case may be, which are matters for the company and its shareholders.

7.   Other Rules

   (1) The provisions of these Rules are additional to the provisions of the Securities Act, 1993, and to other subsidiary legislation made under that Act.

   (2) In particular all persons involved in takeover activities must have full regard at all times to the relevant provisions of the Securities (Advertisements) Rules, 1993, the Securities (Conduct of Business) Rules, 1993, and the Securities (Registration of Securities) Rules, 1993.

8.   Structure of Rules

   (1) The provisions of these Rules fall into two categories.

   (2) First, there are general principles of conduct contained in the Second Schedule which are to be observed in takeover and merger transactions.

   (3) Secondly, the Rules lay down in the Third Schedule a series of specific provisions.

   (4) Some of the provisions of the Third Schedule are no more than examples of the application of the general principles and the Commission will interpret them in accordance with those principles.

   (5) The Rules through the general principles, may apply to a situation not specifically covered by a provision of the Third Schedule.

   (6) The Commission may modify or relax the application of a provision of the Third Schedule in exceptional circumstances, for example, when it considers that its strict application would operate harshly.

9.   Companies to which these Rules apply

   (1) These Rules apply to takeovers and mergers affecting public companies in Zambia.

   (2) As a result, although it is generally the nature of the offeree company, the potential offeree company, or the company in which control may change or be consolidated that is relevant, there are also circumstances in which it is necessary to consider the treatment of the offeror’s shareholders in order to carry out the objectives of these Rules.

10.   The Commission

   (1) These Rules are administered by the Commission.

   (2) The Commission undertakes the investigation of takeover and merger transactions and the monitoring of related dealings in connection with these Rules.

   (3) It is available for consultation and to give rulings on all matters before or during takeovers and mergers, as the case may be.

11.   Consulting the Commission

   (1) When there is any doubt as to whether a proposed course of conduct is in accordance with the general principles contained in the Second Schedule or the provisions of the Third Schedule, parties or their advisers should always consult the Commission in advance.

   (2) In this way, the parties can obtain clarification of the basis on which they can properly proceed and thus minimise the risk of taking action which might, in the event, be a breach of these Rules.

   (3) However, while the Commission will respond to questions respecting an interpretation of these Rules, it should not be expected to answer purely hypothetical questions, or to give provisional rulings when the parties with an interest in such rulings cannot be identified.

12.   Requests for rulings

   (1) Any request for a ruling under these Rules shall take the form of a written submission addressed to the Commission.

   (2) The submission shall be made by or on behalf of the party or parties required to make representations in support of the submission.

   (3) The submission shall be comprehensive and contain all relevant information which the Commission will require to reach a fully informed decision.

13.   Publication of rulings

   (1) Subject to confidentiality considerations, it will be the policy of the Commission to publish their important rulings, and the reasons for them, so that their activities may be understood by the public.

   (2) All rulings will normally be announced to the parties as soon as possible.

   (3) Important rulings suitable for publication will then be constituted as a written statement and will be issued as promptly as possible.

14.   Co-operation with other authorities

   (1) Information given to the Commission will be treated in the strictest confidence.

   (2) Because of the overriding importance of maintaining a fair market and suppressing improper activities, this information is available to the Commission to be held subject to its own obligations of confidentiality.

   (3) Subject to those obligations, the Commission may from time to time give information received by it to other regulatory authorities, so they can discharge their own duties.

   (4) Conversely, the Commission may from time to time receive information from other regulatory bodies which is relevant to a matter then current.

   (5) Co-operation with other regulatory authorities is regarded as an important part of the Commission’s functions.

SECOND SCHEDULE

[Rule 4]

GENERAL PRINCIPLES FOR CONDUCT OF TAKEOVERS AND MERGERS

1.   Spirit of the Rules

   (1) It is impracticable to devise rules in sufficient detail to cover all circumstances which can arise in offers.

   (2) Accordingly, persons engaged in offers should be aware that the spirit as well as the precise wording of the general principles and Rules must be observed.

   (3) Moreover, the General Principles and the spirit of the Rules will apply in areas or circumstances not explicitly covered by any of the provisions of the Third Schedule.

2.   Competent independent advice

A board which receives an offer, or is approached with a view to an offer being made, shall seek competent independent advice in the interests of its shareholders.

3.   Limitations on director’s actions

   (1) While the boards of an offeror and of an offeree company and their respective advisers and associates have a primary duty to act in the best interests of their shareholders, they must accept that there are limitations in connection with takeover and merger transactions on the manner in which the pursuit of those interests can be carried out.

   (2) Inevitably, therefore, the general principles contained in the Second Schedule and the provisions of the Third Schedule will impinge on the freedom of action of boards and persons involved in such transactions.

4.   Equality of treatment

All shareholders are to be treated even-handedly and all shareholders of the same class are to be treated similarly.

5.   Control

If control of a company changes or is acquired or is consolidated, a general offer to all other shareholders is normally required.

6.   No less favourable terms

If, after a takeover or merger transaction is reasonably in contemplation, a written offer has been made to, or shares have been purchased from one or more shareholders of, an offeree company, any subsequent general offer made by or on behalf of the same offeror, or any person acting in concert with it, to the shareholders of the same class shall not be on less favourable terms.

7.   Information to shareholders

   (1) During the course of an offer, or when an offer is in contemplation, neither an offeror, nor the offeree company, nor any of their respective advisers may furnish information to some shareholders which is not made available to all shareholders.

   (2) This principle does not apply to the furnishing of information in confidence by the offeree company to a bona fide potential offeror or vice versa<FC:255,0,0>.

8.   Announcements

   (1) An offeror shall announce an offer only after careful and responsible consideration.

   (2) The same applies to making acquisitions which may lead to an obligation to make a general offer.

   (3) In either case the offeror and its financial advisers shall be satisfied that it can and will continue to be able to implement the offer in full.

9.   Sufficient information and time

   (1) Shareholders shall be given sufficient information, advice and time to reach an informed decision on an offer.

   (2) No relevant information shall be withheld.

   (3) Documents and advertisements issued in connection with takeovers and mergers shall be prepared with the highest possible degree of care, responsibility and accuracy.

10.   Full and prompt disclosure

   (1) All persons concerned with takeovers and mergers shall make full and prompt disclosure of all relevant information and take every precaution to avoid the creation or continuance of an uninformed market.

   (2) Parties involved in offers must take care that statements are not made which may mislead shareholders or the market.

11.   Oppression of minority

Rights of control shall be exercised in good faith and the oppression of minority or non- controlling shareholders is always unacceptable.

12.   Duties of directors

Directors shall have regard to the interests of the shareholders as a whole, and not to their own interests or those derived from personal and family relationships.

13.   No frustration of offer by offeree board

At no time after a bona fide offer has been communicated to the board of the offeree company, or after the board of the offeree company has reason to believe that a bona fide offer might be imminent, may any action be taken by the board of the offeree company in relation to the affairs of the company, without the approval of shareholders in general meeting, which could effectively result in any bona fide offer being frustrated or in the shareholders being denied an opportunity to decide on its merits.

14.   Full co-operation

All parties concerned with takeovers and mergers are required to co-operate to the fullest extent with the Commission, and to provide all relevant information.

THIRD SCHEDULE

[Rule 4]

SPECIFIC REQUIREMENTS FOR CONDUCT OF TAKEOVERS AND MERGERS

SECTION I - OFFERS

1.   Offer

An offer shall be put forward in the first instance to the board of the offeree company or to its advisers, and before the offer is announced to the public.

2.   Identity of offeror

If an offer or an approach with a view to an offer being made is not made by the ultimate offeror or potential offeror, the identity of that person or the ultimate controlling shareholder must be disclosed at the outset to the board of the offeree company.

3.   Implementation of offer

A board which is approached is entitled to be satisfied by the offeror that the offeror will be in a position to implement the offer in full.

4.   Confidentiality

   (1) Absolute secrecy before an announcement of an offer or proposed offer is of vital importance.

   (2) All persons who have confidential information, particularly if it is price sensitive, are required to take the greatest care to prevent a leak.

   (3) This requirement is additional to the law against insider dealing.

SECTION II
INDEPENDENT ADVICE, INDEPENDENT COMMITTEES AND SHAREHOLDER APPROVAL

5.   Board of offeree company

   (1) A board which receives an offer, or is approached with a view to an offer being made, shall, in the interests of shareholders, retain an independent financial adviser to advise the board as to whether the offer is, or is not, fair and reasonable.

   (2) Such advice, including reasons, shall be obtained in writing and such written advice shall be made known to shareholders by including it in the offeree’s circular along with the recommendation of the offeree’s board regarding acceptance of the offer.

   (3) If any of the directors of an offeree company is faced with a conflict of interest, the offeree board shall, if possible, establish an independent committee of the board to discharge the board’s responsibilities in relation to the offer.

6.   Board of offeror company

   (1) If any director of an offeror which is a public company in Zambia is faced with a conflict of interest as a result of a proposed offer, the offeror’s board shall, if possible, establish an independent committee to assess the proposed offer.

   (2) If the conflict is a material one the Commission shall be consulted to establish, having regard to, among other things, the materiality of the offer to the offeror, whether the offeror’s board shall retain an independent financial adviser to advise the shareholders or independent shareholders, of the offeror, as the case may be, and whether the offer should be made conditional upon approval of the offer by a majority of the votes cast by such shareholders in attendance either in person or by proxy at a duly convened general meeting of the offeror’s shareholders.

7.   Persons not suited to give independent advice

A person who has, or had, a connection, financial or otherwise, with the offeror or offeree company of a kind likely to create a conflict of interest will not be regarded as a suitable person to give independent advice.

8.   Independent financial advisers and independent shareholders

   (1) A financial adviser will not normally be considered to be independent if he is considered to have a relationship with the offeror, the offeree company, or the controlling shareholder(s) of either of them, which is reasonably likely to affect the objectivity of his advice.

   (2) If there are shareholders who are not independent because they have an interest in the proposed transaction other than their interest as a shareholder of the offeror or offeree company, as the case may be, the independent adviser shall endeavour to represent the best interests of the offeror or the offeree company, respectively, by concerning itself only with the interests of the independent shareholders, i.e. those shareholders of the company who have no interest in the proposed transaction other than their interest as a shareholder of the company.

9.   Independent committees

   (1) Members of an independent committee of a company’s board of directors shall consist of directors of the company who have no direct or indirect interest in the offer for consideration by the independent committee other than as a shareholder of the offeree.

   (2) For this purpose, it is presumed that employees of an offeree company that is an associated company of the offeror have an indirect interest in the offer and are therefore not independent.

   (3) The same presumption is applicable to employees, directors, agents, partners, close relatives and affiliates of any person that exercises control or direction over the business and operations of the offeree company if such person has a direct interest in the offer.

   (4) For such purpose an affiliate is a person which controls, is controlled by, or is under common control with, the person in question.

   (5) In case of doubt the Commission should be consulted.

   (6) If a committee of a board of directors is not truly independent it shall not be characterised as such.

   (7) If it is not possible to form an independent committee, responsibility for representing the interests of any independent shareholders shall reside primarily with the independent financial adviser.

SECTION III
ANNOUNCEMENTS

10.   Offers or possible offers

An announcement is required—

      (a)   when a firm intention to make an offer is notified to the board of the offeree company from a serious source, irrespective of the attitude of the board to the offer;

      (b)   immediately upon an acquisition of shares which gives rise to an obligation to make an offer under clause 57(for which purpose, the announcement that an obligation has been incurred shall not be delayed while full information is being obtained-additional information can be the subject of a later supplementary announcement);

      (c)   when, following an approach to the offeree company, the offeree company is the subject of rumour and speculation or there is undue movement in its share price, or a significant increase in the volume of share turnover, whether or not there is a firm intention to make an offer;

      (d)   when, before an approach has been made, the offeree company is the subject of rumour and speculation or there is undue movement in its share price, and there are reasonable grounds for concluding that it is the potential offeror’s actions (whether through inadequate security, purchasing of offeree company shares or otherwise) which have led to the situation; or

      (e)   when negotiations or discussions are about to be extended to include more than a very restricted number of people (outside those who need to know in the companies concerned and their immediate advisers).

11.   Responsibilities of offeror and offeree for announcements

   (1) Before the board of the offeree company is approached, the responsibility for making an announcement can lie only with the offeror.

   (2) The offeror shall, therefore, keep a close watch on the offeree company’s share price and volume for any signs of undue movement.

   (3) The offeror is also responsible for making an announcement once an obligation has been incurred to make a mandatory offer under clause 56.

   (4) Following an approach to the board of the offeree company which may or may not lead to an offer, the primary responsibility for making an announcement will normally rest with the board of the offeree company which must, therefore, keep a close watch on its share price and volume.

12.   Suspension of trading

   (1) When an announcement is required the offeror or offeree, as the case may be, shall notify the Commission and the Stock Exchange immediately that an announcement is imminent and if there is any possibility that an uninformed market for shares of the offeror or offeree could develop prior to publication of the announcement serious consideration shall be given to requesting a suspension of trading in such shares pending publication of the announcement.

   (2) A potential offeror must not attempt to prevent the board of an offeree company from making an announcement or requesting the Stock Exchange to grant a temporary suspension of listing at any time the board thinks appropriate.

13.   Announcement of firm intention to make an offer

   (1) When a firm intention to make an offer is announced, the announcement must contain—

      (a)   the terms of the offer;

      (b)   the identity of the ultimate offeror or the ultimate controlling shareholder;

      (c)   details of any existing holding of voting rights in the offeree company-

      (i)   which the offeror owns or over which it has control or direction;

      (ii)   which is owned or controlled or directed by any person acting in concert with the offeror;

      (iii)   in respect of which the offeror or any person acting in concert with him has received an irrevocable commitment to accept the offer; and

      (iv)   in respect of which the offeror or any person acting in concert with him holds an option to purchase or warrants or other convertible securities;

      (d)   all conditions (including normal conditions relating to acceptance, listing and increase of capital) to which the offer or the posting of it is subject; and

      (e)   details of any arrangement (whether by way of option, indemnity or otherwise) in relation to shares of the offeror or the offeree and which might be material to the offer.

   (2) The announcement of an offer shall include confirmation by the financial adviser or by another appropriate third party that resources are available to the offeror sufficient to satisfy full acceptance of the offer.

14.   Announcement of certain purchases

   (1) Acquisitions of voting rights of an offeree company by an offeror or by any person acting in concert with the offeror may give rise to an obligation to make a cash offer (clause 51), to increase an offer (clause 52) or to make a mandatory offer (clause 56).

   (2) Immediately after any acquisition giving rise to any such obligation, an announcement must be made, stating the number of voting rights acquired and the price paid, together with the information required by clause thirteen (to the extent that it has not previously been announced).

15.   No frustrating action

   (1) Once a bona fide offer has been communicated to the board of an offeree company or the board of an offeree company has reason to believe that a bonafide offer may be imminent, no action which could effectively result in an offer being frustrated, or in the shareholders of the offeree company being denied an opportunity to decide on the merits of an offer, shall be taken by the board of the offeree company in relation to the affairs of the company without the approval of the shareholders of the offeree company in general meeting.

   (2) In particular the board must not, without such approval—

      (a)   issue any shares;

      (b)   issue or grant options in respect of any unissued shares;

      (c)   create or issue or permit the creation or issue of any securities carrying rights of conversion into, or subscription for, shares of the company;

      (d)   sell, dispose of or acquire or agree to sell, dispose of or acquire assets of material amount;

      (e)   enter into contracts, including service contracts, otherwise than in the ordinary course of business; or

      (f)   cause the company or any subsidiary or associated company to purchase or redeem any shares in the company or provide financial assistance for any such purchase.

   (3) Where the company is under a prior contractual obligation to take any such action, or where there are other special circumstances, the Commission must be consulted at the earliest opportunity.

   (4) In appropriate circumstances the Commission may grant a waiver from the general requirement to obtain shareholders’ approval.

16.   No withdrawal of an offer

When there has been announcement of a firm intention to make an offer, except with the consent of the Commission, the offeror must proceed with the offer unless the posting of the offer is subject to the prior fulfilment of a specific condition and that condition has not been met.

17.   Information to offerors

   (1) Relevant information relating to the offeree, including particulars of shareholders, given by the offeree shall, on request, be furnished equally ad promptly to any other bonafide potential offeror, who shall specify the questions to which it requires answers.

   (2) An offeror is not entitled, by asking in general terms, to receive all the information supplied to its competitor.

SECTION IV
OBLIGATIONS OF DIRECTORS

18.   Resignation of directors of offeree company

Except with the consent of the Commission the directors of an offeree company shall not resign until the first closing date of the offer, or the date when the offer becomes or is declared unconditional, whichever is the later.

19.   Sale of shares by directors

When directors (and their close relatives, related trusts and companies controlled by them, their close relatives or related trusts) sell shares to a purchaser as a result of which the purchaser is required to make an offer under clause 56, such directors must ensure that as a condition of the sale the purchaser undertakes to fulfil his obligations under that Rule.

SECTION V
TIMING AND CONTENT OF DOCUMENTS

20.   Availability of information

Information about companies involved in an offer must be made equally available to all shareholders as nearly as possible at the same time and in the same manner.

21.   Offer document time limit

   (1) The offer document, which must not be dated more than three days prior to despatch, should normally be posted by or on behalf of the offeror company within twenty-one days (or, in the case of a securities exchange offer, thirty-five days) of the announcement of the terms of the offer.

   (2) The consent of the Commission is required if the offer document may not be posted within this period.

22.   Contents of offer document

The offer document submitted by the offeror to the offeree shareholders shall contain all such information as is necessary to enable offeree shareholders to reach a properly informed decision.

23.   Offeree circular

The offeree company shall send to its shareholders within fourteen days of the posting of the offer document a document containing all such information as it considers to be necessary to enable its shareholders to reach a properly informed decision on the offer.

24.   Views of offeree’s board and financial adviser

   (1) The offeree company’s document must include the views of its board on the offer and the written advice of its financial adviser as to whether the offer is, or is not, fair and reasonable and the reasons therefor.

   (2) Reference is made in this regard to clause 5.

   (3) If the offeree company’s financial adviser is unable to advise whether the offer is, or is not, fair and reasonable the Commission should be consulted.

25.   Subsequent documents

   (1) Documents subsequently sent to shareholders of the offeree company by either party must contain details of any material changes in information previously published by or on behalf of the relevant party during the offer period.

   (2) If there have been no such changes this must be stated.

SECTION VI
STANDARD OF CARE AND RESPONSIBILITY

26.   Prospectus standard

   (1) Any document must be prepared with the same standard of care as if it were a prospectus.

   (2) This applies whether the document is issued by the company, or by an adviser on its behalf, or by any other person in relation to an offer.

   (3) Those who issue any such document must ensure that it remains accurate and up to date throughout the offer period, and must notify shareholders of any material change as soon as possible.

27.   Sufficient information

   (1) Shareholders must be given sufficient information and advice to enable them to reach a properly informed decision as to the merits or demerits of an offer.

   (2) Such information must be available to shareholders early enough to enable them to make a decision in good time.

   (3) The obligation of an offeror in these respects towards the shareholders of the offeree company is no less than the offeror’s obligation towards its own shareholders.

28.   Directors’ joint and several responsibility

Documents shall state that all directors of the offeror, or, as appropriate, the offeree, jointly and severally accept full responsibility for the accuracy of information contained in the document and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in the document have been arrived at after due and careful consideration and there are no other facts not contained in the document, the omission of which would make any statement in the document misleading.

29.   Commission’s consent required for exclusion of directors

   (1) If it is proposed that any director shall be excluded from such a statement, the Commission’s consent is required.

   (2) In such cases, the exclusion and reasons for it shall be stated in the document.

SECTION VII
PROFITS FORECASTS

30.   Standard of care

   (1) A profit forecast must be compiled with due care and objectivity by the directors, whose responsibility it is.

   (2) The financial advisers must report whether or not they are able to satisfy themselves that the forecast has been so compiled with such report must be set out in the relevant document.

31.   Assumptions

   (1) When a profit forecast appears in any document, the assumptions, including the commercial assumptions, upon which the forecast is based must be stated in the document.

   (2) Such assumptions shall be specific rather than vague.

   (3) All-embracing assumptions and those relating to the general estimates made in the profit forecast shall be avoided.

   (4) Furthermore it will not normally be acceptable for assumptions to relate to matters which the directors, by virtue of their particular knowledge and experience in the business, are best able to take a view on, or over which they are able to exercise control, since such matters should be reflected directly in the profit forecast.

SECTION VIII
ASSET VALUATIONS

32.   Disclosure of revaluations

When revaluations of assets of either the offeror or offeree company are made in connection with an offer, details of the revaluations or an appropriate summary thereof must be included in the offer document or other document circulated to the shareholders of the offeree company by its board.

33.   —

   (1) The revaluations must be carried out or confirmed by an independent, professionally- qualified valuer or other expert and the basis of valuation clearly stated.

   (2) The document shall include a statement that the valuer or other expert has given and not withdrawn his consent to the issue of the document with the inclusion of the valuation in the form and context in which it is included. Preparing revaluations

SECTION IX
ISSUANCE OF DOCUMENTS

34.   Filing of documents for comments

   (1) Two copies of all documents must be filed with the Commission for comment prior to release or publication and must not be released or published until the Commission has confirmed that it has no further comments thereon.

   (2) The final copy of the document must be filed with the Commission and the Stock Exchange in duplicate.

35.   Publication of announcements

All announcements must be published as a paid announcement in at least one daily newspaper of general circulation throughout Zambia.

SECTION X
OFFER TIMETABLE

36.   Minimum period

An offer must be open for at least 21 days following the date of posting of the offer.

37.   Conditions

If the offer is conditional, it must specify the latest day when the offeror can declare the offer unconditional.

38.   Fourteen day period for acceptance

   (1) Where a conditional offer becomes or is declared unconditional, it shall remain open for acceptance for not less than fourteen days thereafter.

   (2) In any announcement of an extension of an offer, either the next closing date must be stated or, if the offer is then unconditional, a statement may be made that the offer will remain open until further notice.

   (3) In the latter case, at least fourteen days notice in writing must be given before the offer is closed to those shareholders who have not accepted the offer.

39.   Final day

Except with the consent of the Commission, an offer shall not be kept open after the expiry of sixty days from the date of the posting of the initial offer document unless it has previously become unconditional.

40.   Revised offer

   (1) If, in the course of an offer, the offeror revises its terms, all offeree shareholders, whether or not they have already accepted the offer, will be entitled to the revised terms.

   (2) A revised offer must be kept open for at least fourteen days form the date of posting written notification of the revision to shareholders.

41.   Acceptor’s right to withdraw

An acceptor shall be entitled to withdraw his acceptance after twenty-one days from the first closing date of the offer, if the offer has not by then become unconditional. Such entitlement to withdraw shall be exercisable until the offer becomes unconditional.

SECTION XI
ANNOUNCEMENT OF RESULTS OF OFFER

42.   —

   (1) The offeror shall immediately inform the Commission and the Stock Exchange that an offer has been revised or extended, has expired or has become or has been declared unconditional and shall publish an announcement on the following day to that effect.

   (2) The announcement shall state the number of shares which it or any person acting in concert with it has or controls, the number of shares for which acceptances of the offer have been received, and the number of shares otherwise acquired by the offeror and any person acting in concert with it during the offer period.

   (3) The statement must also specify the percentages of the relevant classes of share capital, and the percentages of voting rights, represented by these numbers Nature of announcement

43.   Consequences of failure to announce

   (1) The Commission shall be consulted if an offeror is unable to comply with any of the requirements of clause 42.

   (2) The Commission may require that acceptors be granted a right of withdrawal, on terms acceptable to the Commission, until the requirements of this rule can be met.

SECTION XII
RESTRICTIONS ON DEALINGS BEFORE AND DURING THE OFFER

44.   Restrictions on dealings before the offer

   (1) No dealings of any kind in the securities of the offeree company may be transacted by any person with a commercial interest who has confidential price sensitive information concerning an actual or contemplated offer or revised offer between the time when there is reason to suppose that an approach or an offer or revised offer is contemplated and the announcement of the approach, the offer, the revised offer, or of the termination of the discussions.

   (2) Such restriction does not apply to an offeror, or persons acting in concert with the offeror, in respect of such dealings if such dealings are transacted for purposes of the offer unless the offeror, or a person acting in concert with the offeror, is a director or employee of the offeree company.

   (3) No such dealings may take place in the securities of the offeror except where the offer in not price sensitive in relation to those securities.

45.   Restrictions on dealings during the offer

During an offer period, the offeror and persons acting in concert with the offeror must not sell any securities in the offeree company except with the prior consent of the Commission and following twenty-four hours public notice that such sales might be made.

46.   Restrictions on dealings by offeror during non-cash offers

During an offer period for an offer consisting of shares of the offeror traded on a Stock Exchange (and for which there is no cash alternative) the offeror, and persons acting in concert with him, may not engage in any purchase of the offeror’s shares until the later of the date the offeror abandons its intention to conduct the offer and the date the related offer period expires.

47.   Dealings after termination of discussion

If discussions are terminated or the offeror decides not to proceed with an offer after an announcement has been made that offer discussions are taking place or that an approach or offer is contemplated, no dealings in securities of the offeree company by any person privy to this information may take place prior to an announcement of the position.

SECTION XIII
DISCLOSURE OF DEALINGS DURING OFFER PERIOD

48.   Dealings in relevant securities

   (1) During an offer period all parties to a takeover or merger transaction and their advisers and any persons acting in concert with any of them are free to deal, subject to clauses 44, 455, 46, 47, 52, 53 and 54 and to the disclosures and restrictions mentioned in this clause being made and complied with by them, as follows—

      (a)   Own account-Dealings in relevant securities by any such person for his own account during an offer period must be disclosed forthwith in writing to the Commission.

      (b)   Discretionary accounts-Dealings in relevant securities by any such person for discretionary accounts (but not for non-discretionary accounts) of investment clients during an offer period must be disclosed forthwith in writing to the Commission.

      (c)   Material trading arrangement-Dealings in relevant securities by any company having a material trading arrangement with an offeree company must be disclosed forthwith in writing to the Commission.

   (2) For the purposes of this rule—

      (a)   dealings include the purchase and sale of securities, the exercise or conversion of rights over securities, subscriptions for securities, and redemptions or purchases by a company of its own securities;

      (b)   disclosure of dealings must include the following information—

      (i)   the total of the relevant securities in question purchased or sold, or redeemed or purchased by the company itself;

      (ii)   the prices paid or received;

      (iii)   the identity of the person(s) dealing;

      (iv)   if the dealing is by a person acting in concert with the offeror or the offeree company, an explanation of how that status arises; and

      (v)   if the disclosure is made by a five per cent shareholder, a statement to that effect;

      (vi)   the resultant total amount of relevant securities owned or controlled by the person(s) in question (including those of any person with whom there is an agreement or understanding) and the percentage which it represents.

49.   Dealings by five per cent shareholders

During an offer period, if a person, or group of persons acting in concert, owns or controls (directly or indirectly) five per cent or more of any class of relevant securities, or as a result of any transaction will so own or control five per cent or more, dealings in such securities of that company by such person or persons (or any other person through whom ownership or control is derived) must be disclosed to the Commission.

50.   Discretionary Accounts

If a person manages investment accounts on a discretionary basis, relevant securities so managed will be treated, for the purpose of this rule, as controlled by that person and not by the person on whose behalf the relevant securities are managed.

SECTION XIV
CASH OFFER

51.   When cash offer required

   (1) Where-

      (a)   shares of any class under offer in the offeree company have been purchased for cash by an offeror, and any person acting in concert with the offeror, during the offer period and within six months prior to its commencement and such shares carry ten per cent or more of the voting rights or the offeree company;

      (b)   an offeror making a non-cash offer (for which there is no cash alternative) acquires shares of the offeree for cash during the offer period and thereby becomes obligated to increase its offer pursuant to clause 52; or

      (c)   in the view of the Commission there are circumstances which render such a course necessary in order to give effect to General Principal One set forth in the Second Schedule, the offer or revised offer, as the case may be, shall be in cash or accompanied by a cash alternative and, in the case of (a) and (c), the offer price shall not be less than the highest price paid by the offeror or any person acting in concert with it for shares of that class during the offer period and within six months prior to its commencement.

   (2) The consent of the Commission is required if the offeror wishes to make its offer for a price other than the highest price paid by it, or any person acting in concert with it for shares of the class that is the subject of the offer during the offer period and within six months prior of its commencement.

SECTION XV
PURCHASES AT ABOVE OFFER PRICE

52.   Highest price paid

If the offeror or any person acting in concert with its purchases securities in the offeree company in the market or otherwise during the offer period at above the offer price, then the offeror must increase the offer to not less than the highest price (excluding stamp duty and dealing costs) paid for any securities so acquired.

53.   Offers involving a further issue of listed securities

   (1) If the offer involves a further issue of securities of a class already traded on a Stock Exchange, the current value of the offer on a given day should normally be established by reference to the average traded price of such securities traded during the immediately preceding trading period.

   (2) If the offer involves a combination of cash and securities and further purchases of the offeree company’s shares oblige the offeror to increase the value of the offer, the offeror must endeavour, as far as practicable, to effect such increase while maintaining the same ratio of cash to securities as is represented by the offer.

54.   Shareholder notification

Shareholders of the offeree company must be notified in writing of the increased price at least fourteen days before the offer closes, and an announcement must be made stating the number and class of securities purchased and the price paid.

55.   Special dates

Except with the consent of the Commission neither the offeror nor any person acting in concert with it may enter into arrangements to purchase or sell securities of the offeree company, or to accept an offer, either during an offer or when one is reasonably in contemplation if such arrangements have special conditions which are not extended to all shareholders.

SECTION XVI
MANDATORY OFFER

56.   When mandatory offer required

Subject to the granting of a waiver by the Commission, if—

      (a)   any person acquires, whether by a series of transactions over a period of time or not, thirty-five percent or more of the voting rights of a company;

      (b)   two or more persons are acting in concert, and they collectively hold less than thirty-five per cent of the voting rights of a company, and any one or more of them acquires voting rights and such acquisition has the effect of increasing their collective holding of voting rights to thirty- five per cent or more of the voting rights of the company;

      (c)   any person holds not less than thirty-five per cent, but not more than fifty per cent, of the voting rights of a company and that person acquires additional voting rights and such acquisition has the effect of increasing that person’s holding of voting rights of the company by more than five per cent from the lowest percentage holding of that person in the twelve-month period ending on and inclusive of the date of the relevant acquisition; or

      (d)   two or more persons are acting in concert, and they collectively hold not less than thirty-five per cent, but not more than fifty per cent, of the voting rights of a company, and any one or more of them acquires additional voting rights and such acquisition has the effect of increasing their collective holding of voting rights of the company by more than five per cent from the lowest collective percentage holding of such persons in the twelve-month period ending on and inclusive of the date of the relevant acquisition, that person, or the principal members of the concert group, as the case may be, shall extend offers, on the basis set out in this rule, to the holders of each class of equity share capital of the company, whether the class carries voting rights or not, and also to the holders of any class of voting non-equity share capital in which such person, or persons acting in concert with him, hold shares. Offers for different classes of equity share capital must be comparable and the Commission shall be consulted in advance in such cases.

57.   Conditions

Except with the consent of the Commission—

      (a)   offers made under clause 56 must be conditional upon, and only upon, the offeror having received acceptances in respect of voting rights which, together with voting rights acquired or agreed to be acquired before or during the offer, will result in the offeror and any person acting in concert with it holding more than fifty per cent of the voting rights; and

      (b)   no acquisition or voting rights which would give rise to a requirement for an offer under clause 56 may be made if the making or implementation of such offer would or might be dependent on the passing of a resolution at any meeting of shareholders of the offeror or upon any other conditions, consents or arrangements.

58.   Consideration

   (1) Offers made under clause 56 must, in respect of each class or equity share capital involved, be in cash or be accompanied by a cash alternative at not less than the highest price paid by the offeror or any person acting in concert with it for voting rights of the offeree within the preceding six months.

   (2) The cash offer or the cash alternative must remain open after the offer has become or is declared unconditional for not less than fourteen days thereafter.

   (3) The Commission shall be consulted where there is more than one class of voting capital involved or where there are no relevant purchases within the preceding six months.

   (4) The Commission’s consent is required if the offeror considers that the highest price should not apply in a particular case.

59.   Restrictions on control by offeror

Except with the consent of the Commission, no nominee of an offeror or persons acting in concert with it may be appointed to the board of the offeree company, nor may an offeror and persons acting in concert with it exercise offeree company voting rights, until the offer document has been posted.

60.   Prompt registration of transfers

The board and officials and registrars of an offeree company shall use their best endeavours to ensure the prompt registration of transfers during an offer period so that shareholders can freely exercise their voting and other rights.

SECTION XVII
CONDITIONS

61.   Subjective conditions

An offer must not normally be made subject to conditions which depend on judgments by the offeror or the fulfilment of which is in its hands.

62.   Acceptance condition

   (1) Except with the consent of the Commission, all offers (other than partial offers), whether voluntary or mandatory, shall be conditional upon the offeror having received acceptances in respect of shares which, together with shares acquired or agreed to be acquired before or during the offer, will result in the offeror and persons acting in concert with it holding more than fifty per cent of the voting rights of the offeree company.

   (2) A voluntary offer may be made conditional on an acceptance level of shares carrying a higher percentage of the voting rights.

   (3) Mandatory offers made under clause 56 shall be subject to no other conditions, whether as to minimum or maximum levels or acceptances required to be received or otherwise.

   (4) It follows that the offer should be unconditional as to acceptances where the offeror and persons acting in concert with it hold more than fifty per cent of the voting rights before such offer is made.

SECTION XVIII
DELAY BEFORE SUBSEQUENT OFFER

63.   Temporary ban

   (1) Except with the consent of the Commission, where an offer has been announced or posted but has not become unconditional in all respects, and has been withdrawn or has lapsed, neither the offeror nor any person who acted in concert with it in the course of the original offer, nor any person who is subsequently acting in concert with any of them, may within twelve months from the date on which such offer withdrawn or lapses either—

      (a)   make an offer for the offeree company; or

      (b)   acquire any voting rights of the offeree company if offeror or persons acting in concert with it would thereby become obliged under clause fifty-six to make an offer.

   (2) The restriction in this Rule may also apply where a person, having made an announcement which, although not amounting to the announcement of an offer, raises or confirms the possibility that an offering might be made, does not announce a firm intention either to make, or not to make, an offer within a reasonable time thereafter.

64.   Partial offers

   (1) The restrictions in clause 63 also apply following a partial offer which could result in a holding of not less than thirty-five per cent of the voting rights of the offeree company whether or not the offer has become or been declared wholly unconditional.

   (2) When such an offer has become or been declared wholly unconditional, the period of twelve months runs from the date.

65.   Six months delay before acquisition above offer price

   (1) Except with the consent of the Commission, if a person, together with any person acting in concert with him holds more than fifty per cent of the voting rights of a company, neither that person nor an person acting in concert with him may, within six months of the closure of any previous offer made by him to the shareholders of that company which become or was declared wholly unconditional, make a second offer to shareholders, or purchase any shares of that company at a higher price than that made available under the previous offer.

   (2) For this purpose the value of a securities exchange offer shall be calculated as at the day the offer became, or was declared, unconditional.

SECTION XIX
SUBSTANTIAL ACQUISITIONS

66.   Disclosures

   (1) Following an acquisition or disposal of shares carrying voting rights in a company, or rights over such shares, a person must disclose that acquisition or disposal and his total holding to the company not later than 9.00 a.m. on the dealing day following the date of the acquisition or disposal, if—

      (a)   as a result of the acquisition he comes to hold, with any shares or rights over shares already held by him, shares or rights over shares representing twenty per cent or more but less than thirty-five per cent of the voting rights in a company; or

      (b)   as a result of the acquisition or disposal his holding of shares or rights over shares already represents twenty per cent or more of the voting rights and is increased or decreased to or beyond any whole percentage figure representing twenty per cent or more but not exceeding thirty-five per cent; or

      (c) as a result of a disposal his holding of shares or rights over shares decreases from one representing twenty per cent or more of the voting rights to one representing less than twenty per cent.

   (2) Where two or more persons act by agreement or understanding in the acquisition by one or more of them of shares carrying voting rights in a company, or rights over such shares, their holding and acquisitions must be aggregated and treated as a holding or acquisition by one person for the purpose of this Rule.

   (3) Each person acting in such manner must ensure that the obligations arising under this Rule are fulfilled.

   (4) The terms of such disclosures are the same (with any necessary modifications as may be appropriate) as for clause 48.

SECURITIES (ADVERTISEMENTS) RULES

[Section 78]

Arrangement of Rules

   Rules

   1.   Title

   2.   Interpretation

   3.   Restrictions on advertising

   4.   Exception from restrictions on advertising

   5.   Advertisements to comply with schedule

   6.   Advertisement directions

   7.   Advertisements to be copied to the commission

   8.   Offences

      SCHEDULE

 

[Rules by the Securities and Exchange Commission]

<TS:0.197222,NM,NO,0.39375,NM,NO,0.590278,NM,NO,0.786806,NM,NO,0.984028,NM,NO,1.18125,NM,NO,1.37778,NM,NO,1.575,NM,NO,1.96875,NM,NO,2.52153,NM,NO,7.5,RT,NO>Act 13 of 1994,

<TS:0.197222,NM,NO,0.39375,NM,NO,0.590278,NM,NO,0.786806,NM,NO,0.984028,NM,NO,1.18125,NM,NO,1.37778,NM,NO,1.575,NM,NO,1.96875,NM,NO,2.52153,NM,NO,7.5,RT,NO>SI 166 of 1993.

 

1.   Title

These Rules may be cited as the Securities (Advertisements) Rules.

 

2.   Interpretation

   (1) In these Rules, unless the context otherwise requires—

“advertisement” includes every form of advertising, whether in a publication, brochure, handout, or letter-head, or by the display of notices, or by means of circulars or other documents, or by an exhibition of photographs or cinematograph films or videos, or by way of sound broadcasting or television, or by the distribution of recordings or in any other manner, but shall not include dealers’ circulars to customers, nor any communications between licensees or between licensees and issuers of securities;

“image advertisement” means an advertisement that does no more than—

      (a)   promote public awareness of the licensee;

      (b)   describe the services the licensee provides or the types of investment the licensee markets;

      (c)   commend the licensee in general, but not any particular service the licensee provides or types of investment the licensee markets; or

      (d)   offer to supply further information on request;

“securities advertisement” means any advertisement for or in connection with securities or securities business;

“licensee” means a person licensed under Part IV of the Act;

“promotion” means advertising, issuing a prospectus, application form or proposal form, or circulating or making available promotional material;

“prospectus” means any prospectus, notice, circular, or other document which is an offer to the public of any securities for subscription, purchase or exchange;

“Securities” has the meaning given in section 2 of the Act, and includes investments in collective investment schemes;

“securities business” means dealing in, or advising in relation to, securities;

“short form advertisement” means advertisement that contains the licensee’s name and in respect of the business of the licensee’s securities business does no more than some or all of the following—

      (a)   display the licensee’s address, telephone number, symbol or logogram;

      (b)   describe the licensee’s business and the fees charged;

      (c)   contain a statement that the licensee is regulated in the conduct of the licensee’s business by the Commission;

      (d)   state, in relation to securities that the licensee will or may buy or sell (or arrange to buy or sell), their names, indicative prices, difference of prices from previous prices, their income and yields and their earnings (or price/earnings ratio);

      (e)   state, simply as a matter of fact, and not so as to imply any offer to deal, that the licensee alone or with others named, arranged the issue of or a transaction in a particular security.

   (2) For the purposes of these Rules, an advertisement issued outside Zambia shall be treated as issued in Zambia if—

      (a)   it is directed to persons in Zambia; or

      (b)   it is made available to persons in Zambia as a newspaper, journal, magazine or [illegible word] published and circulating principally outside Zambia or in a sound or television broadcast transmitted principally for reception outside Zambia.

 

3.   Restrictions on advertising

Subject to rule 4, no person other than a licensee shall issue or cause to be issued a securities advertisement in Zambia.

 

4.   Exceptions from restrictions on advertising

Rule 3 does not apply to an advertisement issued or caused to be issued by, and relating only to securities issued by—

      (a)   the Government of Zambia or the government of any country or territory outside Zambia; or

      (b)   the central bank of any country or territory.

 

5.   Advertisements to comply with Schedule

A licensee shall not issue or cause to be issued, whether in Zambia or elsewhere, a securities advertisement unless the requirements of the Schedule to these Rules are complied with in relation to that advertisement.

 

6.   Advertisement directions

   (1) If the Commission considers that any securities advertisement issued, caused to be issued or proposed to be issued by a licensee is misleading or is otherwise in breach of these Rules, the Commission may by notice in writing give the licensee a direction under this rule.

   (2) A direction under this rule may contain all or any of the following prohibitions or requirements—

      (a)   a prohibition on the issue of advertisements of a specified kind;

      (b)   a requirement that advertisements of a particular description shall be modified in a specified manner;

      (c)   a prohibition on the issue of any advertisements which are, wholly or substantially, repetitions of an advertisement which has been issued or is proposed to be issued and which is identified in the direction;

      (d)   a requirement to take all practical steps to withdraw from display in any place or from circulation any advertisement or any advertisements of a particular description specified in the direction;

      (e)   a requirement, in respect of a particular advertisement, that a correction be published in the manner and form specified by the Commission.

 

7.   Advertisements to be copied to the Commission

A copy of every securities advertisement issued or caused to be issued by a licensee shall be forwarded forthwith by the licensee to the Commission.

 

8.   Offences

Any person who issues or causes to be issued in Zambia a securities advertisement the issue of which is prohibited by rule 3, or which does not comply with rule 5 or with a direction under rule 6, commits an offence and is liable on summary conviction to a fine not exceeding one hundred thousand penalty units.

[Am by Act 13 of 1994.]

SCHEDULE

[Rule 5]

1.   Prominence of required statements

The significance of any statement or other matter required by the provisions of this Schedule to be included in an advertisement shall not be disguised either through lack of prominence in relation to the remainder of the advertisement or by the inclusion of matter calculated to minimise the significance of the statement or the other matter required to be included.

2.   Advertisements to be clear and not misleading

   (1) The content of a securities advertisement and the manner of its presentation shall be such that the advertisement is not likely to be misunderstood.

   (2) A securities advertisement shall not contain any statement, promise or forecast unless the licensee issuing it has taken all reasonable steps to ensure that each such statement, promise or forecast is not misleading in the form or context in which it appears.

   (3) A securities advertisement shall not contain any statement, purporting to be a statement of fact that the licensee issuing it does not reasonably believe at the time, on the basis of evidence of which he has a record in his possession, to be true.

   (4) If the securities or securities business to which an advertisement relates is available in limited quantities, or for a limited period or on special terms for a limited period, the advertisement may say so but, if that is not the case, the advertisement shall not contain any statement or matter that implies it is so.

3.   Advertisements to be distinguished from other matter

   (1) The terms of a securities advertisement and the manner of its presentation shall be such that it appears to be an advertisement issued with the object of promoting the securities, securities business or licensee to which it relates.

   (2) Where the medium in which the advertisement is carried contains or presents other matter the advertisement shall be distinguished from that other matter so that the part that is an advertisement clearly appears as such.

4.   Advertisements to identify the securities or securities business to which they relate

Except in the case of a short form advertisement or an image advertisement, the nature of the securities or securities business to which the advertisement relates shall be clearly described.

5.   Promotions to be genuine

No securities advertisement shall be issued with the intention not of persuading persons who respond to the advertisement to pursue the subject matter of the advertisement but, with the intention instead, of persuading them to enter into an agreement, or use business services, of a description not mentioned in the advertisement.

6.   Advertisements not to imply governmental approval

A securities advertisement shall not contain any matter that states or implies that the securities or securities business which is the subject of the advertisement or any matter in the advertisement has the approval of any Government department or of the Commission.

7.   Synopses to be fair

A securities advertisement that states some only of the rights and obligations attaching to an investment in securities or some only of the terms and conditions of a securities agreement shall—

      (a)   state sufficient of them to give a fair view of the nature of the investment in securities, of the financial commitment undertaken by an investor in acquiring the investment in securities and of the risks involved; and

      (b)   state how a written statement of all of them can be obtained.

8.   Comparison with other investments or services

A securities advertisement shall not compare or contrast one investment in securities with an alternative investment, or one securities service with an alternative securities service, unless the comparisons and contrasts are fair in relation to what is promoted and to the alternative having regard to what is not stated as well as to what is stated.

9.   Taxation

   (1) A securities advertisement that refers to taxation shall contain a warning that the levels and bases of taxation can change.

   (2) A securities advertisement that contains any matter based on an assumed rate of taxation shall state what that rate is.

   (3) A securities advertisement that refers to reliefs from taxation—

      (a)   shall state that the reliefs are those that currently apply; and

      (b)   shall contain a statement that the value of a relief from taxation depends upon the circumstances of the tax payer.

10.   Cancellation rights

Where a securities advertisement states that an investor who enters into an investment agreement to which the advertisement relates will be given an opportunity to cancel the agreement, the advertisement shall define the period during which the investor will have that right and the time when the period will begin.

11.   —

A securities advertisement shall not contain information about the past performance of securities investments of any description unless-

      (a)   it is relevant to the performance of the securities investment the subject of the advertisement;

      (b)   except where the source of the information is the advertiser itself, the source of the information is stated;

      (c)   if the whole of the information is not set out—

      (i)   what is included is not unrepresentative, unfair or otherwise misleading; and

      (ii)   the exclusion of what is excluded does not have the effect of exaggerating the success of performance over the period to which the information that is included relates;

      (d)   if the information is presented in the form of a graph or chart, no part of the information is omitted so as to give a misleading impression of the rate at which variable quantities have changed; Past performance

      (e)   in the case of an advertisement of units or shares in a collective investment scheme, any comparison made between the value of an investment in those units or shares at different times is on an offer to bid basis, that is to say, on the basis of what it would have cost to acquire an amount of the units at the earlier time and what a disposal of that amount of those units would have realised at the later time, and the fact that that is the basis of the comparison is stated;

      (f)   the period which is selected as illustrating past performance is a period of not less than three years which period must end no more than three months before the date of the issue of the advertisement; and

      (g)   the advertisement contains a warning that the past is not necessarily a guide to the future.

12.   Indications of the scale of business activities

   (1) A securities advertisement shall not contain any statement indicating the scale of the activities or the extent of the resources of a licensee, or of any group of which the licensee is a member, so as to imply that the resources available to support the performance of the licensee’s obligations are greater than they are.

   (2) Statements which relate to resources of members of a group other than the licensee shall clearly state that fact.

13.   —

   (1) This paragraph applies to any securities advertisement that is not a short form or image advertisement.

   (2) An advertisement shall contain a statement in accordance with this paragraph warning of the risks involved in acquiring or holding the securities investment the subject of the advertisement.

   (3) Where the advertisement relates to a securities investment in the case of which deductions for charges and expenses are not made uniformly throughout the life of the investment but are loaded disproportionately onto the early years, the advertisement shall draw attention to that fact and that accordingly, if the investor withdraws from the investment in the early years, he may not get back the amount he has invested.

   (4) Where the advertisement relates to an investment that can fluctuate in value in money terms, the statement shall draw attention to that fact and to the fact that the investor may not get back the amount he has invested.

   (5) Where the advertisement offers an investment as likely to yield a high income or as suitable for an investor particularly seeking income from his investment, the statement shall draw attention to that fact that income from the investment may fluctuate in value in money terms.

   (6) Where the advertisement relates to an investment denominated in a currency other than that of the country in which the advertisement is issued, the advertisement shall draw attention to the fact that changes in rates of exchange between currencies may cause the value of the investment to diminish or to increase.

   (7) Where the advertisement contemplates the investor entering pay unspecified additional amounts later, the statement shall draw attention to the fact that the investor may or, as the case may be, will have to pay more money later and that accordingly a transaction in that investment can lose the investor more than his first payment.

   (8) Where the advertisement relates to an investment that is not readily realizable—

      (a)   if the investment is not traded on an established securities exchange, the statement shall draw attention to the fact that there is no established market for investment so that it may be difficult for the investor to sell the investment or for him to obtain reliable information about its value or the extent of the risks to which it is exposed; or Risk warnings

      (b)   if the investment is traded on an established securities exchange but is dealt in so irregularly or infrequently—

      (i)   that it cannot be certain that a price of that investment will be quoted at all times; or

      (ii)   that it may be difficult to effect transactions at any price that may be quoted;

the statement shall draw attention to that fact.

14.   Guaranteed returns

A securities advertisement shall not describe a prospective investment return as being in any way guaranteed, secured, assured or promised, either expressly or impliedly, unless the advertisement has been approved in writing by the Commission prior to its issue.

15.   Dating

   (1) Each securities advertisement in a publication shall state in the bottom right hand corner of the advertisement the date on which it was first issued.

   (2) Any securities advertisement by way of a prospectus, brochure, handout or similar marketing literature shall state the date on which it was first issued on either the front or back outside cover page.

   (3) Any securities advertisement by way of a cinematograph film, video or TV broadcast shall bear the date on which it was first issued prominently at the beginning or end of the advertising material.

SECURITIES (COMPENSATION FUND) REGULATIONS

[Section 27]

[Re-denominate the currency as stipulated under S 4 of Re-denomination Act, 8 of 2012, read with Bank of Zambia Act, 43 of 1996.]

Arrangement of Regulations

   Regulation

   1.   Title

   2.   Interpretation

   3.   Ownership of compensation fund

   4.   Compensation fund to be kept in dedicated bank account

   5.   Accounts of compensation fund

   6.   Investment of compensation fund

   7.   Application of compensation fund

   8.   Claims against compensation fund

   9.   Notice calling for claims against compensation fund

   10.   Power of Committee in respect of claims

   11.   Appeals

   12.   Prosecution or conviction not a condition precedent to payment of compensation

   13.   Authority to pay claimant

   14.   Power of Committee to require production of securities, etc.

   15.   Subrogation of Commission to rights, etc., of claimant upon payment from fund

   16.   Payment of claims only from compensation fund

   17.   Provision where compensation fund insufficient to meet claims

   18.   Provision where claims exceed total amount payable

   19.   Power of Committee to enter into contracts of insurance

   20.   Application of insurance moneys

 

[Regulations by the Minister]

SI 162 of 1993,

SI 66 of 1999.

 

1.   Title

These Regulations may be cited as the Securities (Compensation Fund) Regulations.

 

2.   Interpretation

In these Regulations, unless the context otherwise requires—

“compensation fund” and “fund” mean the compensation fund established by the Minister under section 64 of the Act;

“Compensation Fund Committee” and “Committee” mean the Compensation Fund Committee appointed under section 65 of the Act;

“default”, in relation to the failure by a licensee to perform a legal obligation, means a default arising from—

      (a)   the bankruptcy, winding up or insolvency of the licensee;

      (b)   any breach of trust committed by the licensee; or

      (c)   any defalcation, fraud or misfeasance committed by the licensee, or by any representative, director or employee thereof;

“legal obligation” includes an obligation arising under a contract or quasi contract or under a trust (including a constructive trust);

“Licensee” means a dealer of an investment adviser, as the case may be, licensed under Part IV of the Act;

“prescribed” means prescribed by the Commission;

“representative” has the same meaning as section 2 of the Act.

 

3.   Ownership of compensation fund

The assets of the fund shall be the property of the Commission but shall be kept separate from all other property and shall be held in trust for the purposes set out in these Regulations.

 

4.   Compensation fund to be kept in dedicated bank account

All moneys forming part of the fund shall, pending the investment or application thereof in accordance with these Regulations, be paid or transferred into a dedicated bank account with a registered bank in Zambia.

 

5.   Accounts of compensation fund

   (1) The Compensation Fund Committee shall establish and keep proper accounts of the fund and shall before 30th June, in each year cause a balance sheet in respect of such accounts to be made out as at the preceding 31st March.

   (2) The Committee shall appoint an auditor to audit the accounts of the fund.

   (3) The auditor appointed by the Committee shall regularly and fully audit the accounts of the fund and shall audit each balance sheet and cause it to be laid before the Committee not later than three months after the balance sheet was made out.

   (4) The costs of audit pursuant to clause (3) shall be borne by the <FT:Verdana,SN>Compensation Fund.

[Reg 5(4) am by reg 2 of SI 66 of 1999.]

 

6.   Investment of compensation fund

Any moneys in the fund that are not immediately required for its purposes may be invested by the Committee in any manner in which trustees are for the time being authorised by law to invest trust funds.

 

7.   Application of compensation fund

   (1) Subject to these Regulations, the fund shall be held and applied for the purpose of compensating persons who suffer pecuniary loss as referred to in section 67 of the Act from any default committed by a licensee, or by any representative director or employee thereof, in relation to any money or other property which, in the course of or in connection with the business of that licensee—

      (a)   was entrusted to or received by the licensee, or any representative director or employee thereof, for or on behalf of any other person; or

      (b)   (in the case of a licensee who, in respect of the money or other property, was either the sole trustee or trustee with any other person), was entrusted to or received by such licensee, or by any representative director or employee thereof, as trustee or for or on behalf of the trustees of that money or property.

   (2) Subject to clause (3) the total amount of compensation that may be paid out of the fund under these Regulations to all persons who suffer loss through default by a licensee, or by any representative director or employee thereof, shall not exceed in respect of that licensee the sum of one million kwacha, which shall cover—

      (a)   all claims arising out of that default; and

      (b)   all claims arising out of any earlier default by that licensee which have not been the subject of a determination under regulation thirteen.

   (3) Notwithstanding clause (2), the Minister may, by order, direct the Committee to increase the total amount in such sum as he may determine, which shall be applied from the fund in respect of a particular licensee in payment to persons who suffer loss through default by that particular licensee, or by any representative, director or employee thereof:

Provided that the total amount to be so applied shall not in the case of any default exceed by more than fifty per cent the maximum sum specified in clause (2).

 

8.   Claims against compensation fund

   (1) Subject to these Regulations, every person who suffers pecuniary loss as provided in clause (1) of regulation 7 shall be entitled to claim compensation from the fund and to take proceedings in the Court against the Committee to establish such claim.

   (2) Subject to these Regulations, the amount which any claimant shall be entitled to claim as compensation from the fund shall be the amount of the actual pecuniary loss suffered by him (including the reasonable costs of and disbursements incidental to the making and proof of his claim) less the amount or value of all moneys or other benefits received or receivable by him from any source other than the fund in reduction of the loss.

   (3) In addition to any compensation payable under these Regulations, interest shall be payable out of the fund on the amount of the compensation, less any amount attributable to costs and disbursements, at such rate as the Commission may determine, calculated from the day upon which the default was committed and continuing until the day upon which the claim is satisfied.

   (4) Clause (1) does not entitle any licensee to make a claim against the fund.

 

9.   Notice calling for claims against compensation fund

   (1) The Committee may cause to be published in a daily newspaper published and circulating generally in Zambia a notice, in or to the effect of the form prescribed, specifying a date, not being earlier than three months after the said publication, on or before which claims for compensation from the fund, in relation to the person specified in the notice, may be made.

   (2) A claim for compensation from the fund in respect of a default shall be made in writing to the Committee—

      (a)   on or before the date specified in the notice, where a notice under clause (1) has been published; or

      (b)   within six months after the claimant became aware of the default, where no such notice has been published;

and any claim which is not so made shall be barred unless the Committee otherwise determines.

   (3) No action for damages shall lie against the Committee or against any member or offer of the Committee by reason of any notice published in good faith and without malice for the purposes of this regulation.

 

10.   Power of Committee in respect of claims

   (1) Where the Committee is satisfied that a claim for compensation under these Regulations is a proper claim, it shall, subject to these Regulations, make a determination allowing the claim.

   (2) If the Committee is not satisfied as to the propriety of a claim for compensation, it shall make a determination disallowing the claim or, if it is satisfied as to the propriety of part of such a claim, it shall make a determination allowing the claim as to that part.

   (3) The Committee after disallowing (whether wholly or partly) any claim for compensation from the fund shall serve notice of such disallowance in the prescribed form on the claimant or his legal representative.

   (4) In any proceedings brought to establish a claim, evidence of any admission or confession by, or other evidence which would be admissible against, the licensee or other person by whom it is alleged a default was committed shall be admissible to prove the commission of the default, notwithstanding that the licensee or other person is not the defendant in or a party to those proceedings, and all defences which would have been available to that licensee or person shall be available to the Committee.

 

11.   Appeals

   (1) A person aggrieved by a decision of the Committee under regulation 10 may appeal to the High Court.

   (2) No appeal shall be commenced after the expiration of three months after service of notice of disallowance under clause (3) of regulation 10.

   (3) The Court shall have and may exercise, subject to the same limitations, the same powers as the Committee in determining the claim in respect of which an appeal has been brought.

 

12.   Prosecution or conviction not a condition precedent to payment of compensation

The Committee or, where appeal proceedings are brought, the Court, if satisfied that the default on which the claim is founded was actually committed, may allow the claim and act accordingly, notwithstanding that the person who committed the default has not been convicted or prosecuted therefor or that the evidence on which the Committee or Court (as the case may be) acts would not be sufficient to establish the guilt of that person upon a criminal trial in respect of the default.

 

13.   Authority to pay claimant

The determination of the Committee under regulation 10 or the decision on appeal of the Court under regulation eleven shall be sufficient authority to the Commission to pay the claimant the amount allowed.

 

14.   Power of the Committee to require production of securities, etc.

   (1) The Committee may at any time and from time to time require any person to produce and deliver any securities, documents or statements of evidence necessary—

      (a)   in order to substantiate any claim made against the fund; or

      (b)   for the purpose of enabling criminal proceedings to be brought against any person in respect of a default, being a default which is or involves the commission of a criminal offence.

   (2) Where any claimant required to produce any securities, documents, or statements of evidence under clause (1) fails to produce them, the Committee may refuse to allow the claimant’s claim until such time as he produces them.

 

15.   Subrogation of Commission to rights, etc., of claimant upon payment from fund

On payment out of the fund of any moneys in respect of any claim under these Regulations, the Commission shall be subrogated to the extent of such payment to all the rights and remedies of the claimant in relation to the loss suffered by him from the default.

 

16.   Payment of claims only from compensation fund

No moneys or other property belonging to the Commission, other than the fund, shall be available for the payment of any claim under these Regulations whether the claim is allowed by the Committee or, on appeal, by order of the court.

 

17.   Provision where compensation fund insufficient to meet claims

Where the amount at credit in the fund is insufficient to pay the whole amount of all claims against it which have been allowed, the amount at credit in the fund shall, subject to clause (2), be apportioned between the claimants in such manner as the Committee thinks equitable, and any such claim so far as it then remains unpaid shall be charged against future receipts of the fund and paid out of the fund when moneys are available therein.

 

18.   Provision where claims exceed total amount payable

   (1) Where the aggregate of all claims which have been allowed in relation to default by or in connection with a licensee exceeds the total amount which may pursuant to clause (2) of regulation seven be paid under these Regulations in respect of that licensee, then the said total amount shall be apportioned between the claimants in such manner as the Committee thinks equitable.

   (2) Upon payment out of the fund of the said total amount in accordance with such apportionment, all other claims against the fund which may thereafter arise or be made in respect of the same default shall be absolutely discharged.

 

19.   Power of Committee to enter into contracts of insurance

   (1) The Committee may in its discretion enter into any contract with any person or body of persons, corporate or unincorporate, carrying on fidelity insurance business in Zambia whereby the fund will be insured or indemnified to the extent and in the manner provided by such contract against liability in respect of claims under these Regulations.

   (2) Any such contract may be entered into in relation to licensees generally, or in relation to any particular licensee named therein, or in relation to licensees generally with the exclusion of any particular licensee named therein.

   (3) No action shall lie against the Committee or against any member or officer of the Committee for injury alleged to have been suffered by any licensee by reason of the publication in good faith of a statement that any contract entered into under this regulation does or does not apply with respect to the licensee.

 

20.   Application of insurance moneys

No claimant against the fund shall have any right of action against any person or body of persons with whom a contract of insurance or indemnity is made under these Regulations in respect of such contract, or have the right to claim in respect of any moneys paid by the insurer in accordance with any such contract.

 
 

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