Zimbabwe’s diversified financial services company Old Mutual and cement maker PPC Limited are discussing important issues with the government as the counters watch for a listing on the Victoria Falls Stock Exchange (VFEX), the local stock exchange CEO announced.
Last year, the government stopped trading three double-listed switches – Old Mutual, PPC Limited, and Seed Co – arguing that their stocks have become vehicles for repatriating investment from the country, causing currency distortions and a surge in the Exchange rate.
It was decided that the meters must be delisted from ZSE and joined the VFEX.
Seed Co International is now listed on VFEX after delisting from the ZSE. The fungibility was also restored.
However, the ban on Old Mutual and PPC Limited was extended by 12 months to March next year.
The duo should be listed in the VFEX.
However, this did not happen.
“PPC and Old Mutual are privately discussing the suspension issue with the government,” ZSE chief executive officer Justin Bgoni told Business Times.
Old Mutual is also listed on the Johannesburg Stock Exchange and the London Stock Exchange, while PPC is listed on the JSE.
However, the Insurance and Pensions Commission (IPEC) said it was important to find a quick resolution to the Old Mutual and PPC matter.
IPEC stressed that the continued suspension of Old Mutual and PPC requires a swift resolution as several local pension funds have tied their money in the two counters.
Market observers believed that the reluctance of the two companies to list on the VFEX indicated a lack of confidence in the emerging stock market.
The dollar-denominated exchange, created out of the need to attract international capital and hard currency funding to local businesses, has had problems gaining new listings since it was launched last October.
This was attributed, among other things, to the inconsistency of politics as well as bottlenecks in confidence deficits and dividend transfers.
That being said, due to its unforeseen legal system and political inconsistencies, Zimbabwe has been viewed as a high risk country to invest in.
Pursuant to the Foreign Exchange Control Policy RV177 / 2020 issued by the Reserve Bank of Zimbabwe, all foreign currency inflows invested in a VFEX-listed resident company come from free funds or offshore funds and these mutual funds are credited to the foreign investments of the listed company in a currency account.
The central bank also said the funds held in the FCA assets are not subject to any buyback requirements and are intended to be held indefinitely for use by the publicly traded company.
The policy also stipulates that resident companies listed on the VFEX must obtain an exchange control permit in order to open an offshore account in order to receive investment proceeds.
Non-resident companies not listed on VFEX receive mutual funds in local or offshore investment accounts.
The non-resident company can keep the raised funds from the listing or the balance after investing the required amounts in Zimbabwe.
Foreign currencies that resident investors at VFEX receive as divestment proceeds and dividends in their local FCA accounts are eligible for offshore payments and local obligations.
Dividend or disinvestment proceeds from non-resident investors can be freely transferred through the authorized dealer without the prior approval of the exchange control authority.
The government this week offered more incentives to promote listings on VFEX. The exporters listed on the stock exchange would keep 100% of the additional export proceeds. Before the inspection, the exporters on the exchange were entitled to withhold 60% of the proceeds. – business hours