Demutualisation of the Botswana Stock Exchange

By Published On: August 27th, 2018Categories: Articles

History of Botswana Stock Exchange Limited

The modern day Botswana Stock Exchange Limited (BSEL) traces its origins to the Botswana Share Market (BSM) that was established in 1989. Back then there was only one stock broker (Stockbrokers Botswana) and it created the market by matching orders from the public on the shares of the then five listed companies. The buoyancy of Botswana’s economy led to more companies and more stockbrokers coming to the market and ultimately creation of the BSE in 1994 through an Act of Parliament.

Following the establishment of the BSE as a stock exchange through an Act of Parliament of 1994, which resulted in the BSE opening for trading in 1995, the exchange was owned by its members (stock brokers) through ownership of Proprietary Rights as well as the Government of Botswana. Proprietary Rights were defined in the BSE Act “as a share in the assets of the Exchange acquired for the purposes of registering as a member of the exchange in order to trade on the exchange”. Historically, Government has provided majority of the financing targeted at developing the BSE infrastructure and undertaking market development initiatives, and jointly, Government and brokers have played a meaningful role of developing various facets of the BSE and the market as a whole. This includes establishing a favourable regulatory environment, driving marketing efforts and investor awareness, amongst others.

Commencement of the BSE’s Demutualisation Process

On December 1, 2015, the BSE (Transition) Act, No. 2 of 2015 came into operation to commence the process of conversion of the BSE from a mutual entity to a public company limited by shares under the Companies Act, a process known as demutualisation. The BSE Transition Act was primarily aimed at governing this process by outlining the details of conduct of the BSE whilst it is undergoing conversion, following conversion, and defining the powers of the relevant stakeholders overseeing the transition of the BSE during this period, being the Minister in the Ministry of Finance and Economic Development. It is worth noting that although BSE was regarded as a mutual entity, it was by and large a parastatal.

The Main Committee of the BSE, comprising broker representatives and Government representatives, whose responsibility was to oversee the affairs of the BSE played a strategic role in the commencement of the demutualisation. As the BSE would become a company, the BSE Act would become repealed effective the date of conversion, and in its place would be the Companies Act. The Companies Act required the promulgation of the Constitution of the BSEL as a governing document of the Exchange with respect to governance issues…

Read complete article: Mmegi Online

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