The Sunday Mail
Business Writer
The Reserve Bank of Zimbabwe (RBZ) has finally issued the exchange control directive that will pave way for the commencement of trading on the Victoria Falls Stock Exchange.
Absence of the exchange control directive resulted in a false start for the new bourse, which was pencilled to officially commence trading on Monday last week.
According to Exchange Control Directive RV177/2020 that was issued by the Reserve Bank of Zimbabwe’s Director Exchange Control, Farai Masendu, all foreign currency inflows invested into a resident company listed on the VFEX, shall be from free funds or offshore funds credited into the listed corporate’s Investment FCA.
The directive also covers custodians facilitating trades on the VFEX that are now allowed to transfer foreign currency pursuant to a trade between buyers’ and sellers’ FCAs.
Currently, Seed Co International is the only company listed on the VFEX and following a lengthy period spend under suspension, investors could be eager to trade.
The base opening price for the counter will be US21,90c.
As per ZSE directive, local retail investors will, however, first have to open custodian accounts if they are to start trading.
In terms of dividends paid out by a VFEX listed company to resident investor, such income shall not be subject to the surrender requirements and may be held for an indefinite period for use to meet local and or external foreign currency payments in line with Exchange Control Provisions.
“Dividends and disinvestment proceeds due to non-resident investors shall be freely remittable through the Authorised Dealer without seeking prior Exchange Control approval,” reads part of the Directive.
Meanwhile, investment inflows received by a resident company listed on the VFEX in its Investment FCA, can be held for an indefinite period for use by the listed company without seeking prior Exchange Control approval.
If the resident companies listed on the VFEX choose to open offshore accounts for the purpose of receiving investment proceeds it will have to seek specific Exchange Control approval from the central bank.
“Authorised Dealers are reminded to report all investment inflows on the daily EC Form return to ensure full accounting of foreign currency receipts.”
Relaxation of exchange control requirements on the VFEX, forms part of the incentives that have been put in place by authorities to attract listing companies and investors.
As part of the incentives, investors on the VFEX will also be exempted from paying tax on their capital gains while withholding tax on dividends will be 5 percent which is lower than the 10 percent on the ZSE.
A brainchild of the ZSE, the VFEX was officially launched a fortnight ago by the Minister of Finance and Economic Development Professor Mthuli Ncube in an event attended by local and regional captains of industry. — ebusinessweekly.co.zw
