The Botswana Stock Exchange (BSE) has announced a raft of amendments to the Central Securities Depository (CSDB) Rules ÔÇô including the powers to reject a request for a transfer if the request does not conform to the rules.
The announcement to the market follows the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) approval of amendments to Section 13 of the CSDB Rules with reference to Transfers of Securities traded off market.
The authority to transfer listed securities held either in physical or dematerialised form shall vest with the CSDB.
Except as otherwise provided in these Rules, the CSDB shall only effect transfers for transactions executed through the BSE.
Under the new rules, all transfers for off market transactions shall be subject to prior approval by the CSDB.
However, this will be premised on the parties submitting proof that the transaction was carried out in an environment that provides fair play, transparency and a competitive price discovery and is similar to the trading environment provided by a stock exchange.
Equally, the parties must show that the transaction is a gift to a close relative or that the transaction does not result in a change in beneficial ownership.
A “close relative”, in relation to an individual, means the individual’s spouse and children (including lawfully adopted children).
“All such transfers shall be subject to a fee of two percent (2%) of the transaction value, except for transactions that fall within Section 13.4(a)(ii) and (iii)…”
Participants are expected to provide CSDB with the transfer form and the necessary documentation to process and approve the transfer of securities.
“CSDB may, at its absolute discretion, reject a transfer request, if such request does not conform to these rules, without assigning any reasons for the rejection.”
In the event of a death of an account holder, securities held by such account holder in SCDB may be transferred to his/her legal heir.
For this purpose, a request to transfer such securities shall be made to CSDB in the prescribed transfer form through the respective Participant/s.
The BSE said for the transfer of securities pertaining to takeovers, CSDB may carry out such transfers in accordance with the relevant provisions of the statutes and the rules and procedures established by CSDB and BSE.
“Subject to the provisions of these rules, an account holder may, by completing the prescribed form, request the relevant Participant to transfer securities in connection with a takeover of a listed company or a de-listing of a security, to another account holder,” it said.
It has also been revealed that subject to the provisions of these rules, an account holder may by completing the CSDB prescribed form, request a Participant, with whom the account holder’s securities account is maintained, to transfer securities held in such securities account to another designated securities account.
Equally, a participant shall not delay or refuse to process transfers unless the account holder has not paid for such securities or the securities are held under lien for payments outstanding to the Participant or any other institution.
“If there is a delay in processing such transfers for any reason the transferor Participant shall promptly inform the account holder and transferee Participant, giving reasons for such delay.”
It shall also be the responsibility of both transferor and transferee Participants, in processing a transfer request made by an account holder, to check and ensure the completeness and accuracy of the request.
The transfer of securities within accounts in the CSDB will be effected by the CSDB subject to the above procedure being followed, and verification being done by the Participants and the CSDB prescribed transfer forms being submitted to CSDB.
The BSE said the rules shall become effective on September 22.
