Capital market intermediaries directed to include disclosures in financial statements

The Securities and Exchange Commission of Zimbabwe (SecZim) has directed Securities Market Intermediaries (SMIs) to include disclosures in their financial statements on issues such as capital adequacy.

Stockbrokers and asset managers are some of the SMIs under SecZim.

SecZim chief executive Anymore Taruvinga, in a directive, said the disclosures shall be filed as supporting notes and tables, having been audited by registered public auditors, and they should be submitted annually to the Commission.

In terms of capital adequacy, Taruvinga said, subject to prior approval by the Commission, all SMIs shall be required to provide an audited capital adequacy position as prescribed in the Capital Adequacy Directive for Securities Market Intermediaries from time to time.

“For the avoidance of doubt, a specific comparison of adjusted liquidity capital and total requirements should be clearly shown by way of a table,” he said.

On trust accounts, he said as per Part IV of the Securities and Exchange Act (Chapter 24:25) and Section 40 of Statutory 100 of 2010, licensed SMI’s who maintain trust and nominee accounts are to be audited at the end of the financial year by a registered public auditor.

Taruvinga said the audited trust and nominee accounts shall be submitted to the Commission accompanied with the SMI’s audited financial statements.

In the case of securities investment managers, custodians, and trustees, funds under management, assets under custody, and trusteeship shall be required to be disclosed separately in the financial statements as part of the notes, including the requisite asset classes in which funds are invested.

Taruvinga said these shall apply to all banks holding SecZim licenses that report consolidated audit reports.

The Commission also noted that SMIs shall be required to disclose their environmental, social, and governance (ESG) impact assessment processes and practices in the audited financial statements, in line with IFRS s1 general requirements for disclosure of sustainability-related financial information and IFRS s2 climate-related disclosures.

All SMIs shall be required to disclose their risk assessment processes, internal controls and practices which encompass identifying and assessing the risks specific to their operations which include but are not limited to operational risk, market risk, strategic risk, liquidity risk and legal and compliance risk.

All SMI’s shall disseminate and publish their audited financial statements no later than 90 days after the end of the financial year, either in a local newspaper or on the respective SMI’s website.

The SMIs shall also be required to submit audited financial statements to the Commission in pdf format for publication on the SecZim website.

According to Taruvinga’s failure to comply with the provisions, the offender shall be penalised as per Section 105 of the Securities and Exchange Act (Chapter 24:25).-ebsinessweekl