12 Aug 2018

 

The Botswana Stock Exchange has demutualised from a statutory body owned by stockbrokers and government to a public company with various shareholders.

Addressing  the media on August 8, BSE chief executive officer Mr Thapelo Tsheole said the stock exchange has of August fully demutualised following its conversion from a mutual exchange to a company incorporated in terms of the Companies Act. He explained that through the demutualisation process, the BSE has transformed from a member owned entity to an investor-owned corporation which involved changing the legal status, structure and governance of an entity.

He stated that the demutualisation was a long thought out process which started in 2015 when the BSE Transition Act came into operation.

Prior to the demutualisation process, Mr Tsheole said they consulted with relevant stakeholders comprising of stockbrokers and government  representatives as well as the Minister of Finance and Economic Development, adding that they all played a strategic role in the end process of demutualisation.

Government, he noted, had been financially supporting the stock exchange since 1995, and that it had invested in the organisation until it turned profitabile in 2012.

“Government has cumulatively injected P75million on the BSE since 1995 hence its contribution was highly considered during the shares evaluation process,” he said.He said the governments financial input and stockbrokers’ contribution was highly considered in terms of shares valuation and distribution among potential shareholders.

“In the case of the then BSE, the proprietary rights of the members of the BSE as well as the cash injection by government have been converted to shares in BSE limited,” said Mr Tsheole.

He said judging by the amount of cash that government had invested in BSE over the years, the Minister of Finance and Economic Development saw it fit to make government the majority shareholder with 81.3 per cent of the shares while Motswedi Securities owned 4.32 per cent, Imara Capital Securities 5.75 per cent, African Alliance 2.88 per cent and Stock Brokers Botswana 5.75 per cent of the shares.

The demutualisation, he said, was not expected to change operations of the BSE, but would result in the transformation of the stock exchange and lead to an improved corporate governance structure to boost investor confidence and maximise value creation.

He said the current structure would follow the company act in-terms of board composition which allowed for up to two none independent board members. He added that seven board members would be members of the public elected by shareholders.

Mr Tsheole emphasised the importance of demutualisation, highlighting that it took out the perceived conflict of interests which could exist because of stockbrokers representation in the board.Post the demutualisation process, Mr Tsheole said the BSE would be better positioned to attract capital from some investors as some funds did not invest in mutual exchanges but prefered invest in demutualised exchanges.

He said the demutualisation has also enabled the BSE to operate as a fully fledged  company with clear objectives and would in future consider self-listing. ENDS