Disquiet over ZWL$13bn unclaimed shares

PHILLIMON MHLANGA

The Securities and Exchange Commission of Zimbabwe (SecZim) has expressed disquiet over ZWL$13bn  worth of unclaimed shares, primarily as a result of lackluster data integrity in the capital markets industry, Business Times can report.

Apparently, both Chengetedzai Depository Company and the Zimbabwe Stock Exchange Central Securities Depository, which commenced it’s central securities depository operations in November 2021,  are the custodians of the portfolio of shares.

But, it’s Chengetedzai Depository Company, established in 2010, which holds the unclaimed shares.  This means, investors must go through Chengetedzai Depository Company, the custodian of the unclaimed shares portfolio, in order to claim their shares. Nonetheless, among many other prerequisites, the investor with unclaimed shares ought to possess a letter from the relevant stock broking company.

Business Times can report that share certificates  can only be picked up by  their respective  owners or appointees  with the general power of attorney  after presenting   adequate and acceptable proof of ownership.

Unclaimed shares are shares bearing share certificates that are not in the possession of their respective investors.

SecZim CEO, Anymore Taruvinga, expressed concerns about the current situation, stating that contacting shareholders who own the shares is a difficult task.

According to him, this has led SecZim to launch a market drive in which more efforts are being made to locate the people who fall under the category of unclaimed shares and help them claim their shares.

Taruvinga said that in order to keep the data current, it was imperative to have frequent communication with shareholders via extensive Know Your Customer (KYC) procedures.

“We have unclaimed shares worth ZWL$13bn. The records of the shareholders are not up to date. There is no account, there is no address. It’s largely a KYC problem,” Taruvinga said.

He added: “Prior to 2014, stockbrokers performed custodial role. With the coming in of the central  securities depository, stockbrokers were instructed to surrender shares (to Chengetedzai Securities Depository ), but some decided not to do so.”

Multiple analysts told Business Times that the difficulty in locating shareholders whose shares have not been claimed is mostly the result of stockbrokers’ poor record keeping.

They said poor data records have been passed from one administrator to another during the transfer of shares from stockbrokers to central securities   depositories.

This indicates that there have been unclaimed shares due to legacy weaknesses in the stockbrokers’ data management, which is the primary cause of the inability to locate many shareholders.