HARARE (FinX) – In a significant move to bolster transparency and accountability within the financial sector, the Securities & Exchange Commission of Zimbabwe (SECZim) has issued Directive Number 08/2024, mandating enhanced disclosures in the audited financial statements of Securities Market Intermediaries (SMIs). This directive aims to ensure that SMIs adhere to rigorous standards of financial reporting, risk management, and compliance with regulatory requirements.
The directive, which applies to all licensed SMIs, outlines specific disclosures that must be included in their annual audited financial statements. Key among these is the requirement for a detailed capital adequacy position, which must be presented in a clear table format comparing adjusted liquid capital against total requirements. This measure is designed to provide stakeholders with a transparent view of the financial health of these intermediaries.
In addition to capital adequacy, the directive emphasizes the importance of trust accounts. Licensed SMIs that maintain trust and nominee accounts are required to have their books audited annually by a registered public auditor. The audited accounts must be submitted to the SECZim alongside the SMI’s overall audited financial statements, ensuring that client funds are managed with the utmost integrity.
The directive also addresses the growing concerns surrounding risk management and compliance with anti-money laundering (AML) regulations. SMIs are now required to disclose their risk assessment processes, including how they identify and mitigate risks associated with money laundering and terrorist financing. This includes an independent assessment of their AML/CFT (Countering the Financing of Terrorism) programs, ensuring that policies and controls are not only adequate but have operated effectively throughout the reporting period.
Furthermore, the SECZim has set a clear timeline for the publication of audited financial statements. SMIs must disseminate their financial reports within 90 days after the end of their financial year, either through local newspapers or on their respective websites. This requirement is aimed at enhancing public access to vital financial information, thereby promoting greater transparency in the financial markets.
The directive also outlines penalties for non-compliance, reinforcing the importance of adherence to these new regulations. Offenders may face penalties as stipulated in Section 105 of the Securities and Exchange Act [Chapter 24:25], serving as a deterrent against any lapses in compliance.
Anymore Taruvinga, the Chief Executive Officer of SECZim, emphasized the importance of these measures in a statement released alongside the directive. “This directive is a crucial step towards enhancing the integrity and stability of our financial markets. By ensuring that SMIs maintain high standards of financial reporting and risk management, we are fostering a more transparent and accountable financial environment for all stakeholders.”
The introduction of this directive comes at a time when the global financial landscape is increasingly focused on sustainability and responsible governance. The SECZim’s requirements for disclosures on Environmental, Social, and Governance (ESG) issues further align with international standards, reflecting a commitment to responsible financial practices.
