Capital Markets and Securities Authority (CMSA)

Preparations for the launch of the long awaited Enterprise Growth Market segment (EGM) within the Dar es Salaam Stock Exchange (DSE) is in the final stages, the Capital Markets and Securities Authority (CMSA) has said.

Speaking to this paper in an email interview, CMSA chief executive officer Nasama Massinda, said the preparations to introduce the EGM have taken too long for three reasons.

The preparations were awaiting the process of finalising amendments of the Capital Markets and Securities Act (CMSA Act No. 5 of 1994), the DSE Blue Print (rules of the exchange) and the accenting of new regulations by the Finance minister, she said.

She did not reveal the exact date for the commencement of the segment, but stated that all the legal requirements were finalised early last year, signed by the Finance minister and published in the Government Gazette.

“This development provides the legal basis for the CMSA to consider and approve applications for issuance of securities and listing on the EGM as well as licensing of a new category of market players who are crucial for the operationalisation of the EGM like Nominated Advisers (NOMADS),”she said.

She said the Nominated Advisers are a new category of advisors particular to the segment.

According to her, the Nominated Advisors will act as full time consultant to start-ups, small and medium enterprises aiming at raising capital through the segment.

The Nominated Advisors are expected to guide specific companies from inception all the way until it exits EGM to the main investment market segment.

She stated that the Nominated Advisors act also as the regulator’s eyes and ears in the company, thus espouse investors’ confidence in investing in such young enterprises.

She revealed that the process of issuing licence to the potential advisers is also in the final stages.

“Once the licences are issued, companies with the potential for issuing shares and listing in the EGM can approach the NOMADs and the process for issuance can commence,” she said.

The CMSA will train the NOMADs in order to build the capacity for them to assume their roles professionally and effectively in this new and sensitive segment of the market.

On the other hand investors and the general public as well need to be sensitised about the EGM in order to enable them to assess the risk levels to assume in investing in the EGM, she said.

“The operationalisation of the EGM will be a milestone in the development of the securities industry that will pave way for new entrants to raise capital in the securities industry including market players and listings in start-ups and SMEs thus availing the investing community diversified invest portfolios,” she said.

Asked why some profit making companies shun away from listing shares on the bourse, she said share listing in the bourse is a corporate decision by shareholders and directors of the company.

She mentioned other reasons as corporate / strategic decision by the company directors, lack of clear understanding of the benefits and advantages of listing the company and fear of dilution of control of the firm by inviting other shareholders.

More other reasons are fear of meeting the requirements and disclosure of company information and the inability of some companies not meeting the criteria for listing in the main segment of the DSE.

The CMSA chief said the agency conducts awareness programmes to directors, management and shareholders of potential firms on the benefits of joining the bourse.

She said it also conducts programmes on the processes of issuing shares to the public, gives advice to the government on policy issues regarding development of the industry and provides incentives to attract potential companies to list in the bourse.

At the moment only eleven local firms and five foreign-owned companies are listed in the DSE, which is in its 17th year of operation.