A new Statutory Instrument (SI) was effected into law a few days ago and the SI gives more detail regarding how the Victoria Falls Exchange (VFEX) will work.
Granted that VFEX has been pitched as an offshore capital centre by the Ministry of Finance, one of the questions that came up was which currency would be used. The US$ and other currencies which are not the ZW$:
Securities listed on the Victoria Falls Stock Exchange shall be tradable and settled solely in United States Dollars or a convertible currency.S.I 196 of 2020
Can local companies list?
Another question was whether or not local companies would be able to list on the exchange.
Short answer: Yes. The longer variant of that answer is that local companies will be able to list on VFEX if the company is listing 20% or less of its capital on the Zimbabwe Stock Exhange. It seems this rule is meant to ensure that companies don’t flee the Zimbabwe Stock Exchange to follow the forex-bases valuations of VFEX.
Local companies that aren’t on the ZSE can also apply to be on the Vic Fall Exchange on two conditions;
- Any capital raised by such company on the Exchange shall be from an offshore source or from free funds;
- at least 20% of such capital shall be re-invested or employed in Zimbabwe no later than five years from the date that it was raised.
Non-resident companies can list on the exchange on two conditions;
- Any capital raised by such company on the Victoria Falls Stock Exchange is from an offshore source or from free funds;
- a non-resident company that had delisted from the Zimbabwe Stock Exchange in the five years preceding its listing on the Victoria Falls Stock Exchange shall reinvest or employ in Zimbabwe 20% of the capital raised on the Victoria Falls Stock Exchange no later than five years from the date that it was raised
What is still unclear is when the Victoria Falls Stock Exchange will actually open up and whether companies will apply for listing before or after it opens.