Kampala, Uganda | ISAAC KHISA | Uganda Securities Exchange has received approval from the Capital Markets Authority to demutualise within a period of one year, according to its Chief Executive Officer, Paul Bwiso.
Bwiso said the new development means that the USE ceases to be a mutual entity limited by guarantees and becomes a company limited by shares with a change in its management and managerial structures. The authorised share capital of the demutualised exchange will be Shs1bn.
This implies that USE will now become a profit seeking entity, capitalising on new income opportunities by being innovative and creative while diversifying away from traditional stock and bonds into derivatives.
“The approval of the demutualisation marks great milestone for the USE and the Ugandan capital markets as a whole,” he said during a press briefing in Kampala on Oct.4, adding that demutualisation is expected to improve the stock exchange’s governance and deepen the capital markets.
He said demutualisation of USE also makes it to be at par with the regional stock markets that are already demutualised as well as meeting international standards for the operation of an efficient stock exchange.
Nairobi Stock Exchange in Kenya and the Dar es Salaam Stock Exchange in Tanzania were demutualised in 2011 and 2015, respectively while Rwanda Stock Exchange was demutualised from the start as it was registered as a company limited by shares in 2005 before being officially unveiled in 2011.
This new development comes barely a year since Parliament amended the Capital Markets Authority Act in 2016.
After demutualisation, its seven current members consisting mainly brokers will hold a combined 40% shareholding within the next three years while no singe member will be allowed to hold more than 10% shareholdings of the issued shares at the exchange.
The rest of the shareholdings will be offered to the public through an Initial Public Offering (IPO).