1. LAWYERS AND CAPITAL MARKETS
2017 ANNUAL LAW CONFERENCE
Thursday, 4th May, 2017
Diana Sichone
Directorate of Enforcement and Legal Services
Securities and Exchange Commission

2. Overview Capital markets SEC Legal Framework
Who we are
What we do
Legal Framework
Securities Act, No. 41 of 2016
Securities Rules
Other sources
Role of lawyers in the Capital Markets
Lawyers, Equip yourself

3. Capital Markets What are capital markets? Types of capital markets:
A market where securities (long term financial instruments eg equity [shares] and debt instruments [bonds]) are bought and sold
Platform where companies needing long-term finance can meet investors who have finance to offer the companies
Types of capital markets:
PRIMARY MARKETS
SECONDARY MARKETS
securities issued for the first time (first issue market)
e.g Company issues shares in an IPO and receives money from investors
previously issued securities traded by investors
ie investor buys or sells to another investor

4. FINANCIAL SERVICES SECTOR SECURITIES AND EXCHANGE COMMISSION
Who SEC is
FINANCIAL SERVICES SECTOR
BANK OF ZAMBIA
BANKS
NON-BANKING
PENSIONS AND INSURANCE AUTHORITY
PENSIONS
INSURANCE
SECURITIES AND EXCHANGE COMMISSION
CAPITAL MARKETS

5. 3 Core Objectives of securities regulation
Investor Protection
From misleading, manipulative or fraudulent practices (insider trading, etc) by full disclosure of all material information to investors’ decision
Ensuring that markets are fair, efficient and transparent
To ensure that market is not misled about the potential prospects of a company; and all value/price sensitive information is rapidly made available to the market.
Reduction of systemic risk
Regulation requires effective management of risk and seeks to reduce impact of failure by firms

6. What SEC Does: Capital Market Regulation
Investor protection
Fair, efficient & transparent markets
Reduction of systemic risk
Capital Markets Regulation
Licensing
Registration
Authorisation
Recognition
Supervision and Inspections
Regulation of takeovers and mergers
Registration of securities
Investigations and Enforcement actions

7. Legal Framework Securities Act, No. 41 of 2016 Securities Rules
All Rules issued under Securities Act, Cap. 354 of the Laws of Zambia still subsist:
until specifically repealed and replaced by new Rules
Unless inconsistent with the new Securities Act
Listing Rules of Exchanges
Other relevant laws:
Banking and Financial Services Act
Companies Act
Competition and Consumer Protection Act

8. Securities Act, No. 41 of 2016: Salient features
Exemption powers – exempting securities or persons
Perpetual licensing regime (one-off licence)
Extension of supervisory framework to new players:
Clearing and settlement agencies
Credit rating agencies
Transfer secretaries
Introduction of administrative penalties
Establishment of Capital Markets Tribunal
hears appeals from SEC decisions
Appeal from Tribunal lies to Court of Appeal
Extensive enforcement powers eg powers to obtain information from any person; obtaining sworn testimony etc
Stiffer penalties – eg instead of prescribed penalty units, a penalty of up to 10% of annual turnover of company depending on severity of offence

9. Securities Act, No. 41 of 2016: Salient features
EXEMPTION POWERS
PERPETUAL LICENSING
NEW PLAYERS REGULATED
CAPITAL MARKETS TRIBUNAL
ADMINISTRATIVE PENALTIES
EXTENSIVE ENFORCEMENT POWERS

10. Role of Lawyers in Capital Markets
PRIMARY MARKET CAPITAL RAISING
SECONDARY MARKET TRADING
OTHER
Transaction adviser to entities raising funds eg
Initial Public Offers
Rights issues
Debt issuances
Intermediary or transfer secretarial role
Transaction adviser
Trading of securities
Mergers, takeovers etc
Legal adviser
Institutional client - balance between compliance and creating attractive investment opportunities
Retail clients - prospective investor/investors
In-house Lawyer to other capital market operators
Legal advice to reduce/eliminate litigation risk
Ensures compliance with legal and regulatory environment
Direct investor in capital market products:
Shares, Bonds and
Collective investment schemes

11. Long-term Market Performance

12. Equip yourself
Lawyers play a critical advisory role in the Zambian capital markets.
Relevant skills required:
Interpretation of accounting records
Basic knowledge of economics and finance
The types of law capital markets lawyers use include:
Securities
Commercial and contract
Financial regulatory
Tax etc
Training:
Investment Advisors and Stockbrokers course
Chartered Institute of Securities and Investments (CISI)

13. Diana Sichone