Omega Ukama 
THE Victoria Falls Stock Exchange (VFEX) has outlined guidelines for the listing of depositary receipts (DRs) as it intensifies efforts to encourage participation.
DRs are instruments issued locally that grant rights in respect of securities issued in other jurisdictions.
In a recent circular to prospective issuers, the exchange said through DRs, investors can diversify their investment portfolio by gaining exposure to international securities, in addition to locally issued securities.
“Additional sources of capital DRs provide international companies a way of raising more capital by tapping into the global markets.
“Less international regulation Since DRs are traded on a local stock exchange, investors do not need to worry about international trading policies and global laws.
“Although investors will be investing in a company that is in a foreign country, they can still enjoy the same corporate rights, such as being able to vote for the board of directors.”
The exchange said an issuer or depository that wants to list a on the VFEX must first engage the foreign issuer at an early stage.
The guidelines say prospective issuers should also engage the VFEX at an early stage.
“This engagement will enable the issuer and depository to get VFEX comments on the prospects for listing for the entity.”
In addition, before a DR can be listed, the issuer must enter into a formal agreement with a foreign issuer, secure approvals from the VFEX and appoint professional advisors.This comes as interest in the VFEX is growing as the US$-denominated market, which listed Padenga Holdings
(Padenga) last month, is also anticipating a third listing in September.
The exchange was launched last October, with authorities hoping it would shore-up foreign capital inflows following years of massive investor flight.
Padenga migrated to the bourse from the Zimbabwe Stock Exchange (ZSE) and Finance minister Mthuli Ncube says a third listing is on the cards.
Meanwhile, exchange principals have said they are negotiating with “several” entities that have shown interest.
In May, the Treasury unveiled measures that include an incremental exports scheme allowing entities listed on the VFEX to retain 100 percent of their proceeds in foreign currency, on volumes above their monthly average.
