BSE demutualises, increase credibility
Four years after the Botswana Stock Exchange (BSE) kicked off its demutualization process, the bourse has finally registered as a public company.
Thapelo Tsheole, BSE Chief Executive Officer announced to media this week that all processes have been completed with government being the major shareholder of the new company Botswana Stock Exchange Limited.
“We have demutualised into a public company with various stakeholders,” said Tsheolo, adding that the process started with the formulation of the BSE Transition Act, a piece of legislation enacted in 2015 to guide the process.
Tsheole said though the process took four years, he considers the timeline short compared to other jurisdictions like Kenya and South Africa where it took 13 and five years respectively.
“It was a painful and emotional process; the past two months had a lot of work.”
Under the new company, following lengthy valuing of government’s contribution and the brokers proprietary rights to trade on the bourse, government emerged with the largest chunk of 81.3 percent, Motswedi Securities 4.3 percent, Imara Capital 5.7 percent and African Alliance 2.8 percent.
As a new company, BSE will now follow the Companies Act and stop being guided by the BSE Act of 1995, allowing two non-independent directors and seven that are independent to sit on its board, opposed to having six brokers in the board and three appointed by government.
“It takes out the potential conflict of interest or perceived conflict of interest,” said an optimistic Tsheole, adding that the new development will enable the bourse to attract capital in some of the sophisticated investors who are skeptical about conflict of interest in non-demutualised stock exchanges.
“Now we operate as a full company with clear motives. We are going to be following proper corporate principles,” said Tsheole, citing that the company already harbours plans to list on the bourse subject to the major shareholder agreeing.
“We are going to re-value the company and possibly persuade government to offer some of its shares as this is a practise in other private entities
Though brokers within the BSE were rumoured to have been against the demutualization, Tsheole believes the development will give BSE credibility, highlighting that brokers cannot own more that 20 percent shareholding.
Over the years, since 1995 to 2012 when the BSE started posting profits, government has invested heavily in the bourse to amounts reaching 75million pula.
