JUST IN: Govt extends suspension of fungibility of Old Mutual and PPC shares
Enacy Mapakame Business Reporter
Finance and Economic Development Minister Professor Mthuli Ncube, has extended the suspension of financial services giant Old Mutual and cement maker PPC’s fungibility by another 12 months.
In a notice in the Government Gazette last Friday, Minister Ncube indicated that Government was still considering the implications of an audit report.
The initial suspension was implemented last year on allegations that fingible stocks had become vehicles for repatriating investments out of the country, at a time foreign currency has been scarce and therefore fuelling currency distortions and spike in exchange rate.
By Alois Vinga
FINANCE Minister, Mthuli Ncube has extended the suspension of PPC Limited and Old Mutual shares by a further 12 months.
In a notice published in the latest Government Gazette, the treasury boss renewed the suspension to end of March next year.
“In my capacity as an exchange control authority under Part V (Securities) of the Exchange Control Regulations, 1996 (Statutory Instrument 109 of 1996), hereby order the suspension, for a period of twelve months from the publication of this general notice ending on the 11th March, 2022.
“This includes every authority, directive or order granted by any exchange control authority allowing the fungibility of shares of the following companies listed on the Zimbabwe Stock Exchange, Old Mutual Limited and PPC Limited,” said Ncube.
Minister Ncube said the government was still considering the implications of an audit report.
The government last March banned the movement of PPC and Old Mutual shares across borders claiming that this fueled currency speculation.
Ncube’s directive was issued on 12 March 2021 under General Notice 371A of 2021, titled “Exchange Control (Suspension of Fungibility of Certain Shares) Order 2021”. It read in part:
… the Government, having received the audit report, is still considering its implications:
Now, THEREFORE, I, Hon. Professor M. Ncube, in my capacity as an exchange control authority under Part V (“Securities”) of the Exchange Control Regulations, 1996 (Statutory Instrument 109 of 1996), hereby order the suspension, for a period of twelve months from the publication of this general notice ending on the 11th March 2022, of every authority, directive or order granted by any exchange control authority allowing the fungibility of shares of the following companies li
On 4 January 2021 the Financial Surveillance Department of the South African Reserve Bank (FinSurv) issued a circular on the removal of the so-called “loop” prohibitions contained in the Currency and Exchanges Manual for Authorised Dealers (the Manual), wherein are set out the approved practices as set out by for use Authorised Dealers, i.e. the commercial banks.
At the outset, it must be noted that (a) the basis of what is allowed or not allowed under the Manual is what is contained in the Exchange Control Regulations, 1961, and the discretions given to FinSurv and the Minister thereunder, but nowhere in those regulations does one find the word “loop”, or any prohibition against such a “loop”. This is entirely an interpretation of the prohibition in regulation 10(1)(c) of those regulations (the Regulation) that a South African resident may not, without approval, export capital or the right to capital from South Africa.