SECURITIES AND EXCHANGE COMMISSION

TRANSFER SECRETARIES [service registrars or custodians] GUIDANCE NOTE

NUMBER 1/06

ISSUED PURSUANT TO SECTION 79 OF THE SECURITIES ACT, CAP 354 OF THE LAWS OF ZAMBIA FOR THE GUIDANCE OF TRANSFER SECRETARIES, ISSUERS, SERVICE REGISTRARS, CUSTODIANS, LUSE CSD, BROKER-DEALERS AND SUCH OTHER PERSONS SO HEREBY AFFECTED

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1. Introduction

This Guidance Note is issued for the promotion of efficient, accurate and time sensitive LuSE securities depository procedures to create minimum standards of performance for the market.

2. Explanatory notes

‘Service registrar or custodian  or Transfer secretary’ refers to an issuer or to any person so licensed by the Securities and Exchange Commission pursuant to section 4(c) of the Securities Act who acts on behalf of an issuer in conducting transfer agency work.

‘Turnaround’ refers to the period within which the job is to be accomplished.

The ‘turnaround’ shall be calculated as follows;

For documents received at or before noon on a business day, the turnaround shall be calculated from that business day.

In the case of documents received in the afternoon of a business day, the turnaround shall be calculated from the next business day.

3. Processing a LuSE Deposit or Transfer

3.1 Broker to LuSE Sub-custodian

Upon receipt of instructions to deposit physical certificates, the broker shall deliver the certificates accompanied by deposit request forms and LuSE depository transfer forms to the LuSE sub-custodian within 24 hours.

The turnaround for delivery by the broker to the LuSE sub-custodian following receipt of instructions shall be 1 day or 24 hours.

2.2  LuSE Sub-custodian to Transfer Secretary

After receiving forms and the certificates from the broker, the LuSE  sub-custodian shall enter them in the register and deliver them to the transfer secretary as follows;

 to a Lusaka based transfer secretary within 2 days after  receipt of the forms and certificates

to a transfer secretary based outside Lusaka within  4 days after receipt of the forms and certificates

The turnaround for processing forms and certificates by the LuSE sub-custodian and subsequent delivery to the transfer secretary shall be 2 days for Lusaka based transfer secretaries and 4 days for transfer secretaries based outside Lusaka. [How does this affect the T+3 DVP?]

2.3 Transfer Secretary to LuSE sub-custodian

The transfer secretary shall, in the manner so defined in the issuer’s Articles of Association, process the transfers and deliver properly executed re-issued certificates to the LuSE sub custodian as follows

Where the issuer is Lusaka based and acts as its own transfer secretary, within 7 calendar days of receiving the forms and certificates from the LuSE sub-custodian.

Where the issuer is Lusaka based and is represented by a transfer secretary, within 7 calendar days of receiving the forms and certificates from the LuSE sub-custodian.

Where the issuer is based outside Lusaka and acts as its own transfer secretary, within 14 calendar days of receiving the forms and certificates from the LuSE sub-custodian.

Where the issuer is based outside Lusaka and is represented by a transfer secretary, within 14 calendar days of receiving the forms and certificates from the LuSE sub-custodian.

The turnaround for the transfer secretary to deliver re-issued certificates back to the LuSE sub-custodian shall be 7 calendar days for Lusaka based transfer secretaries and 14 days for transfer secretaries based outside Lusaka.

2.4 LuSE sub-custodian to LuSE Central Securities Depository and Broker

The LuSE sub custodian shall be enter the re-registered certificates into the register and secure them.  Confirmation of this deposit shall be communicated  as follows:

to the LuSE Central Securities Depository within 2 calendar days of receipt of the new certificates

to the broker within 2 calendar days hours of receipt of the new certificates.

The turnaround for processing the new certificates and sending confirmation to the LuSE Central Securities Depository and broker shall be 2 calendar days.

2.5  LuSE Central Securities Depository

After receipt of confirmation from the LuSE sub custodian, the LuSE Central Securities Depository shall;

enter this deposit into the system within 24 hours and

inform the brokers of this deposit.

The turnaround for LuSE to enter confirmations into the system and inform the brokers shall be one calendar day.

2.6  Broker

The broker shall be required to inform the client within 48 hours of receipt of the final confirmation from the LuSE Central Securities Depository.

3. Reporting Requirements

Any person who fails to comply with these requirements for whatever reason must immediately file a written notice with the Securities and Exchange Commission  and the LuSE Central Securities Depository giving reasons for the failure to comply and explaining steps being taken to remedy the situation.

Any person who fails to file the written notice may be sanctioned under rules or regulations made pursuant to the Securities Act such as the  Conduct of Business Rules or as may apply.

Failure to comply shall be deemed misconduct, and will have the same meaning as defined at section 24 (8) of the Securities act.