The Botswana Stock Exchange has fully demutualized as of 2nd August 2018, after its conversion from a mutual exchange to a company incorporated under the Companies Act, being the date of registration of Botswana Stock Exchange Limited (BSE Limited) by the Companies and Intellectual Property Authority (CIPA).
“Looking at stock exchanges across the world, the pace of stock exchanges’ demutualization has been rapid in developed markets and slower in emerging markets. This demonstrates the difficulty with which this process is accomplished given the diverse interests of the parties involved,” said Thapelo Tsheole, Chief Executive Officer of the BSE Limited.
Demutualization is a process of transforming from a member owned, not-for-profit, entity to a for-profit, investor-owned corporation which involves changing the legal status, structure and governance of an entity. In the case of a stock exchange, it is the separation of the ownership of the exchange from the right to trade on the exchange.
In the case of the then BSE, the Proprietary Rights of the members of the then BSE, as well as the cash injection by Government of the Republic Botswana, have been converted to shares in BSE Limited with the Botswana Government owning about 80% of its shareholding.
It also means that stockbrokers who sat on the board will no longer supervise the executive of the BSE like under the previous regime addressing issues of possible conflict of interest.
The demutualization of the BSE began on 1st December 2015, when the BSE Transition Act, No. 2 of 2015 came into operation. The Main Committee comprising of broker representatives and Government representatives, as well as the Minister of Finance and Economic Development, played a strategic role in the entire end to end process of demutualization, along with management.
Tsheole said, “On our part, the pace of demutualization has been exceptional and without hurdles, and BSE Limited now joins an elite league of stock exchanges as it is the seventh among twenty-eight stock exchanges in Africa to have undergone demutualization”.
He said, ‘This demutualization and immediate corporatization of the Exchange brings forth enormous efficiencies that will enable the bourse to discharge its mandate and drive value for shareholders and stakeholders as we strive to become a world class securities exchange.”
