The interest in listing at the Dar es Salaam Stock Exchange (DSE) has grown for local Tanzania business enterprises as a result of the recently planned Entrepreneurship Growth Market (EGM) mad following a recent awareness campaign that was carried out by the Capital Markets and Securities Authority (CMSA) as well as the bourse management.
According to a recent report by The Guardian, the CMSA Principal Public Relations Officer Charles Shirima has indicated that the overall purpose of the EGM, which is currently in the advanced stages of planning, is to encourage small enterprises to grow.
“There are amendments sought for in the existing laws guiding CMSA and DSE to support the changing market environment,” said Mr. Shirima.
Included in these amendments that are currently seeking endorsement by the Parliament is one that is would ultimately lead to the introduction of ‘a nominated advisor’ who would help guide firms into the EGM segment transactions.
Once in effect, the nominated advisor would serve as a consultant to companies in order to help them meet the requirements for achieving issuance and listing with the EGM.
In addition, this advisor would also be responsible for guaranteeing the continuous protection of investors’ interests by ensuring that a sound financial management was employed.
Mr. Shirima went on to say that currently the market rules for the issuance and listing of existing equities market segment were strict, but also more easily accessible at the same time.
In addition, Mr. Shirima also indicated that, if things continued as planned, the amendments to the EGM should be ready in this financial year.
Following the listing of companies and the distribution of dividends to its shareholders, Mr. Shirima said that the firm would then graduate from the EGM category to the Main Investment Market Segment, at which time the role of the advisor would no longer be necessary.
Additional steps to increase the overall number of products in the Tanzania market apart from the introduction of the EGM include the introduction of various fiscal incentives, which have been designed for issuers of securities and investors of listed securities.
Mr. Shirima explained that the insurers of securities were currently enjoying a reduced corporate tax, amounting to between 30 and 25 percent, for a period of three years, which remained in effect as long as they continued to issue at least 35 percent of the shares that were held by members of the public.
Mr. Shirima went on to say that other planned incentives to issuers of securities include the tax deductibility of all Initial Public Offer (IPO) costs for the purpose of tax determination, which would make it possible for IPO costs tax to also benefit investors.
Following this incentive were others, including withholding tax on investment income made; stamp duty; capital gains tax and withholding 5 percent of taxes for listed companies and 10 percent of taxes for unlisted companies on their respective dividend income.
In the end, the overall purpose of these incentives is to attract more firms to list at the bourse.