REGULATORYNOTICE ON THE IMPLICATIONS OF THE AMENDMENT TO THE CAPITAL MARKETS AUTHORITYACT, CAP 84 AS AMENDED.
TheCapital Markets Authority (Amendment) Act No. 8 of 2016 was passed by theParliament of Uganda on the 1st March 2016. The Act came into forceon 20th May 2016.
The amendments will have implications on the governanceand operational aspects of CMA, licensed and approved persons; and the entirecapital markets industry in Uganda.
Belowis a highlight of the changes introduced in the Amendment Act.
1.CMA and its regulatoryframework complies with the International Organization of SecuritiesCommissions (IOSCO) Principles on Securities Regulation, Financial Action TaskForce recommendations on Anti-money Laundering and Combating of Financing ofTerrorism and the East African Common market Protocol. To this end CMA Uganda willnow make a formal application to IOSCO to become a signatory of the IOSCOMemorandum of Understanding as the regulatory framework will be compliant withthe IOSCO Principles of Securities Regulation.
2.The establishment of theCapital Markets Tribunal which will have the mandate to handle and resolve alldisputes related to capital markets in Uganda.
3.Introduction of a fitness andproper criteria for the CMA Board Members and all approved persons.
4.Power to recognize Self-Regulatoryorganizations and such organizations include Securities Exchanges, CommoditiesExchanges or member associations for approved persons.
5.Introduction of newcategories for approvals and licenses to include stock broker, dealer, authorizeddepositary, commodities exchange, securities exchange, transaction adviser,investment adviser, fund manager, representative, authorized registrar, custodian,credit rating agency, underwriter, investment house, venture capital fund andmarket adviser.
6.Introduction of a statutorymanager for approved persons whose license or approval is revoked or suspendedby the CMA.
7.CMA’s oversight over listedcompanies has been enhanced through the criminalization of false or misleadingfinancial statements of listed companies. This will ensure transparency andintegrity of the financial statements of listed companies.
8.Whistleblowers protection forpersons responsible for preparing and approving financial statements andfinancial information of listed companies if they report breach of thesecurities laws.
9.Corporate Governance changes that is, theBoard Composition reduction of members from twelve to eleven; establishment ofthe post of Board Secretary; increase in the tenure of Board Members from threeto 5 years and recognition of Committees of the CMA Board.
10.Inclusion of theimplementation of the EAC Council Directives, decisions or recommendationsrelating to the securities markets in the East African Region.
Extensionof the Authority’s powers to tracing and freezing any assets including the bankaccounts of any person who upon investigation by the Authority is found to haveengaged in any fraudulent dealings in the securities or insider trading; supervisionof Anti-money laundering and combating of financing of terrorism in the CapitalMarkets and performance of functions conferred on the Authority as anaccountable person under the Anti-Money Laundering Act, 2013.
11.Amending the Authority’sregulatory mandate in aspects like inspections, investigations, disclosure,power to search premises and assistance to foreign regulatory Authorities, and powerto issue statement of Principles and Codes of Practice in respect to theconduct and financial standing expected of an approved person.
12.Granting the Authority thepower to issue Guidelines and Regulatory Notices, intended to supportflexibility and market development in instances of lack of regulatoryframework.
13.Establishment of a FidelityFund to insulate the securities exchange from liabilities arising out of thewrongs committed by the employees of the securities Exchange. The Fidelity fundwill be administered by the CMA and the fund will operate an account licensedby the Central Bank of Uganda.