Securities and Exchange Commission 2017 Annual Report

Protecting Investors in the Capital Markets SECURITIES AND EXCHANGE COMMISSION 2017 ANNUAL REPORT www.seczambia.org.zm

Protecting Investors in the Capital Markets info@seczambia.org.zm JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Capital Markets provide opportunities for long term investments and can help secure your future well-being. Talk to a SEC licensed dealer or investment adviser for advice on your investment options. Take advantage of the Capital Markets and invest in your future. Let’s talk Capital Markets Let the market work ... for you Annual Business Growth Report 100 90 80 70 60 50 40 30 20 10 0

SECURITIES AND EXCHANGE COMMISSION Corporate Office Address Plot 3827 Parliament Road Olympia P.O. Box 35165 Lusaka ZAMBIA (0211) 227012/222368/222369/226386 Fax: (0211) 225443 info@seczambia.org.zm Website: www.seczambia.org.zm

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CONTENTS
OUR MISSION STATEMENT ................................................................................................... 3
SEC COMMISSIONERS ................................................................................................. . 5 SEC MANAGEMENT ............................................................................................................. .. 7-9 CHAIRMAN’S REVIEW ............................................................................................................. .. 11-12 CHIEF EXECUTIVE’S STATEMENT ..................................................................................... . 13
Performance of the equities market ....................................................................................... 14

Equity market.................................. ............................................................................................... 14
Market Capitalisation .............. .................................................................................................... 15
Turnover ......................................................................................................................................... 15
Volume of shares and number of trades ............................ ............................................................ 15
Number of Listed and Quoted Companies ........................ ............................................................ 15
Turnover to Market Cap Ratio .......................... ............................................................................ 15
Trading Turnover (Government Trade Securities) .................. ...................................................... 16
Corporate Bonds............................................................................................................................. 16
Collective Investment Schemes (CIS) ................................ ............................................................ 16
Financial Performance of the Commission....................................................................................... 16-18 Staff Complement ............................................................................................................. ................ 18-19 Training and Workshops ................................................................................................. ............... 20-21 Strategic Plan Overview ............................................................................................................. ... 22
Conclusion ......................................................................................................................... ................. 22
CORPORATE GOVERNANCE ................................................................................................. .. 23
Board Composition ................................................................................................................. 23
Board Meetings ......................................................................................................................... .... 24
Committee Membership ................................................................................................. ............... 25
Committees and Committee members ......................................................................... ............. 26
Regulatory and Operational Efficiency........................................ ................................................... 27
Extent of implementation of the Commission’s oversight function and their effectiveness .... .. 27-28
Cost Savings resulting from the Commission’s Operations........................................ .................. 28
Cost to the Nation for not having the Commission .............................. ......................................... 28
Actual and projected efficiencies the Commission has achieved as a result of the
continuining regulatory activities ...................................................................................... ............. 28
Nature of the working relations with Capital Market Operators ....................... ........................ 29
Immediate and Projected capabilities of the Commission ........................... ................................ 29
Audit Function ......................................................................................................................... .... 29
Commission Secretary ............................................................................................................. .. 30 Board Performance Self-Evaluation ..................................................................................... . 30-31 OPERATIONAL ACTIVITIES ................................................................................................. .. 32 Market Supervision ............................................................................................................. ... 32
Zambia’s Capital Market Players ..................................................................................... . 32
Compliance ......................................................................................................................... ..... 33
Inspections ......................................................................................................................... ..... 33
Surveillance ......................................................................................................................... ..... 33
Complaints Handling ............................................................ ........................................................ 34
Annual Report, 2017

Market Development ............................................................................................................. 35

Zambia’s Capital Markets Indaba ........................................... .................................................. 35
Launch of the National Financial Sector Development Policy and National Financial ........ .. 36
Financial Literacy Week Launch ............................................................................................... 36-37
Workshops and Capacity Building ............................................................................................. 38-39
Sensitisation Activities ....................... ....................................................................................... 39-41
Professional Body engagement ................................................................................................. 41
2017 Capital Markets Schools Challenge Competitions ............................................................ 41-42
Enforcement and Legal Services ..................................................................................... ........... 43
Legislative development ................................ ......................................................................... 43
Enforcement actions taken ........ ............................................................................................... 43
Regulatory compliance .............................................................................................................. 44
Regulatory compliance ................................................................................................. 44
IOSCO MMOU Compliance ................................................................................................. 44
Market Transactions .............................................................................................................. 45-46 FINANCIAL STATEMENTS ..................................................................................... ........... 47-72 31 December 2017
APPENDICES ........................................................................................................................... 74
Appendix I........................................................................................................................... ............ 74
The SEC Staff, (Past and Current) ....................................................................................... ......... 74
Appendix II ........................................................................................................................... 75
List of Authorised Capital Market Players for 2017 ............................................................... ....... 75
Dealer’s Licenses .............................................................................................................. 75
Dealer’s Representative Licenses .................................................................................... 76-78
Investment Adviser’s License ................................................................................................. 79
Investment Adviser’s Representative License ....................................................................... 79
Securities Exchange Licenses ................................................................................................. 80
Appendix III ........................................................................................................................... 81
Contact Details of Capital Market Players ........................................................................... ........ 81
Stock Exchange Details .............................................................................................................. 81
Dealers’Details ............................................................................................................... ........... 81-83
Investment Advisors’Details ................................................................................................. 84
Listed Companies’Details ................................................................................................. 85-87
Quoted Companies’Details ................................................................................................. 88-89
Details of Companies with Listed Debt Securities .......................................................... 90
Annual Report, 2017 2
Contents

MISSION, VISION AND MANDATE Annual Report, 2017 3 To stimulate the expansion and grow the capital market in order to make a sustainable contribution to the economic development of Zambia. To be a capital markets regulator that offers a conducive market environment for raising long-term capital needed for a thriving economy. The Securities and Exchange Commission (SEC) was established pursuant to section 3 of the Securities Act, Cap 354 of the Laws of Zambia. The mandate of the Commission is to ensure that investors, both local and foreign, are protected. It is also the mandate of the Commission to develop the market. This therefore entails that the Commission has a huge role of ensuring that there is a balance between investor protection and Capital Market Development.

Mr. Amos Siwila
Mr. Siwila, a legal practitioner, has been the SEC Board Vice-Chairperson since November 2015, Acting Chairperson from August 2016 and the elected Board Chairperson since June 2017. Mr. Siwila represents the Law Association of Zambia (LAZ) on the Board. Mr Siwila served as the Board Chairperson at the date of this report. Annual Report, 2017 SEC COMMISSIONERS During the period under review, the Commission comprised the following Commissioners appointed from institutions specified in the Securities Act, No. 41 of 2016:
Mr. George Nonde
Mr. Nonde, a chartered accountant, has been a SEC Board Member since September 2014 and the Board’s elected Vice-Chairperson since June 2017. He represents the Zambia Chamber of Commerce and Industry (ZACCI) on the Board and served as the Board Vice-Chairperson at the date of this report. Chairperson Vice Chairperson Mrs. Ireen Musonda-Habasimbi Mrs. Habasimbi, an economist, has been a SEC Board Member since May 2017. She represents the Ministry of Finance on the Board. Commissioner Dr. Jonathan Chipili Dr. Chipili, an economist at the Bank of Zambia (BoZ), has been a SEC Board Member since August 2012. Dr. Chipili represents the Central Bank on the Board. Commissioner 5

Ms. Mainza Masole
Ms. Masole, a social security professional, has been a SEC Board Member since May
2017. She represents the Pensions and Insurance Authority on the Board.
Commissioner
Mr Joe H. Simachela
Mr. Simachela, a legal practitioner, had been a SEC Board Member since June 2010. He is a chief State Advocate at the Ministry of Justice and represented the Ministry of Justice on the Board until the end of his tenure of office in September 2017. Commissioner Annual Report, 2017 6 Mrs. Conceptor Zulu Mrs. Zulu, a legal practitioner, has been a SEC Board Member since November 2017. She represents the Ministry of Justice on the Board. Commissioner Mr. Phillip K. Chitalu Mr. Chitalu, a chartered accountant, is the Chief Executive Officer of the Commission and is an ex-officio Member of the Commission Board. Ex-officio Commissioner SEC Commissioners

SEC MANAGEMENT
During the period under review, the following were the Commission’s Management team:
Phillip K. Chitalu
Mr. Chitalu, a chartered accountant, has been with the Commission since August
2011. He has a bachelor’s Degree of Accountancy from the Copperbelt University, a
Fellow of the Association of Chartered and Certified Accountants (FCCA) and also Fellow of the Zambia Institute of Chartered Accountants (FZICA). Mr. Chitalu also holds a Master of Philosophy in Development Finance from Stellenbosch University, Cape Town. Chief Executive Officer Mutumboi Mundia Ms. Mundia, a fellow of the Association of Chartered Certified Accountants (ACCA), has been with the Commission since January 2013. She is a Chevening Scholar and holds a Master’s Degree in Corporate Strategy and Governance from the University of Nottingham in the UK. She also holds the International Global Certificate for Securities Regulators from the Harvard Law School/IOSCO. Ms Mundia further holds the Introductory Certificate in Arbitration from the UK’s Chartered Institute of Arbitrators. Director - Market Supervision & Development Diana Sichone Mrs. Sichone, a legal practitioner, has been with the Commission since July, 2014. She holds a Bachelor’s degree in law from the University of Zambia and a Masters degree in Corporate and Commercial law from the University of Lusaka. She is also an advocate of the High Court for Zambia, a qualified legislative drafter and trained commercial Arbitrator. Commission Secretary and Director – Enforcement & Legal Services Annual Report, 2017 7

Annual Report, 2017
Mateyo Lungu
Mr. Lungu, a chartered accountant, has been with the Commission since December
2015. He is the holder of the Association of Chartered Certified Accountants (ACCA)
qualification and the Certified Accounting Technician (CAT) from Chingola School of Accounts (ZAMIM-Chingola campus). He is a Fellow of the Association of Chartered Certified Accountants and an Associate member of the Zambian Institute of Chartered Accountants. Manager - Finance Saul Nyalugwe Mr. Nyalugwe has been with the Commission since October, 2012. He holds a bachelor of laws degree from Nelson Mandela Metropolitan University in South Africa, a Diploma in Purchasing and Supply from Sandwell College of Higher and Further Education (West Bromwich) UK and a Diploma in Human Resource Management from Zambia Institute of Human Resource Management. He also trained in Domestic Arbitration- Chartered Institute of Arbitrators. Manager - Administration Abraham Alutuli Mr. Alutuli, a chartered accountant, has been with the Commission since May, 2014. He Holds a Master of Business Administration (MBA) and is a Fellow of both the Association of Chartered Certified Accountants (ACCA) and Zambia Institute of Chartered Accountants (ZICA). He is also a certified fraud examiner and holds a National Accounting Technician Certificate. Manager – Market Supervision Bruce Mulenga Mr. Mulenga has been with the Commission since 2013. He holds a bachelor of Science in Accounting from Hull university and BTEC National Diploma in Business and Finance from City College of Higher Education. Manager – Market Transactions & Investments 8 SEC Management

Annual Report, 2017
Dingase Makumba
Mrs. Makumba has been with the Commission since May 2014. She holds a Masters of Business Administration from the Eastern and Southern Africa Management Institute(ESAMI), Bachelor of Arts in social sciences from the University of Zambia and postgraduate diploma in marketing from the Chartered Institute of MarketingUK Manager - Market Development Mubanga Kondolo Mr. Kondolo, a financial sector specialist has been with the Commission since June 2017. He holds a BA (Hons) in Business and Management from University of Sunderland. Manager - Financial Inclusion Nonde Sichilima Mr. Sichilima, a chartered accountant, has been with the Commission since September, 2015. He holds a BA (Hons) Degree in Accounting and Finance from Athlone Institute of Technology, Ireland. He is a member of the Zambia Institute of Chartered Accountants and a Fellow of the Association of Chartered Certified Accountants (FCCA). Manager – Market Supervision 9 SEC Management

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Annual Report, 2017
CHAIRMAN’S REVIEW
The Commission presents the report for the year ended 31st December 2017, as required by the Securities Act, Number 41 of 2016. The Securities Act further requires that the Commission should report on a number of issues not limited to but including the following:
a. The extent of the implementation of the Commission’s oversight functions and their effectiveness; b. Cost savings resulting from the Commission’s operations;
c. The cost to the nation for not having the Commission;
d. The nature of the working relations with capital market operators; May I begin by reporting that since the enactment of the 2016 Securities Act, our investor protection work at the Commission has been made a lot easier. However, in order to obtain the full benefits from this Law, Rules and Regulations that will make the Act fully operational are being formulated. These Rules and Regulations once completed will enhance the existing Rules which are a carry forward from the 1993 Securities Act. The Commission is happy to report that following the coming into effect of the 2016 Securities Act, the Commission has made a re-application to the International Organisation of Securities Commissions (IOSCO), which once the application is successful will make our capital markets more attractive to other players such as the external fund managers. We now live in a global village and as such, the necessity to improve local Laws, Rules, and Regulations that ensured the markets were regulated in a manner acceptable to the global village is cardinal for the development of our local capital markets. Therefore, the Commission will continue to pursue the development of Laws, Rules and Regulations that will ensure our markets would compete for funds at par with other markets, especially with our country’s low savings rate. Following my report last year on the Commission’s quest to develop capital markets, an indaba was held in April 2017. The Indaba, which was graced by Hon Felix Mutati, MP, who was Minister of finance at the time discussed and agreed a road map for developing a long term Capital Markets Master Plan (CMMP). The indaba was a platform to brainstorm capital markets development ideas. The CMMP will anchor ideas that the market needs to pursue for it to remain relevant. The Commission believes that it is the development of a long term plan that will help spur the development of capital markets in Zambia. The Commission will then draw its shorter term plans from these longer term developmental goals. 11 e. The actual and projected efficiencies the Commission has achieved as a result of the continuing regulatory activities; and f. The immediate and projected capabilities of the Commission. The Commission has reported on these matters in relevant sections of this annual report.

Annual Report, 2017
The Commission continues to view capital markets as an important alternative to regular savings vehicles. Therefore, improvements in the regulatory approaches to securing asset values is important. The Commission during the year continued to make improvements in the regulatory tools and approaches towards strengthening Collective Investment Scheme (CIS) assets, savings in corporate bonds, as well as the savings made through equity investments. Although the growth in savings increased from the last reported figures of 2016, the total savings through capital markets still remains small relative to other financial sectors in Zambia. The Commission hopes that as the CMMP alluded to above is crafted, ideas in that document will help improve the performance of the capital markets sector. The Commission also continued to engage the market as a way of sharing useful views about the development of capital markets in Zambia. These activities, meant to fulfil the Commission’s mandate, are again presented below under relevant sections. Of note looking forward are some activities that the Commission will during 2018 be hoping to achieve and/or implement. As mentioned above, it is key that capital market development follows a systematic agreed process. Therefore, in order to ensure that development follows a laid down process, the development of the CMMP will be a desirable deliverable during 2018. In line with the 10- year plan, the Commission is also working on completing the development of the 2018 – 2021 Strategic Plan. This 2018 – 2021 plan will be aligned to the 10- year development plan and may be revised in the event that the 10-year plan was at variance with the short term strategic plan being developed. The Commission is also looking to ensuring the 2016 Securities Act is fully implemented. With the assistance of the World Bank, Rules for certain aspects of the Securities Act are being developed while the Commission is also working on updating the rest of the Rules to be in line with the new law. This will ease the delivery process of the investor protection mandate enshrined in the Securities Act. In concluding, may I now end, on behalf of my colleagues on the Commission Board and staff, by thanking the Government through the Ministry of Finance for the continued support to the Commission. The Commission has continued to receive financial support on time which ensures that the Commission meets its obligations on time, an important ingredient for good regulatory oversight work. I wish to also thank all the capital markets stakeholders and in particular the Capital Markets Association of Zambia (CMAZ), whose continued dialogue and interaction with us has made our investor protection agenda and the capital markets development initiatives a success. 12 Amos Siwila CHAIRPERSON Chairman’s Review

Annual Report, 2017
CHIEF EXECUTIVE’S STATEMENT The Commission’s mandate of investor protection and market development were undertaken during the year as required by the Securities Act, number 41 of 2016. In line with the requirements of the Securities Act, the Commission reports, among other things, the performance of the Commission in line with the six key areas as highlighted in the Chairman’s report. The Commission presents below operational reports that highlight activities the Commission performed in order to deliver on the requirements of the Law. The Commission also presents independently audited financial statements which, with the “clean” audit report clearly show that the Commission adhered to the governance requirements of both the Securities Act, accounting standards, and other requirements. The Commission further continues to demonstrate that the financial resources of the Commission are continually managed in a prudent manner having in mind the Commission’s need to use resources in its primary function of investor protection and attending to market development goals. The Commission presents below operational reports that highlight activities the Commission performed in order to deliver on the requirements of the Law. The Commission also presents independently audited financial statements which, with the “clean” audit report clearly show that the Commission adhered to the governance requirements of both the Securities Act, accounting standards, and other requirements. The Commission further continues to demonstrate that the financial resources of the Commission are continually managed in a prudent manner having in mind the Commission’s need to use resources in its primary function of investor protection and attending to market development goals. Although the Commission continues to operate below the minimum required resource needs, those regulatory activities that add value to the protection of investors and the country’s savings were undertaken. This is more so on the Commission’s understanding that resources should be applied to avoid contagion effects that a failure of capital markets could have on the larger financial sector. During the year, the Commission ensured that the K475million in CISs, the K929 million in corporate bonds, and the over K63 Billion invested via the Lusaka Securities Exchange Plc (LuSE) was protected as losing these funds would result in loss of confidence in the financial services sector in Zambia and loss of livelihood for the saving public, among other negative effects. The Zambian capital markets continued to contribute to the overall financial sector objectives of capital formation by encouraging savings and also helped protect investors and in the process avoided the social costs that could result from the failure by retirement funds and individual investors to access their life savings in CISs, corporate bonds, and securities. The Commission now reports below the performance of the equity, corporate debt, and
Collective Investment schemes (CIS) segments of the capital markets sector. These areas under the supervision of the Commission all contributed to the overall wellbeing of the financial system in Zambia. 13

Annual Report, 2017
31/12/2017 31/03/2016 Percentage Change LuSE All Share Index 5,311.54 4,195.95 27%↑ Market Cap (K’million-Including Shoprite) 62,350 57,668 8%↑ Market Cap (US$ million-Including Shoprite) 6,223 5,813 7%↑ Market Cap (K’million-Excluding Shoprite) 28,111 23,429 20%↑ Market Cap (US$ million-Excluding Shoprite) 2,805 2,362 19%↑ Gross Domestic Product (US$ Million) 23,200 22,300 4%↑ Trading Turnover - Equities ( K’million) 1,198 277 332%↑ Volume of Shares Traded (‘Millions’) 852 105 711%↑ Number of Trades 3,850 2,582 49%↑ Number of Listed Companies 23 23 0% Number of Quoted Companies 13 12 8.33% Market Capitalization/GDP Ratio (%) 12.07 10.31 17%↑ †Turnover /Market cap Ratio 4.26 1.18 261%↑ Trading Turnover-GRZ Bonds (K’million) 11,959 4,450 169%↑ Number of Trades (GRZ Bonds) 1,331 428 211%↑ Number of Brokers 6 6 0%% Number of Collective Investment Schemes 9 7 29%↑ Source: Lusaka Securities Exchange Plc *2016 GDP (CSO @ K9.92/US$) and 2017 GDP (World Bank Forecast) †Turnover to market cap ratio excludes Shoprite 14 Performance of the equities market The Capital markets in Zambia has three licensed exchanges. The performance of the market report is however restricted to the Lusaka Securities Exchange Plc (LuSE), which is the only active regulated market. The Bonds and Derivatives Exchange (BaDEX) and Pan African Exchange (“PANEX”) were not active during the review period. The Lusaka Securities Exchange (LuSE) All Share Index (LASI) closed the year at 5,311.54 points indicating a 27 % increase compared to the preceding period that closed at 4,195.95 points. The increase in the LASI was mainly due to positive price changes in share prices notably in ZANACO (234%), African Explosives Zambia Limited (170%), Copperbelt Energy Corporation (66%), Standard Chartered Bank Zambia (59%) and Cavmont Capital Holdings Zambia Limited (33%). These movements were primarily driven by improved stability in economic variables and a more positive economic outlook. Equity market We present below the salient indicators of the performance of the market during the year under review:
Chief Executive’s Statement

Annual Report, 2017
The market capitalization, which is the market value of securities of all listed companies, increased from K57,668 million (including Shoprite) as at 31st December 2016 to K62,350 million as at 31st December 2017, representing an 8% increase. This increase in the market capitalisation was due to an increase in the share prices of some of the listed entities. The market capitalization (excluding Shoprite) closed at K 28,111 million as at 31st December 2017 compared to K 23,429 million at 31st December 2016 representing a 20% increase. In US$ terms, the market capitalization of the LuSE including Shoprite increased by 7% from US$ 5,813 million at 31st December 2016 to US$ 6,223 million as at 31st December 2017. The market capitalization excluding Shoprite was US$2,805 million at 31st December 2017 compared to US$ 2,362 million as at 31st December 2016 a 19% rise. 15 Chief Executive’s Statement Market Capitalisation Market Capitalisation The turnover increased by 332% from K852 million in 2016 to K1,198 million in 2017. This increase is mainly attributed to Zanaco Bank Plc which recorded 54% of the total turnover in 2017. Volume of shares and number of trades The volume of shares and number of trades increased by 117% and 49% in 2017 receptively. The increase in the volume was mainly due to Zanaco Bank Plc which contributed 80%of the volume of shares. Number of Listed and Quoted Companies There was an increase in the number of quoted companies from 12 in 2016 to 13 in 2017 after the registration with the Commission of CEC Africa Investments Limited shares which then became quoted on the LuSE. There was however, no change in the number of listed companies during the period under review. Turnover to Market Cap Ratio The increase in the turnover to market capitalisation ratio was by 261% from 1.18 recorded in 2016 to
4.26 for 2017. The change is mainly attributed to the
Zanaco Bank Plc corporate action which contributed 77% to the total turnover of the LuSE.

Annual Report, 2017 16
Trading Turnover (Government Debt Securities) The trading turnover of government bonds increased by 169% from K4,450 million in 2016 to K11,959 million in 2017. The increase in the value of traded debt securities is attributed to the increase by 211% in the number of trades from 428 trades in 2016 to 1,331 trades in 2017. Corporate Bonds The total value of outstanding debt securities registered with the Commission as at 31st December 2017 was K929 million and the total compared to K1,165 million outstanding at 31st December 2016. The reduction is due to some of the bonds maturing during 2017. Collective Investment Schemes (CISs) The number of authorised fund managers increased from 7 in 2016 to 9 in 2017 after two new fund managers were authorised in 2017. The value of funds under management by the authorised managers increased by 18.7% from K363,618,982 at the end of December 2016 to K431,571,408 Although there was a growth in the number of fund managers, this increase in funds under management is mainly due to greater participation in the sector by investors, which is a good development as the CIS funds are small compared to other markets in the region. Therefore, the continued growth of the industry is a reassuring sign that the sector will continue to provide an alternative savings vehicle for small investors and pension funds as well. Chief Executive’s Statement Financial Performance of the Commission In order to safe guard savings made through the capital markets, government continues to support the Commission in meeting operational costs. The Commission also continues to support government efforts by generating revenues that support budget implementation. However, as the Commission’s mandate is largely investor protection, financial performance indicators are mainly on account of the Commission needing to prudently apply the limited resources in meeting its mandated objectives. We report in other sections on some of the non-financial activities that the SEC is required to do as part of its mandate. In the period ending 31st December 2017, the Commission recorded an operating deficit of K1,301,332 (2016 – surplus K2,282,100) from a combined income of K20,299,377 against total operating costs of K21,600,709. The deficit in the year is mainly attributed to the subdued market activities arising from high money market rates in 2016 through to 2017. The capital markets ability to transfer savings into productive sectors, which drives the Commission’s ability to earn fees, is affected by high money market rates as corporates are unable to raise funds due to expensive funds.

Annual Report, 2017 17
Accumulated Fund
The Commission’s accumulated fund position at 31st December 2017 stood at K10,480,935 in contrast to K11,782,267 recorded at 31st December 2016. The diagram below shows that since 2012, the Commission has managed to contain costs and thus improve on its net assets position. The net assets position shows that the commission has for the last five years managed to keep its costs within its purse limits. Income Earned During the year ended 31st December 2017, the Commission internally generated 52% of its income while GRZ grant support accounted for 48%. This is on the backdrop of subdued market activities as explained above. Chief Executive’s Statement Commission Expenses The Commission being a services organization has human capital as its main asset. Therefore, the Commission’s major expense continues to be employee costs, a significant and key component of our regulatory activities and therefore the key cost driver. On a comparative basis, for the period to 31st December 2017, the Commission’s total staff costs were 54% (2016 – 52.4%) of its total expenditure. Being a serviceoriented organization that also champions investor awareness and investor protection, labor, awareness, and governance costs continues to be the Commission’s major cost elements. The Commission also strives to uphold good corporate governance by ensuring that the SEC had a well-functioning Board supported by effective Board committees. In order to assist the Board make informed licensing, authorization, and registration decisions among others, the Board, as provided for in the Securities Act, has constituted a number of committees of the Board, which have a good representation of various required professions.

Capital Expenditure
During the period under review, the Commission’s capital expenditure was as follows:
2017 2016
Type ZMW ZMW
Computer hardware 135,389 51,934 Office equipment 174,941 - Office furniture 130,538 21,910 Motor vehicles 1,044,386 405,429- Total 1,485,254 479,273 The 59% increase in capital expenditure during the period under review was due to the purchase of motor vehicles. Staff Complement The Commission’s staff complement during the review period remained at 18 compared to an approved structure of 43 (2015 – 2018). Capacity building continued to be at the core of the Commission’s objectives. The full list of employees during the period under review is provided in Appendix I while the approved structure is highlighted on next page:
Annual Report, 2017 18
Chief Executive’s Statement

Chief Executive’s Statement

Board Committees
Compensation Fund
Committee
Licensing Committee
Market
Transactions Committee
Committee
*V=VACANCIES
Inclusion
Financial
Manager
Annual Report, 2017 19
Chief Executive’s Statement

Training and Workshops
Multi-national and Regional Conferences and Summits Attended by Commission Staff The Commission has a deliberate policy to ensure staff are aware of the developments in this everchanging capital markets environment. The country and the Commission are also signatories to regional bodies such as SADC, which among other things require membership and attendance at meetings such as those of the Committee on Insurance, Securities and Non-Bank Authorities (CISNA) and the Eastern and Southern African Anti Money Laundering Group (ESAAMLG). Therefore, during the Financial Year ended 31 December 2017, Commission staff attended the following trainings, conferences, meetings and workshops. Course and Location Dates Attended by PEER to PEER learning, Peru 14 to 20 January 2017 Director Market Supervision and Development, Legal Officer IOSCO-AMERC Meeting, Abu Dhabi, United Arab Emirates 14 to 15 February 2017 Director Market Supervision and Development, Secretary & Chief Executive Investment Advisors & Stockbrokers Course, Lusaka 6 to 27 February 2017 Inspector Analysts CISNA Legal, Benoni RSA 20 to 24 February 2017 Director Enforcement & Legal Services Annual International Institute For Securities Market Growth and development, Washington DC 27 March to 06 April 2017 Director Enforcement & Legal Services, Manager supervision Investment Advisors & Stockbrokers Course, Lusaka 30 January to 20 February Legal Officer CISNA , Swaziland 05 to 07 April 2017 Manager Transaction & Finance Manager ESAAMLG, Tanzania 2 to 7 April 2017 Manager Market Development IFC-Capital Markets Development, Kenya 10 to 12 May 2017 Secretary and Chief Executive & Director market Supervision and development NAMFISA, Namibia 10 To13 July 2017 Inspector Analysts & Manager Financial Inclusion US SEC Compliance Training 10 to 14 July 2017 Legal Officer IOSCO-Madrid, Spain 16 June to 2 July Secretary and Chief Executive & Manager Market Development ACCA, CIMA & ZICA Business Conference, Livingstone 15 to 19 August 2017 Director Market Supervision and Development, Manager Market Supervision, Manager Market transaction and Manager Finance IFC-Milken Capital Markets Training, USA 09 August 2017 to 2 May 2018 Accounts Officer Annual Report, 2017 20 Chief Executive’s Statement

Course and Location Dates Attended by ESAAMLG, Tanzania 3 to 8 September 2017 Director Enforcement & Legal Services, Manager Market Development SPPRC, Botswana 23 to 26 August 2017 Secretary & Chief Executive Officer OICU-IOSCO, Spain 4 to 7 September 2017 Director Market Supervision and Development ZIBFS, Lusaka 22 September 2017 Manager Supervision, Manager Financial Inclusion, Inspection Analyst & Legal Officer Office Assistant Course, Luanshya 11 to 22 September 2017 Office Assistant CISI training, Livingstone 24 to 29 September 2017 Inspection Analysts, Legal Officer, Surveillance Officer CISNA, Harare 07 to 10 October 2017 Manager Supervision, Director Legal, Manager transactions, Manager Supervision &Secretary and Chief Executive Investment Advisors & Stockbrokers Course, Lusaka 9 to 31 October 2017 Investigations Officer, IT officer Officer, HR Officer FSB Familiarisation Training, RSÁ 19 to 25 November Legal Officer, HR Officer ZIM, Livingstone 07 to 11 November 2017 Investigations Officer, Manager Financial inclusion OICU-IOSCO, Boston USA 3 to 8 December 2017 Secretary and Chief Executive & Manager Market Development Certified Enterprise Risk manager, Kenya 04 to 08 December 2017 Finance Manager International venture capital master Class 21 to 24 November 2017 Manager Transaction IOSCO Technical Assistance, Kenya 28 November to 1 December 2017 Director Supervision and Market Development, Manager Supervision IOSCO Training, Mauritius 5 to 8 December 2017 Inspection Analysts, Manager Supervision Annual Report, 2017 21 Chief Executive’s Statement

The above identified objectives are expected to help the Commission achieve its goal to increase the number of investors and issuers through awareness and building market confidence. The Commission plans to see a market where there is increased liquidity achieved through having a trusted market, increased number of listed entities as well as participation on the market by an increased number of investors. Objective One “Develop and deploy strengthened institutional capacity.” This objective has been carried from the 2012-2015 Strategic Plan as we believe that this is the backbone of the Commission performing better as a regulator. Objective Two “Establish and maintain an effective and efficient regulatory environment for Capital Market.” This is to provide the investors and the market in general with comfort that there is an effective and efficient regulatory and legal system protecting their interests. Objective Three “Encourage and facilitate the development and diversification of Capital Market products and financial instruments.” This is in a bid to grow the Zambian Capital Market and thus offer a wider selection of investment instruments. Objective Four “Optimise market transaction costs.” In general, this will ensure that the Capital Market contributed to the reduction in the cost of doing business in Zambia. Objective Five “Enhance investor protection within the Zambian Capital Market.” This is one of the core mandates of the Commission, and cannot be overemphasized. A satisfied investor leads to increased confidence in the Zambian capital market. The Commission sees potential in the growth of capital markets. With the Commission’s awareness programs, which have been extended to key stakeholders including parliamentarians, Schools through the “Schools challenge”, and the regular Chairman’s breakfast meetings, the Commission sees growth prospects in both the use of the market to fund projects as well as the use of the equity and CIS savings and investment options by the public. Conclusion Phillip K. Chitalu CHIEF EXECUTIVE Annual Report, 2017 22 Chief Executive’s Statement Strategic Plan Overview The 2015 – 2018 strategic plan, which ends in March 2018 identified five (5) key objectives. These objectives include the following:

CORPORATE GOVERNANCE
Corporate governance is a key element by which corporate entities are manged and supervised. The Commission, as the capital markets regulator in Zambia, plays a critical role in ensuring that companies comply with aspects of governance. For instance, the Commission has a say in the appointment of the Directors and senior management of securities exchanges and clearing and settlement agencies to ensure that the office holders are not only fit and proper but also adhere to the governance principles of transparency, responsibility, accountability and fairness. The Commission takes corporate governance very seriously and not only applies it externally to the regulated entities but also applies the corporate governance principles to the Commission as a statutory body.
Section 8(2) and (3) of the Securities Act, No. 41 of
2016 specifies the composition of the Commission Board as consisting representatives of the following organisations:
» Bank of Zambia;
» Law Association of Zambia; » Zambia Institute of Chartered Accountants; » Zambia Chamber of Commerce and Industry; » Ministry responsible for finance; » Ministry responsible for justice; » Pensions and Insurance Authority; and » the Commission’s Chief Executive Officer as exofficio Member. The Minister appoints the non-executive Members of the Commission Board from a nomination made by the respective organisation. In addition, section 8(5) of the Act requires the Minister to ensure that at least fifty percent of each gender is nominated and appointed to the Commission Board, unless it is not practicable to do so. However, the Act empowers the Members to elect, from amongst their number, a Chairperson and Vice-Chairperson of the Board. Board Composition Name of Board Member Institution Represented Position Mr. Amos Siwila Law Association of Zambia Chairperson Mr. George Nonde Zambia Chamber of Commerce and Industry Vice-Chairperson Mrs. Ireen M. Habasimbi* Ministry responsible for finance Member Mr. Joe Simachela and Mrs. Conceptor Zulu Ministry responsible for justice Member Dr. Jonathan Chipili Bank of Zambia Member Ms. Mainza Masole* Pensions and Insurance Authority Member

Zambia Institute of Chartered
Accountants
Member
Phillip K. Chitalu Chief Executive Officer ex-officio Member

Appointed in May, 2017
Mr. Joe Simachela’s tenure ended in September, 2017 and Mrs. Conceptor Zulu was subsequently appointed as the Ministry of Justice representative on the Commission Board in November 2017. Annual Report, 2017 23

Board Meetings
Commission Board
From Left to Right: Mr. Phillip K. Chitalu (CEO), Dr. Jonathan Chipili (Member), Mrs. Ireen M. Habasimbi (Member), Mr. Amos Siwila (Chairperson), Ms. Mainza Masole (Member) and Mr. George Nonde (Vice-Chairperson) The Board held four scheduled meetings in February, June, September and December. In addition, the Board held one Special Meeting in August to deliberate on a matter that required the Board’s urgent consideration. The Board has delegated decision-making on timesensitive matters such as those relating to market transactions (registration of securities for capital raising) to ensure that decisions are expeditiously made and should not wait for a scheduled meeting to be convened every quarter. The following is the Board attendance at the scheduled and special meetings:
NAME
February
Scheduled
Meeting
27.02.17
June
Scheduled
Meeting
02.06.17
August
Special
Meeting
11.08.17
September
Scheduled
Meeting
01.09.17
December
Scheduled
Meeting
14.12.17
Mr. Amos Siwila     
Mr. George Nonde     
Mrs. Ireen M. Habasimbi
(Appointed May, 2017) -     Mr. Joe Simachela* (Tenure expired September 2017)     - Mrs. Conceptor Zulu* (Appointed November, 2017) - - - -  Dr. Jonathan Chipili      Ms. Mainza Masole (Appointed May, 2017) -    

Ministry of Justice nominee on the Board
Annual Report, 2017 24
Corporate Governance

The Commission Board has established Committees to assist the Board in performing some of the statutory functions conferred on the Board. The Commission has one ad hoc and five standing Board Committees namely – » the Compensation Fund Committee; » the Market Transactions Committee; » the Licensing Committee; » the Property Acquisition and Development Committee (ad hoc); » the Risk and Audit Committee; and » the Staff and Remuneration Committee. The Property Acquisition and Development Committee has been established as an ad hoc Committee to guide Management in the Commission’s property acquisition and development process. In addition, the Commission has established a Procurement Committee, chaired by the Chief Executive Officer, in accordance with the Public Procurement Act, No. 12 of 2008. Committee Membership Annual Report, 2017 25 Corporate Governance Compensation Fund Committee Market Transactions Committee Licensing Committee Property Acquisition and Development Committee (ad hoc) Risk and Audit Committee Staff and Remuneration Committee SEC Committees

Committees and Committee Members COMMITTEE MEMBERSHIP REPRESENTATION REPRESENTATIVE COMPENSATION FUND COMMITTEE BoZ Nominee Dr. Jonathan Chipili CMAZ Representative Mr. Muchindu Kasongola BAZ Representative Mr. Fanwell Phiri ZACCI Representative Dr. Francis M Ndilila LAZ Representative Ms. Abigail Chimuka MoF Representative Mrs. Mwila K. Zulu LICENSING COMMITTEE MoF Nominee Mrs Ireen M. Habasimbi BoZ Representative Mrs. Hellen L. Banda ERB Representative Ms. Chiluba Mumba PIA Representative Mrs. Namakau Mundia-Ntini MARKET TRANSACTIONS COMMITTEE BoZ Nominee Dr. Jonathan Chipili PIA Nominee Ms. Mainza Masole MoF Nominee Mrs. Ireen M. Habasimbi CCPC Representative Mr. Chilufya P. Sampa PACRA Representative Mr. Anthony Bwembya ZDA Representative Ms. Cecilia K. Nyalugwe PROPERTY ACQUISITION AND DEVELOPMENT COMMITTEE PIA Nominee Ms. Mainza Masole MoJ Mr. Joe Simachela Ministry of Works and Supply Mr. Geoffrey C. Phiri G.E.S. Architects Mr. Gary E. Simbeye Show Society of Zambia Mr. Vasco Sikanyeu RISK AND AUDIT COMMITTEE ZACCI Nominee Mr. George Nonde PIA Nominee Ms. Mainza Masole MoF Representative Mrs. Joyce P. Sundano STAFF AND REMUNERATION COMMITTEE ZACCI Nominee Mr. George Nonde BoZ Nominee Dr. Jonathan Chipili MoJ Nominee Mr. Joe Simachela ZIHRM Representative Mrs. Beatrice N. Mwila In addition, the Commission’s Procurement Committee was comprised of the following members:
PROCUREMENT
COMMITTEE
SEC CEO Mr. Phillip Chitalu Procurement specialist Mr. Mwawi Phiri Procurement specialist Mr. Charles Ng’andu SEC Member Mrs. Diana Sichone SEC Member Ms. Mutumboi Mundia SEC Member Mr. Mateyo Lungu The Committees were composed of the following members:
Annual Report, 2017 26
Corporate Governance

Regulatory and Operational Efficiency
Section 11(3) of the First Schedule to the Securities
Act, No. 41 of 2016 requires the Commission to include, in its Annual Report, information relating to its regulatory and operational efficiency. In particular,
section 11(3) provides as follows:
“(3) The report to be submitted in accordance with subsection (1), shall include the following:
(a) the extent to which the Commission has fully implemented its regulatory oversight functions as provided under this Act and in its rules and the effectiveness of the operation of such regulatory oversight function; (b) the actual and projected cost savings to the Government, if any, resulting from operations of the Commission; (c) the actual and projected costs which the Commission and the public would have incurred if the Commission had not undertaken regulatory responsibility for certain areas under the Commission’s jurisdiction; (d) the nature of the working relationship between the securities exchanges, clearing and settlement facilities and the Commission; (e) an assessment of the actual and projected efficiencies the Commission has achieved or expectsto be achieved as a result of the continuing regulatory activities of the Commission; and (f) the immediate and projected capabilities of the Commission.” The Commission reports on each of the six areas as follows:
Extent of implementation of the Commission’s oversight function and their effectiveness The Board’s oversight role in governance is highlighted in section 8 of the Securities Act, No. 41 of 2016 which provides as follows:
8. (1) There is constituted the Board of
the Commission which shall be responsible for the implementation of this Act and shall, subject to this Act— (a) exercise the functions of the Commission as provided in this Act; (b) oversee the administrative affairs of the Commission by putting in place effective, efficient and transparent systems of corporate governance and, in doing so, shall— (i) ensure sound financial management structures and processes, including financial, risk management and internal audit controls; (ii) provide strategic direction to the Commission and approve the annual work plan and activity programmes of the Commission as recommended by the Chief Executive Officer; (iii) ensure that the Commission builds sufficient human resource, technical and scientific capacity within the Commission; (iv) determine the structure and staffing levels of the Commission; (v) approve the budget estimates of the Commission and ensure that the Commission receives adequate funding for its operations; (vi) ensure the prevention of irregular expenditure, fruitless and wasteful expenditure, losses resulting from criminal conduct and expenditure not complying with the operational and financial policies of the Commission; (vii) ensure that the members of the Commission, members of committees and officers act in a manner consistent with the objectives and functions of the Commission, the Commission’s corporate governance charter and this Act; and (viii) ensure that officers perform their functions efficiently and effectively; and (c) do every act or thing that is required to be done by the Board as specified in this Act.” Annual Report, 2017 27 Corporate Governance

In addition to the requirements of section 8 of the Act, the Commission’s Board Charter provides guidance to the Board Members in their conduct of Board business to ensures that there is a right balance between the oversight role of the Board and the managerial function of the Commission Management. To achieve the objectives of the Act, the Commission has established and does apply a Code of Conduct to the Commission staff which prescribes the conduct and behaviour of the staff especially with regard to conflict of interest issues. Additionally, the Commission requires all senior management staff to be members of the Institute of Directors of Zambia as a measure to enhance their corporate governance knowledge and expertise. Both the Code of Ethics and the Board Charter have enshrined provisions and procedures on the declaration of interest and declaration of gifts from any person or entity, whether regulated by the Commission or not. Further, both documents specify the procedures to be taken whenever an employee or a Board Member would like to participate in the capital markets as a player, which guard against trading on non-public, pricesensitive information. Cost Savings resulting from the Commission’s Operations One of the Commission’s functions highlighted under section 8(b) of the Securities Act include the approval of the Commission’s budget estimates to ensure sound financial management structures and processes, including financial, risk management and internal audit controls. The Commission does not spend outside the approved budgeted and prudently manages its resources to achieve its strategic objectives. In this vein, the Commission does not engage in fruitless or wasteful expenditure. In addition, the Commission pays off all employee liabilities on time whenever they become due. Further, the Commission is prudent in ensuring that it does not incur any losses as a result of criminal conduct from the Commission’s employees but that the expenditure should comply with the Commission’s Finance and Accounting Policy which prescribes how finances should be handled. Cost to the Nation for not having the Commission The Commission’s principal mandate is investor protection. It does so by ensuring the prompt and full disclosure of non-public price-sensitive information by a company’s directors to the general public on the basis of which the investor will make an informed decision. A number of institutional and retail investors have invested more than six billion United States Dollars in the Zambian capital markets. Therefore, if the Commission is not in place or does not undertake its regulatory mandate around ZMW64 billion in savings could be lost and savings mobilization could be affected. Most of the institutional investors are pension funds which invest the excess contributions from employees into several investment portfolios including the capital markets. Without regulation, the investment of the pension funds would be susceptible to fraud
and other criminal activities. The Commission is there to ensure that it protects the interests of investors in the capital markets. Actual and Projected efficiencies the Commission has achieved as a result of the continuing regulatory activities The Commission has a dual mandate of market supervision and market development. The last few years have seen the Commission focussing on the development of the market due to the nascent stage of the capital market’s development in Zambia. However, the Commission has been undergoing the process of weaning the capital market operators and insisting on compliance with regulatory requirements. Annual Report, 2017 28 Corporate Governance

In light of this, the Commission has enhanced enforcement activities which has resulted in an increase in compliance. As a result of increased regulatory compliance by capital market operators, the Commission has noted an increase in market confidence which has translated into increased capital mobilisation especially in Collective Investment Schemes (CISs) and Corporate Bonds. Nature of the working relations with Capital Market Operators The Commission has a cordial working relationship with capital market operators. It operates an open-door policy where capital market operators are able to consult with and meet with the Commission at short notice on various regulatory issues. The Commission also holds regular meetings with capital market operators in order to learn from the market how the Commission could assist the market in achieving its goals and objectives and thereby grow the capital market industry. In addition, the Commission holds other regular stakeholder meetings including the quarterly Chairman’s breakfast meeting with the market. Further, the Chief Executive Officer also conducts media briefs on a quarterly basis to inform the market on the latest developments in the capital markets. Immediate and Projected capabilities of the Commission The Commission has highlighted capacity building as one of the strategic goals of the Commission under the current Strategic Plan. Thus, it has made training of staff a priority to ensure that the Commission is always in tune with current developments in the capital markets space. Therefore, the Commission has endorsed the investment qualification offered by the Chartered Institute of Securities and Investments (CISI), which is a United Kingdom chartered qualification, as a foundational training for all Commission staff as well as for the Board Members. Through this training and others offered by the Toronto Center and the International Organisation for Securities Commissions (IOSCO), the Commission Board and staff have been able to enhance their understanding of the industry. Audit Function The Commission has outsourced the internal audit function which is provided by MPH Chartered Accountants. The internal audit function is meant to ensure that internal controls are put in place and effectively used to manage risk in the Commission. MPH Chartered Accountants undertakes an audit of several control systems for the Commission. As an independent function from Management, the internal auditors report directly to the Board and therefore provide an independent assurance of risk management of the Commission to the Board. The external auditors are appointed by the Commission Board subject to approval by the Minister responsible for finance. The external auditors perform an annual audit and present a report to the Board stating the level of compliance by the Commission to the law, regulations and policies. The external auditors are Grant Thornton Chartered Accountants. The audit function is one of the most
important tools the Commission uses in its oversight role over the Commission. Overall, the Commission Board has an interest to ensure that it is transparent, responsible, accountable and fair in all its dealings with all types of stakeholders. The Board has delegated, to the Risk and Audit Committee its role of ensuring that the Commission has put in place sound financial management structures and processes, including financial, risk management and internal audit controls. Annual Report, 2017 29 Corporate Governance

Commission Secretary
The Director – Enforcement and Legal Services is the Board-appointed Secretary to the Commission Board and performs the secretarial functions as required under the Securities Act. Section 17 of the Securities Act empowers the Board to appoint a Secretary to the Board on such terms and conditions as the Board may determine. The Commission Secretary is in charge of the corporate secretarial affairs of the Commission, under the general supervision of the Chief Executive Officer and may also perform other functions as directed by the Board. Board Performance Self-evaluation The Board is required to under an annual review of the effectiveness of the Board, its Committees, and its individual Board Members. A self-assessment was done indicating a general improvement in all areas of Board activity as compared to the last assessment conducted for 2016. Specifically, the Board’s overall performance had been shown to have improved from 78% in 2016 (or 70.86% excluding the assessment of Recording/Minute Taking) to 86.32% under the 2017 assessment period. The Board performance self-evaluation was done for eight major areas as follows:
a) Board Activity; b) Mission and Purpose; c) Governance/Partnership Alignment; d) Board Organisation; e) Administration and Staff Support; f) Time and Location of Meetings; g) Recording/Minute Taking; and h) Membership. The assessment criteria relating to Recording or Minute Taking was not specifically assessed during the 2016 Assessment exercise and the following comparative analysis assumes that the criteria is rated at 0%. The overall Board performance for 2016 will, on that assumption, therefore reduce to 70.86% as shown in the following table:
Annual Report, 2017 30
Corporate Governance

On average, the assessment indicated that there had been improvement in all areas of Board activity from the last assessment with the exception of Administration and Staff Support which had reduced from 98% to 93%. The Board’s overall performance had also improved from 78% in 2016 (or 70.86% if the assessment of Recording/Minute Taking is excluded) to 86.32% under the 2017 assessment period. Diana S. Sichone (Mrs.) COMMISSION SECRETARY Annual Report, 2017 31 Corporate Governance

The Securities Act, No. 41 of 2016 is the principal Act for the regulation of the Zambian securities market. The Securities and Exchange Commission (SEC) has as a mandate to protect investors and ensure that the markets are free, fair and transparent. The Commission therefore adopts a supervision strategy for capital market players or intermediaries that ensures the protection of the investing public. The Commission has a dual mandate of investor protection and market supervision. Investor protection is done through various ways including the registration of securities, the licensing and authorisation of capital market operators and the supervision of capital market operators to ensure that they are in compliance with the requirements of the law. The role of market supervision and market development is performed by the Directorate of Market Supervision and Development (“DMSD”). Market Supervision The Commission is responsible for the supervision of capital markets operators. A key objective is to ensure capital markets operators comply with the Securities Act and its subsidiary legislation, thus ensuring a secure, fair and orderly investment environment that enhances investor and public safeguards and promotes an orderly development of the industry. OPERATIONAL ACTIVITIES Zambia’s Capital Market Players The players that operate in Zambia’s Capital Market industry consist of brokers/dealers, investment advisers, securities exchanges, central securities depositories, issuers, fund managers, credit rating agencies, investment banks, and transfer agents, among others. The full list of players and their contact details is provided in Appendices II and III. Licensing Licensing, being at the forefront, sets high regulatory standards at the very outset to fulfil the Commission’s mandate which is designed to ensure investor protection and support the operation of a free, orderly, fair, secure and properly functioning Securities Market. Licensing acts as the entry point into the Securities Market by capital markets operators, therefore the Commission strives to strike the right balance between its businessfriendly approach and complying with international regulatory standards. In line with its endeavour to align its processes to international best practices and to embrace modern regulatory approaches, the Commission constantly ensures that these practices are embedded into its operations at the licensing stage. As a result, this provides for a more cohesive and transparent framework guiding further improvements in the Commission’s regulatory approach. The licensing procedure is clearly defined in the Securities Act and rules, regulations, directives and guidance notes issued by the Commission. At Licensing, the Commission has in place a transparent and well-established set of procedures leading to the issue of a licence or the rejection thereof. The regulatory power of the Commission is anchored upon four pillars as follows:
(a) Any person dealing or advising on securities must be licensed by the Commission; (b) Any securities market must be authorised and licensed as a securities exchange by the Commission; (c) All securities of a public company which are publicly traded must be registered by the Commission; and (d) Collective Investment Schemes (CISs) must be authorized by the Commission. Annual Report, 2017 32

In assessing applications, the Commission is required to conduct a number of assessments

including the fit and proper test
of applicants, financial soundness of the applicants, lawfulness and moral standards of the proposed activity and any other relevant issues. Where applications may cause harm to the good repute of the jurisdiction, such applications are recommended for rejection. A breakdown of the issuances by license type is provided below:
License Type Number of licenses 9 months ended 31st December 2016 Number of licenses for the year ended 31st December 2017 Dealer’s License 28 35 Dealer’s Representative License 109 166 Investment Advisor’s License 11 11 Investment Advisor’s Representative License 23 28 Securities Exchange License 3 3 Total 174 243 Licences issued for the year 2017 The Zambian Capital Markets is steadily continuing to gain momentum and systemic importance based on the number of applications for licences received in 2017. In 2017, the Commission continued with its role of ensuring that only fit and proper persons were allowed to conduct securities business and offer regulated services to the investing public. For the year ending 31st December 2017, the Commission had issued 243 licenses. The full list of licensees as at the year-end is provided in Appendix II. Compliance Compliance entails ensuring that persons authorised or licensed to operate in the Zambian capital markets, including listed and quoted businesses; collective investment schemes (CISs); exchanges; brokers; investment advisers; representatives; custodians; trustees; etc. are compliant at all times in meeting the continuing obligations as set out in the Securities Act. As
part of its onsite inspections,
the Market Supervision Team reviews and assesses the licensed persons’ work procedures & their compliance to the Act, Rules and Directives. Issuers, CISs and investment companies are also specifically monitored for purposes of compliance with continuing obligations. Focus is also given to compliance with the Commission’s Anti-Money Laundering & Counter-Terrorism Financing Directives and other related laws. The Commission works closely with the Financial Intelligence Centre in coordinating all Anti-Money Laundering & Counter-Terrorism Financing related matters. Capital markets players are required to submit monthly, quarterly and annual returns. Taking the example of CISs, fund managers are required to submit monthly and quarterly returns, which the Commission uses to monitor the funds’ investments and also help assess safety of the funds. The CIS industry has eight (8) fund managers who manage about 33 sub funds. A CIS that is established under trust is required to appoint a trustee whilst all other types of CISs are allowed to appoint a custodian. The prevailing scenario is that all CISs operating in Zambia have contracted custodial services thereby securing the assets of the investors at one of the two authorised custodians. In addition, the Commission collates data that is useful for assessing the growth or otherwise of the CIS market. Annual Report, 2017 33 Operational Activities

As at 31st December 2017, the funds held under management were distributed as indicated in the table below:
Name of fund Name of fund manager 31-Dec-16 31-Dec-17 Market share % Market share % Mpile Unit Trust African Life Financial Services Limited 59.89% 61.04% Madison Unit Trust Madison Asset Management Company Ltd 15.34% 13.69% ABC Unit Trust ABC Investment Services Limited 13.62% 13.44% Kukula Fund 1 Kukula Capital Plc 6.03% 5.25% Intermarket Unit Trust African Life Financial Services Limited* 2.31% 1.47% Laurence Paul Unit Trust Laurence Paul Investment Services Limited 1.43% 2.53% Mukuyu Growth Fund Minet Zambia Consulting Limited 0.67% 1.60% Equity Capital Resources Unit Trust Equity Capital Resources Plc 0.70% 0.70% Total 100% 100% *African Life Financial Services was appointed as interim Manager for Intermarket Unit Trust Inspections In 2017, the Commission carried out thematic inspections targeting particular aspects of the market in an attempt to have a more detailed review of their operations. The following were the thematic inspections conducted:

Review of Anti-Money
Laundering/ Countering the Financing of Terrorism (“AML/CFT”) for Capital Market Players;
Review of Brokers’ compliance
with SEC regulations and
Lusaka Securities Exchange trading rules; and
Review of compliance with
listing requirements by issuers.
Surveillance
Market surveillance continues to be one of the key functions undertaken by the Commission. It entails monitoring trade operations by using daily analysis of market trades, writing periodic reports, investigating anomalies and other activities. The goal is to ensure compliance by the capital markets operators to the Commission rules and regulations, in order to regulate the market and provide the necessary protection to investors. As part of surveillance, the Commission attended, in an observer capacity, Annual General Meetings (AGMs) of listed and registered entities. The following were some of the items noted:

Attendance
Most of the AGMs held in the period under review were well attended and compliant in terms of holding the meetings within the stipulated time.
Investor Participation
Investors generally participated in the deliberations of the meetings and almost all of the issues raised by investors during the AGMs were adequately responded to by most companies. Some investors also seemed well involved in the monitoring of the performance of the companies in which they had invested. Annual Report, 2017 34 Operational Activities

Annual Report, 2017 35
Complaints Handling
The Commission continued to receive complaints from members of the public in relation to their investments in securities. During the review period, the Commission received sixteen (16) complaints. The complaints related to various aspects of challenges faced by some investors including delays in payment of dividends, claims for funds not being received after sale of shares, tipoffs on use of misleading information by some capital markets operators etc. Seven (7) of these complaints have been closed while the rest are still being investigated. Market Development In accordance with the Securities Act No.41 of 2016, the Commission, under its Market Development role, is mandated to undertake the following functions:
i. Encourage the development of securities and
securities exchanges and the increased use of such exchanges;
ii. Provide, promote or otherwise support financial
education, awareness and confidence with regard to financial products, institutions and services; and
iii. Prescribe certification standards and accreditation
for licensees.
In the period under review, Market development activities included engagement of market participants through the Annual Securities Wings and Intermediaries Workshop; the hosting of the Capital Markets Indaba held in April 2017; launch of the Financial Inclusion Strategy; engagement of the Curriculum Development Centre for the development of supplementary Financial Education material on capital markets. In addition, the Commission participated in commemorations that included the Financial Literacy Week; the World Savings Day and the inaugural World Investor Week. A TV 13 weeks drama series was also produced and aired alongside press media advertising all aimed at investor awareness and sensitization. The detailed report on these and other activities are highlighted hereunder. Zambia’s Capital Markets Indaba The SEC in partnership with the Financial Sector Deepening (FSD) Africa (a DFID funded project) and the Capital Markets Association of Zambia (CMAZ) hosted the capital markets Indaba. The Indaba whose theme was “Repositioning the Zambian Capital Markets as an Enabler to Achieving Sustainable and Significant Economic Growth” was successfully held from 3rd – 5th April 2017. The indaba was an initial step towards the development of a Capital Markets Master Plan that would guide the direction of capital market development in the short, medium and long term. Hon. Minister of Finance Mr. Felix Mutati MP. with delegates of the Capital Markets Indaba - 2nd - 5th April 2017 Operational Activities

Graced by the Honourable
Minister of Finance, Mr Felix Mutati, MP and flanked by high ranking ministerial officials, the Indaba was met with serious deep thinking about the current inhibitors to development of the Zambian capital markets. Foreign capital markets experts provided insights on areas of focus that would develop the markets as the sessions were deliberated together with government officials and local captains of industry. Launch of the National Financial Sector Development Policy & National Financial Inclusion Strategy The Securities and Exchange Commission through the leadership of the Ministry of Finance (MoF) and in collaboration with the Bank of Zambia (BoZ); the Pensions and Insurance Authority (PIA); the Rural Finance Expansion Programme (RUFEP); and the Competition and Consumer Protection Commission (CCPC) took part in the organisation and launch of two national financial sector documents namely; the National Financial Sector Development Policy (NFSDP); and the National Financial Inclusion Strategy (NFIS) which were launched by the Minister of Finance, Honourable Felix C. Mutati, MP on 8th November 2017 at Radisson Blu Hotel. The objective of the National Financial Sector Development Policy is to have a well-developed and inclusive financial system that supports efficient resource mobilization and investment for sustainable economic development while the National Financial Inclusion Strategy aims to provide a roadmap to further accelerate financial inclusion in Zambia in line with the vision of the NFIS which is ‘to have universal access to and usage of a broad range of quality and affordable financial products and services’. Financial Literacy Week Launch The 2017 Financial Literacy Week (FLW) was spearheaded by all the 3 financial regulators, that is, the Securities and Exchange Commission (SEC), the Bank of Zambia (BoZ) and the Pensions and Insurance Authority (PIA) under the coordination of the Bankers Association of Zambia (BAZ). The official launch of the FLW was on 28th March at Mulungushi International Conference Centre where the Honourable Minister of Finance Felix Mutati officiated the event. The Financial Literacy Week is an annual awareness campaign which is commemorated to educate and sensitize the general public about various topics on financial education. The theme for 2017 was “Know and Plan your Finances to Live a Better Life”. This launch was a kick-off for provincial launches to take place during the week of commemoration of which the Commission was responsible for sensitising the Southern Province. Annual Report, 2017 36 Operational Activities Finance Minister, Hon. Felix Mutati MP’s visit to the SEC stand at the launch of the Financial Literacy Week

Commemoration of the Financial Literacy Week – Southern Province The commemoration was preceded by a launch which was held in the provincial capital, Choma on 29th March 2017 and was officiated by Mr. Douglas Ngimbu, the Southern Province Deputy Permanent Secretary. The event was attended by various secondary schools and the general public. The pupils were taught the importance of saving and planning for their future key life events such as tertiary education, marriage, employment and health. Various financial sector players like the Lusaka Securities Exchange, Laurence Paul, Madison Life Insurance, Stanbic Bank, INDO Bank Zambia, First National Bank, ZSIC, FINCA, Investrust and Barclays Bank were part of the launch and exhibition. In line with the Financial Literacy Week and as part of the activities lined up for commemoration, a Financial Awareness talk was given in Livingstone at the Livingstone Institute of Business and Engineering Studies (LIBES) on 31st March 2017. The 50 students attending were taught about managing their finances to meet key life events. Operational Activities Annual Report, 2017 37 Operational Activities Livingstone Institute of Business and Engineering Studies (Financial Literacy Week) Commission staff and LIBES students who attended the Financial awareness talk

Workshops and capacity building Security Wings Workshop The Commission held the annual Securities Wings Workshop on 25th January 2017 at Radisson Blu Hotel. This workshop highlighted key topics such as:

Licensing Process and
procedure;
Fit and Proper requirements;
Screening processes;
Memorandum of
Understanding and
a Brief on Capital Markets
Awareness Campaign.
The workshop was interactive with active stakeholder participation and attracted 25 participants from Drug Enforcement Commission (DEC), Bank of Zambia (BoZ), Pensions and Insurance Authority (PIA), Zambia Security Intelligence Services (ZSIS), Zambia Police (ZP), AntiCorruption Commission (ACC) and members of staff from SEC. Capital Markets Intermediaries Workshop The Capital Markets Intermediaries workshop was held from the 26th -27th January 2017. This workshop was at Radisson Blu Hotel and was attended by 93 participants from Insurance and Assurance Companies, Brokers, Fund Managers, Financial Advisors, Listed companies, Audit firms, Exchanges, financial institutions, Credit Rating firms and SEC. Presentations during this workshop covered the New Securities Act No. 41 of 2016 and some of the key highlights, Interventions/way forward in terms of Enforcement, Risk Based Surveillance and the Risk Survey. Capital Markets Master Class The Commission hosted a Master Class on 7th April, 2017 facilitated by Prof Kenneth Mwenda, an Extraordinary Professor of Law, University of Pretoria (South Africa) and Program Manager and Executive Head of the World Bank Voice Secondment Program (VSP). The topic of the master class was ‘Understanding the Securities Law and Strategies for Developing Capital Markets.’ It was attended by 50 various capital market players, lawyers, academicians, investors and the SEC staff. Curriculum Development – Scoping and Sequencing Workshop The education curriculum remains one of the most effective ways of targeting and influencing the children and the youth. In this regard, the Commission engaged the Curriculum Development Centre as a gateway to the syllabus. This coincided with a scheduled activity by the Curriculum Development Centre for scoping and sequencing where the Commission was given the opportunity to suggest areas of knowledge within the existing scope. Annual Report, 2017 38 Operational Activities Delegates at the stakeholder’s workshop SEC Chief Executive Officer, Mr. Phillip Chitalu receives a certificate of participation from Prof. Kenneth Mwenda after the Master Class

Financial Education Material Writers Workshop The Commission took part in a Curriculum Development Centre (CDC), first round workshop on the development of the financial education school supplementary material on 12th October 2017 at Mika Convention Centre. The role of the Commission was to provide technical expertise on the development of content for capital markets and as such Commission members of staff formed part of the writing team which also consisted of other representatives from the Bank of Zambia, the Pensions and Insurance Authority, the Bankers Association of Zambia, the Zambia Revenue Authority and ZANACO Bank Plc. The Commission has since submitted content to the Curriculum Development Centre for inclusion. Digital Financial Inclusion Conference The Commission co-sponsored and participated in a Digital Financial Inclusion Conference dubbed ‘Driving Financial Inclusion through Digital Financial Solutions’. The conference was organized by the Zambia Institute of Banking and Financial Services and was held on 22nd September 2017 at Intercontinental Hotel. Further insights on the implications of enhanced digital financial inclusion were shared by foreign financial sector experts and delegates discussed the subject matter. Further, a review of some case developments, critical practical issues, and notable best practices in the region were deliberated. SADC Integrated Regional Electronic Settlement System Through the SADC Committee of Insurance, Securities and NonBanking Financial Authorities (CISNA), the Securities and Exchange Commission (SEC) was invited to attend a one and half-day workshop on the SADC Integrated Electronic Settlement System (SIRESS) which took place from 5th to 6th December 2017 in Johannesburg, South Africa. The objective of the workshop was to mainly provide further understanding among SADC member states of the regional payment system (SIRESS) which is a realization of the SADC Committee of Central Bank Governors (CCBG) Payment System Sub-Committee responsible for implementation of activities under the Protocol on Finance and Investment (FIP). The CCBG’s aim is to cooperate on payment systems, clearing and settlement systems among SADC member states. SIRESS is an automated interbank regional electronic settlement system which facilitates for or settles payments between participating entities in real time. Participants include central banks and financial institutions such as banks and nonbanking financial institutions that are authorized by central banks of member states. CISNA Bi-Annual Meeting The Commission participated in the 39th Bi-annual CISNA Meeting held in Zimbabwe from 8th to 10th November, 2017. The meeting resolved that member countries should endeavour to develop common messages for Financial Education couched in a manner that informs, persuades and reminds the consumer of the following:

Consumer rights and
responsibilities;
Importance of using registered
entities; and
Being a responsible borrower.
Commemoration of the Financial Literacy Week – Southern Province SEC TV Drama Series The SEC undertook the production and showing of a 13 series TV drama programme on Investor education from February to March 2017 on both ZNBC TV 2 and Muvi TV. The programme was created to introduce Unit Trusts as a savings product to the general public especially the low to medium income earning segments. Investor Sensitisation Campaign through Press and Social Media Advertising Advertorials aimed at educating investors and the general public in matters that affect their investments in the capital markets were developed and placed in the print media, in particular the Daily Mail and Times of Zambia. The same adverts were also placed on the SEC social media pages of Facebook and Twitter. The adverts Annual Report, 2017 39 Operational Activities

were meant to address behaviours such as poor attendance in AGMs, the lack of interest and knowledge in capital markets products. Chairman’s Breakfast Meeting with the Lord Mayor of London As a follow up to 2016’s engagement with the former Lord Mayor of London, The Right Honourable Mr. Jefferey Mountevans, the Commission hosted a Chairman’s Breakfast Meeting for the current Lord Mayor of London, The Right Honourable Dr. Andrew Parmley and his delegation on 15th September 2017 at Taj Pamodzi Hotel. Discussions at the meeting focused mainly on good legal frameworks; professionalism; strong corporate governance; and robust and stable business environment among others. The fora also gave the SEC an opportunity to share successes and developments in Zambia’s capital market since the previous Lord Mayor’s visit such as the enactment of the Securities Act of 2016 and the planned 10-year Capital Markets Master Plan (CMMP), among others. Key highlights during the Breakfast meeting included a presentation of the Chartered Institute for Securities and Investments (CISI) Accreditation Certificate to the Zambia College of Pensions and Insurance Trust (ZCPIT) and the witnessing of a Memorandum of Understanding between CISI and Capital Markets Association of Zambia (CMAZ) by the Lord Mayor. Both parties reiterated the need for continuous collaboration especially in areas of capacity building as well as other identified areas that the Commission would require support in, such as development of infrastructure financing models or frameworks amongst others. Annual Report, 2017 40 Operational Activities On-going deliberations during the Breakfast meeting Presentation of Accreditation Certificate to ZCPIT On-going deliberations during the Breakfast meeting

Familiarization Tour by Rusangu University The Commission hosted 30 students and faculty from Rusangu University based in Monze on 16th November 2017. The Commission organised interactive presentations which focused on:
i. Understanding the
comprehensive picture of the Zambian Capital Market
ii. The role of SEC in the
development of the Zambian
Capital Market
iii. Understanding the different
career options available at SEC as well as the Zambian Capital Market Professional Body engagement Zambia Institute of Marketing Conference The Commission co-sponsored and exhibited at the Zambia Institute of Marketing (ZIM) Conference under the theme ‘Enhancing Marketing Standards in Zambia for Competitiveness’ held in Livingstone from 9th to 10th November 2017. Prior to the conference, the Commission took part in a Corporate Social Responsibility activity which involved donation of building material to Chileleko Community School. The Commission also took this opportunity to distribute capital market literature to teachers and pupils. The Commission also participated in the Zambia Institute of Marketing Annual Conference and Awards Gala by acquiring a talking slot. The theme of the conference resonated with the pitch that was made suggesting alternating sources of financing by embracing opportunities embedded in the capital markets. 2017 Capital Markets Schools Challenge Competitions The Capital Markets Schools Challenge 2017 – Lusaka Province The Commission launched the Capital Markets Schools (CMS) Challenge on 30th April 2017 and hosted the 2017 CMS Challenge – Grand Finale on 30th November
2017. The Grand Finale, also an
Awards ceremony, necessitated a proper close to the School competition which was launched in April 2017 in line with the National Strategy on Financial Education’s (NSFE) objective of empowering Zambians with improved knowledge, understanding, skills, motivation and confidence to help them secure positive financial outcomes for themselves and their families. The CMS Challenge is targeted at school going children and creates a platform that empowers them with knowledge on capital markets as well as exposes them to real-life situations and insights into trading in securities such as shares and collective investments schemes. Annual Report, 2017 41 Operational Activities Director – Enforcement and Services takes students through the Departmental functions Manager – Administration shares a light moment

Following the launch of the 2017 CMS Challenge, 46 schools participated in the Challenge with following schools having performed exceptionally well:
No. School Award

Liksasa Secondary School Grand Prize
Mukamambo Secondary School 2nd Place Runners-up
Chongwe Secondary School 3rd Place Runners-up
Roma Girls Secondary School Active Participation
Kafue Day Secondary School Active Participation
Kapululira Secondary School Active Participation
Kaunga Secondary School Active Participation
Kasamu Secondary School Active Participation
The Commission awarded the top three schools with prize money. Launch of the Capital Markets University Challenge In line with our Strategic Goal No. 3 – ‘Encourage and facilitate the development and diversification of capital market products and financial instruments’, we launched a University Essay competition in December 2017. The objective of the on-going essay competition is to engage University going students by providing a platform for them to demonstrate their understanding of capital markets investments and the financial growth prospects that they offer. Annual Report, 2017 42 Operational Activities Group photo of SEC Board members, Ministry of General Education representatives, SEC members of staff and participating schools.

Enforcement and Legal Services The Commission through the Directorate of Enforcement and Legal Services (“DELS”) is responsible for enforcing the Securities Act (“the Act”) and the Rules made thereunder. It is responsible, inter alia, for identifying and recommending law reform and development in the securities sector, ensuring legal and regulatory compliance, providing corporate legal and secretarial services. DELS also provides legal advisory services and undertakes litigation, on behalf of the Commission, in all courts and administrative Tribunals. Legislative developments The new Securities Act, No. 41 of 2016, empowers the Commission to enact subsidiary legislation to operationalise the Securities Act through Statutory Instruments with respect to any matter that the Act requires or permits the Commission to enact. The Commission is in the process of revising and developing a number of Statutory Instruments including revising the fees and levies that capital market participants are mandated by law to pay to the Commission so as to enable capital raises and reduce the cost of doing business. The Securities Act also introduced investigatory powers under section 161 of the Act. The Commission’s authority to investigate suspected cases of securities law violations under this Act is generally unrestricted. The purpose of carrying out an investigation is to adequately develop a factual basis for a determination as to whether particular activities come within the ambit of the Commission’s regulatory authority. Where the Commission has reasonable cause to believe that a person has breached the provisions of the Securities Act, the Commission carries out investigations before deciding on the course of action to take against any person who would have breached the provisions of the Act. During the period under review, the Commission appointed the first Investigations Officer in the Commission’s history. From the date his appointment, the Investigations Officer has conducted a number of investigations arising from a barrage of complaints from the capital market operators, and in some instances at the Commission’s own motion where there was reasonable cause to believe that the provisions of the Securities Act had been breached. Enforcement actions taken One of the key improvements in the current legal framework is the introduction of administrative sanctions which have enhanced the Commission’s enforcement mandate by making it easier to deal with defaulting capital market operators. Previously, a capital market operator who breached any provision of the Securities Act or the Rules made thereunder would only be dealt with through the criminal process of prosecution and the prosecution team would need to secure a conviction before any action could be taken against the defaulting capital market operator. The Securities Act provides the Commission with a wide range of enforcement powers to take against defaulting capital market operators who breach any of the
provisions that the Commission enforces. These include investigations, criminal and civil litigation as well the administrative sanctions earlier alluded to. The Commission has recourse to these options when there are grounds and circumstances meriting the specific action. Not only do the various enforcement actions provide relief by those harmed by a securities law violation, but, more important, the existence of enforcement actions is a powerful incentive for individuals and companies to comply with the securities laws. The Commission has witnessed a reduction in the number of violations of the Securities laws by individuals and companies following the Commission’s initiative to take enforcement action against erring market players. Annual Report, 2017 43 Operational Activities

For instance, the number of market players submitting their annual reports, timely and in accordance with the securities laws, has drastically increased. The enforcement actions taken ranged from the imposition of administrative fines to the making of private censures against defaulting capital market operators for the regulatory breaches. It must be noted that, during the period under consideration, the Commission was defending a judicial review matter in which one of the capital market participants was challenging its regulatory decision and the matter was still ongoing as at the date of this report. In addition, the Commission undertook a number of administrative actions against licensees and other persons in default to ensure that the provisions of the Securities Act were complied with. Regulatory compliance The DELS ensures that as a financial services regulator, the Commission complies with legal and regulatory requirements that facilitate effectiveness in capital markets regulation. This includes compliance with international regulatory requirements and best practices of the International Organisation of Securities Commissions (IOSCO), the Eastern and Southern African Anti-Money Laundering Group (ESAAMLG), the Southern African Development Community (SADC) Committee on Insurance, Securities and Nonbank Administrators (CISNA), the Africa and Middle Eastern Securities Regulatory Committee of IOSCO (AMERC) and other regional and international bodies. The DELS is also the contact point for liaison with foreign capital market regulators on information sharing and exchange of information. IOSCO MMOU Compliance With the enactment of the Securities Act No. 41 of 2016, the Commission qualified to apply to be a signatory to the International Organisation of Securities Commissions (IOSCO) Multilateral Memorandum of Understanding (MMoU) on information sharing and international co-operation. A securities regulator qualifies to be a signatory if the securities law it administers enables it to collect and share information for purposes of enforcement, by other securities regulators, of securities violations. During the period under review, the Commission successfully submitted its application to be a signatory to the MMoU and was, at the date of the report, awaiting feedback from IOSCO on the status of its application. Being a signatory to the IOSCO MMoU is a critical aspect of the Commission’s compliance with its international obligations as the MMoU is a vital instrument both to ensure effective global regulation and to preserve and strengthen securities markets. Not being a signatory to the IOSCO MMoU, therefore, has a number of implications including unattractiveness of a country as an investment destination. Foreign investors are less keen on investing in a country that is not a signatory to the IOSCO MMoU because their investments are not as protected as when the country is a signatory and the Securities regulator is able to exchange and share
information for regulatory purposes. Annual Report, 2017 44 Operational Activities

The table below shows the companies, type and number of securities that were approved during the period under review:
DATE COMPANY
TYPE AND
NUMBER OF
SECURITIES/OR
TRANSACTION
DATE
APPROVAL
GRANTED
PURPOSE OF MEETING
17.02.2017 Copperbelt Energy
Corporation Africa
Investment Limited
Ordinary shares 29.06.2017 Consideration of the application for the registration of 1,625,000,597 shares
17.02.2017 Associated British
Foods Plc
Application for a wavier
02.06.2017 Consideration of application
for a waiver of takeover authorization fee
17.02.2017 ARISE Application for a
waiver
17.02.2017 Consideration of application
for a waiver of trade commissions
02.05.2017 Sree Plc Ordinary shares deferred Consideration of the
application for the registration of 2,000,000 shares
02.05.2017 Zampost
Microfinance
Limited
Medium Term
Note Programme
(MTNP) deferred Consideration of the application for the registration of ZMW 100 million MTNP
02.05.2017 Altus Collective
Investment Scheme
Collective
Investment Scheme
02.06.2017 Consideration of the
application for authorization.
03.08.2017 Bayport Financial
Services Limited
Medium Term Note
Programme
11.08.2017 Consideration of the
application for the registration of ZMW 700 million MTNP Market Transactions In order to ensure there was control on the entities that obtained funds from the public, the Commission is mandated to register securities before they are offered to the public. The Commission also approves mergers or acquisitions involving entities whose securities are registered with the Commission. During the financial year ending 31st December 2017, the Commission through the Market Transactions division received and approved a number of applications from companies including those relating to the registration of securities, mergers and acquisitions. Waivers from certain Securities Act obligations as enshrined in the Act, and other miscellaneous market activities were also considered. Annual Report, 2017 45 Operational Activities

DATE COMPANY
TYPE AND
NUMBER OF
SECURITIES/OR
TRANSACTION
DATE
APPROVAL
GRANTED
PURPOSE OF MEETING
03.08.2017 Cavmont Bank
Limited
Employee Share
Ownership Plan
11.08.2017 Consideration of the
application for authorization
03.08.2017 Barrick Gold
Corporation
Employee Share
Ownership Scheme
(ESOS)
11.08.2017 Consideration of the
application for authorization
23.11.2017 Professional
Insurance
Corporation
Zambia Plc
Ordinary shares 14.12.2017 Consideration of the application for the registration of 7,500,000 shares
23.11.2017 Hobbiton Unit
Trust Fund
Collective
Investment Scheme
14.12.2017 Consideration of the
application for authorization.
23.11.2017 Investec Global
Strategy Fund
Collective
Investment Scheme
14.12.2017 Consideration of the
application for authorization.
28.11.2017 Delta Corporation Application for a
wavier
28.12.2017 Consideration for the
application for a waiver from making a mandatory offer to National Breweries Plc minority Shareholders Annual Report, 2017 46 Operational Activities

2017 FINANCIAL STATEMENTS
Securities and Exchange Commission Financial statements December 2017

Content Page
Statement of commissioners’ responsibilities.................................. 49
Report of the independent auditors.................................................. 50-51
Statement of comprehensive income............................................... 52
Statement of changes in equity......................................................... 53
Statement of financial position......................................................... 54
Statement of cash flows.................................................................... 55
Notes to the financial statement........................................................ 56-70 Detailed statement of comprehensive income................................... 71-72 Annual Report, 2017 48 Financial Statements

Annual Report, 2017 49
STATEMENT OF COMISSION RESPOSIBILITIES The Securities Act, 1993 requires the commissioners to prepare financial statements for each financial year which give a true and fair view of the financial position of Securities and Exchange Commission and of its financial performance and its cash flows for the period then ended. In preparing such financial statements, the commissioners are responsible for » designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; » selecting appropriate accounting policies and applying them consistently; » making judgements and accounting estimates that are reasonable in the circumstances; and » preparing the financial statements in accordance with the applicable financial reporting framework, and on the going concern basis unless it is inappropriate to presume that the Commission will continue in operation. The commissioners are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Commission and enable them to ensure that the financial statements comply with the Securities Act,
1993. They are also responsible for safeguarding
the assets of the Commission and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The commissioners confirm that in their opinion a. the financial statements give a true and fair view of the financial position of Securities and Exchange Commission as of 31 December 2017, and of its financial performance and its cash flows for the period then ended; b. at the date of this statement there are reasonable grounds to believe that the Commission will be able to pay its debts as and when these fall due; and
c. the financial statements are drawn up in accordance
with International Financial Reporting Standards. This statement is made in accordance with a resolution of the commissioners. Signed at Lusaka Financial Statements

REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF SECURITIES AND EXCHANGE COMMISSSION Opinion We have audited the financial statements of Securities and Exchange Commission which comprise the statement of financial position as at 31 December 2017, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the period then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the Commission’s financial statements give a true and fair view of the financial position of the Commission as at 31 December 2017, and of its financial performance and its cash flows for the period then ended in accordance with International Financial Reporting Standards (IFRSs). Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Commission in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Zambia, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation of the financial statements that give a true and fair view in accordance with International Financial Reporting Standards and in the manner required by the Securities Act 1993 Cap 354 of the Laws of Zambia and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Commission’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Commission or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Commission’s financial reporting process. Annual Report, 2017 50 Financial Statements

Annual Report, 2017 51
Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatements, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level assurance but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:
» Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. » Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Commission’s internal control. » Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. » Conclude on appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Commission’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements, or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Commission to cease to continue as a going concern. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including significant deficiencies in internal control that we identify during our audit. Report on Other Legal and Regulatory Requirements In our opinion, the financial statements of Securities and Exchange Commission as at 31 December 2017 have been properly prepared in accordance with the Securities Act,1993 Cap 354 of the Laws of Zambia and the accounting and other records and registers have been properly kept in accordance with the Acts. . Financial Statements

STATEMENT OF COMPREHENSIVE INCOME FOR THE TWELVE MONTH PERIOD ENDED 31 DECEMBER 2017 12 months ended 9 months ended 31 December 31 December Note 2017 2016 ZMW ZMW Income Grants and other income 6 20,299,377 15,883,223 Expenditures Employee benefits costs (11,671,924) (7,128,227) Depreciation (318,734) (196,663) Other operating expenses (9,610,051) (6,276,233) (21,600,709) (13,601,123) (Deficit)/Surplus for the period 7 (1,301,332) 2,282,100 Other comprehensive income - - Total comprehensive (loss)/income (1,301,332) 2,282,100 Annual Report, 2017 52 Financial Statements

Annual Report, 2017 53
STATEMENT OF CHANGES IN EQUITY FOR THE TWELVE MONTHS PERIOD ENDED 31 DECEMBER 2017 Accumulated reserves ZMW Total ZMW At 1 April 2016 9,500,167 9,500,167 Total comprehensive income for the period 2,282,100 2,282,100 At 31 December 2016 11,782,267 11,782,267 Total comprehensive loss for the year (1,301,332) (1,301,332) At 31 December 2017 10,480,935 10,485,935

Financial Statements

STATEMENT OF FINANCIAL POSITION – 31 DECEMBER 2017 Note 2017 ZMW 2016 ZMW ASSETS Non-current assets Motor vehicles, furniture and equipment 9 1,816,228 658,391 1,816,228 658,391 Current assets Short term deposit 10 7,000,000 10,500,000 Trade and other receivables 11 2,839,941 2,845,248 Cash and cash equivalents 12 2,848,986 2,647,155 12,688,927 15,992,403 Total assets 14,505,155 16,650,794 EQUITY AND LIABILITIES Funds and reserves Accumulated reserves 10,480,935 11,782,267 10,480,935 11,782,267 Current liabilities Trade and other payables 13 4,024,220 4,868,527 4,024,220 4,868,527 Total equity and liabilities 14,505,155 16,650,794 The financial statements on page 49 to 72 were approved by the Board of Commissioners on and were signed on its behalf by:
)
)
)
)
)
)
)
CHAIRMAN
COMMISSIONER
Annual Report, 2017 54
Financial Statements

Annual Report, 2017 55
STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS PERIOD ENDED 31 DECEMBER 2017 12 months ended 31 December 2017 ZMW 9 months ended 31 December 2016 ZMW Cash flows from operating activities (Deficit)/Surplus for the period (1,301,332) 2,282,100 Depreciation 318,734 196,663 Loss on sale of assets 8,682 - Interest received (196,412) (32,478) Decrease in trade and other receivables 5,307 359,626 (Decrease)/increase in trade and other payables (844,307) 1,460,185 Net cash (outflow)/inflow (on)/from operating activities (2,009,328) 4,266,096 Investing activities Purchase of property, plant and equipment (1,485,254) (479,273) Investments purchased - (6,500,000) Interest received 196,412 32,478 Investments redeemed 3,500,000 2,198,480 Proceeds from disposal of assets - 97,690 Net cash inflow/(outflow) from/(on) investing activities 2,211,158 (4,650,625) Increase/ (decrease) in cash and cash equivalents 201,831 (384,529) Cash and cash equivalents at beginning of the period 2,647,155 3,031,684 Cash and cash equivalents at end of the period 2,848,986 2,647,155 Represented by:
Cash in hand and at bank 2,848,986 2,647,155 Financial Statements

NOTES TO THE FINANCIAL STATEMENTS – 31 DECEMBER 2017

The Commission
The Commission is a body corporate that came into existence by an Act of Parliament, the Securities Act No. 38 of 1993, with the objective of inter-alia regulating and developing the securities market in Zambia.
Basis of preparing the financial statements

going concern basis
The financial statements have been prepared on a going concern basis which assumes that the Commission will continue in operational existence for the foreseeable future. The validity of this assumption depends on the Commission being able to generate sufficient funds from its future activities to meet its working capital requirements and the Government of the Republic of Zambia increasing its grants to the Commission. If the Commission was unable to continue in operational existence for the foreseeable future, adjustments would have to be made to reduce the reporting date values of assets to their recoverable amounts, to provide for further liabilities that might arise and to reclassify equipment and motor vehicles and long term liabilities as current assets and liabilities. The Commissioners are of the opinion that it is appropriate for the financial statements to be prepared on a going concern basis.

Principal accounting policies
The principal accounting policies applied by the Commission in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. a. Basis of preparation The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS). The financial statements are presented in accordance with IAS 1 “Preparation of financial statements” (Revised 2007). The Commission has elected to present the “Statement of Comprehensive income” in one statement namely the “Statement of Comprehensive Income”. They have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets and financial assets and liabilities at fair value through the statement of comprehensive income. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Commission’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 4. Annual Report, 2017 56 Financial Statements

Annual Report, 2017 57 b. New and revised standards that are effective for annual periods beginning on or after 1 January 2017 Disclosure Initiative (Amendments to IAS 7) The amendments to IAS 7 ‘Statement of cashflows, effective 1 January 2017 requires the Commission to provide disclosures about the changes in liabilities from financing activities. The Commission categorises those changes into changes arising from cash flows and non-cash changes with further subcategories as required by IAS 7. These amendments do not have a significant impact on these financial statements and therefore disclosures have not been made.
c. Standards, amendments and interpretations
to existing standards that are not yet effective and have not been adopted early by the Commission At the date of authorisation of these financial statements, certain new standards, and amendments to existing standards have been published by the IASB that are not yet effective, and have not been adopted early by the Commission. Information on those expected to be relevant to the Commission’s financial statements is provided below. Management anticipates that all relevant pronouncements will be adopted in the Commission’s accounting policies for the first period beginning after the effective date of the pronouncement. New standards, interpretations and amendments not either adopted or listed below are not expected to have a material impact on the Commission’s financial statements. IFRS 9 ‘Financial Instruments’ The new standard for financial instruments (IFRS 9) introduces extensive changes to IAS 39’s guidance on the classification and measurement of financial assets and introduces a new ‘expected credit loss’ model for the impairment of financial assets. IFRS 9 also provides new guidance on the application of hedge effectiveness. Management has identified the following areas that are expected to be most impacted by the application of IFRS 9:
» The classification and measurement of the Commission’s financial assets. Management holds most financial assets to hold and collect the associated cash flows and is currently assessing the underlying types of cash flows to classify financial assets correctly. Management expects the majority of held-to-maturity (HTM) investments to continue to be accounted for at amortised cost. However, a number of available-for-sale (AFS) investments and financial assets are likely to be measured at fair value through profit or loss as the cash flows are not solely payments of principal and interest. » The impairment of financial assets applying the expected credit loss model. This will apply to the Commission’s trade receivables and investments in debt-type assets currently classified as HTM or AFS (unless classified as at fair value through profit or loss). For contract assets arising from IFRS 15 and trade receivables, the Commission applies a simplified model of recognizing lifetime expected credit losses as these items do not have a significant financing component. Financial Statements

» The measurement of equity investments at cost less impairment. All such investments will instead be measured at fair value with changes in fair value presented either in profit or loss in other comprehensive income. To present changes in other comprehensive income requires making an irrevocable designation on initial recognition or at the date of transition to the new Standard. Currently, the Commission is not intending to elect to present changes in the equity investment in other comprehensive income but will account for its equity investments at fair value through profit or loss. » The recognition of gains and losses arising from the Commission’s own credit risk. If the Commission continues to elect the fair value option for certain financial liabilities fair value movements from changes in the Commission’s own credit risk will be presented in other comprehensive income rather than profit or loss. IFRS 16 ‘Leases’ IFRS 16 will replace IAS 17 and three related Interpretations. It completes the IASB’s long-running project to overhaul lease accounting. Leases will be recorded on the statement of financial position in the form of a right-of-use asset and a lease liability. IFRS 16 is effective from periods beginning on or after 1 January 2019. Management is yet to fully assess the impact of the Standard and therefore is unable to provide quantified information. However, in order to determine the impact the Commission are in the process of:
» performing a full review of all agreements to assess whether any additional contracts will now become a lease under IFRS 16’s new definition » deciding which transitional provision to adopt; either full retrospective application or partial retrospective application (which means comparatives do not need to be restated). The partial application method also provides optional relief from reassessing whether contracts in place are, or contain, a lease, as well as other reliefs. Deciding which of these practical expedients to adopt is important as they are one-off choices » assessing any current disclosures for finance leases and operating leases as these are likely to form the basis of the amounts to be capitalised and become right-of-use assets » determining which optional accounting simplifications apply to their lease portfolio and if they are going to use these exemptions » assessing the additional disclosures that will be required. (d) Fee income Licensing fee income is recognised upon issue of a licence. Registration fee income is recognised once securities are registered. Authorisation fee income on a takeover or merger transactions is recognised when the transaction is duly authorised. The LuSE trade commission is credited to the statement of comprehensive income on an accrual basis. (e) Interest Interest income is recognised on an accrual basis. (f) Motor vehicles, furniture and equipment Motor vehicles, furniture and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Commission and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred. Increases in the carrying amount arising on revaluation of property, plant and equipment are credited to the revaluation surplus in the accumulated fund. Decreases that offset previous increases of the same asset are charged against fair value reserves directly in accumulated fund; all other decreases are charged to the statement of comprehensive income. Annual Report, 2017 58 Financial Statements

Annual Report, 2017 59
Each year, the difference between depreciation based on the revalued carrying amount of the asset charged to the statement of comprehensive income and depreciation based on the asset’s original cost is transferred from the revaluation surplus to the accumulated fund. Depreciation is calculated to write down the assets to residual amounts on a straight-line basis over the expected useful lives of the assets concerned. The principal annual rates used for this purpose, which are consistent with those of the previous year, are: - % Motor vehicles 25 Office equipment 20 Computer hardware 33 1/3 Office furniture 25 The assets’ residual values and useful lives are reviewed at each reporting date and adjusted if appropriate. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its recoverable amount. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount. These are included in the statement of comprehensive income in the other operating income. When revalued assets are sold, the amounts included in the revaluation surplus relating to these assets are transferred to retained earnings. (g) Leased assets Where property, plant and equipment are financed by leasing agreements which give rights approximating to ownership (finance leases), the assets are treated as if they had been purchased and the capital element of the leasing commitments is shown as obligations under finance leases. The lease rentals are treated as consisting of capital and interest; the capital element is applied to reduce the outstanding obligations and the interest element is charged to the profit and loss account over the period of the lease so as to produce a constant periodic rate of interest in the remaining balance of the liability under the lease agreement for each accounting period. All other leases are operating leases and the annual rentals are charged to the profit and loss account on a straight-line basis over the lease term. Depreciation on the relevant assets is charged to the profit and loss account over their useful lives. (h) Lease payments Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. The Commission during the period under review had no running lease. (i) Financial assets The Commission classifies its investments into the following categories: financial assets at fair value through profit or loss, trade and other receivables, held-to-maturity financial assets and available-forsale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluate this at every reporting date. (i) Financial assets at fair value through income This category has two sub-categories: financial assets held for trading and those designated at fair value through profit
or loss at inception. A financial asset is classified into the ‘financial assets at fair value through income’ category at inception if acquired principally for the purpose of selling in the short term, if it forms part of a portfolio of financial assets in which there is evidence of short term profit taking, or if so designated by management. Financial assets designated as at fair value through profit or loss at inception are those that are:

held in internal funds to match investment
contracts liabilities that are linked to the changes in fair value of these assets. Financial Statements

The designation of these assets to be at fair value through profit or loss eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases;

managed and whose performance is evaluated
on a fair value basis. Assets that are part of these portfolios are designated upon initial recognition at fair value through profit or loss. (ii) Trade and other receivables Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market other than those that the Commission intends to sell in the short term or that it has designated as at fair value through income or available for sale. Trade and other receivables are recognised at fair value, less provision for impairment. A provision for impairment of Trade and other receivables is established when there is objective evidence that the Commission will not be able to collect all amounts due according to their original terms (iii) Held-to-maturity financial assets Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed maturities other than those that meet the definition of trade and other receivables that the Commission’s management has the positive intention and ability to hold to maturity. These assets are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment is established when there is objective evidence that the Commission will not be able to collect all amounts due according to their original terms. (iv) Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of the other categories. Financial assets are derecognised when the rights to receive cash flows from them have expired or where they have been transferred and the Commission has also transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Held-to-maturity financial assets are carried at amortised cost using the effective interest method. Realised and unrealised gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are included in the statement of comprehensive income in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of non-monetary securities classified as available for sale are recognised in equity. When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments are included in the statement of comprehensive income as net realised gains or losses on financial assets. Interest on available-for-sale securities calculated using the effective interest method is recognised in the statement of comprehensive income. The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active, the Commission establishes
fair value by using valuation techniques. (j) Impairment of assets (i) Financial assets carried at amortised cost The Commission assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Objective evidence that a financial asset or group of assets is impaired includes observable data that comes to the attention of the Commission about the following events:
Annual Report, 2017 60
Financial Statements

Annual Report, 2017 61

significant financial difficulty of the issuer or
debtor;
a breach of contract, such as a default or
delinquency in payments;
it becoming probable that the issuer or debtor will
enter bankruptcy or other financial reorganisation; or
observable data indicating that there is a
measurable decrease in the estimated future cash flow from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the Commission, including:
Adverse changes in the payment status of
issuers or debtors in the Commission; or
National or local economic conditions that
correlate with defaults on the assets in the Commission. The Commission first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant. If the Commission determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment. If there is objective evidence that an impairment loss has been incurred on assets carried at amortised cost, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the statement of comprehensive income. If a held-to-maturity investment or a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under contract. (i) Financial assets carried at amortised cost If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognised in the statement of comprehensive income. (ii) Financial assets carried at fair value The Commission assesses at each reporting date whether there is objective evidence that an availablefor-sale financial asset is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and current fair value, less any impairment loss on the financial asset previously recognised in profit or loss – is removed from equity and recognised in the statement of comprehensive income. Impairment losses recognised in the statement of comprehensive income on equity instruments are not subsequently reversed. The impairment loss is reversed through the statement of comprehensive income, if in a subsequent period the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss. (iii) Impairment of other non-financial assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Financial Statements

(k) Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments and balances held with banks. Bank overdrafts that are repayable on demand are included as a component of cash and cash equivalents. (l) Foreign currencies (i) Functional and presentation currency Items included in the financial statements are measured using the currency of the primary economic environment in which the Commission operates (the ‘functional currency’). The financial statements are presented in Zambian Kwacha, which is the Commission’s presentation currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the rates of exchange prevailing at the date of transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income. (m) Employee benefits (i) Provision for retirement benefits The Commission has a plan with National Pension Commission Authority (NAPSA) where the Commission pays an amount equal to the employee’s contributions. Employees contribute 5% of their gross earnings up to a ceiling set annually. (ii) Provisions for leave pay and long service bonus Provisions for leave pay are made in respect of all staff. In addition, all employees are entitled to gratuity and a provision is made thereon. (n) Trade and other payables Trade and other payables are stated at cost.
4. Critical accounting estimates and judgements
The Commission makes estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements. Estimates and judgements are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the process of applying Commission’s accounting policies, management has made judgements in determining:
(a) the classification of financial assets; (b) whether assets are impaired; (c) estimation of provision and accruals; and (d) recoverability of trade and other receivables.
5. Management of financial risk
5.1 Financial risk
The Commission is exposed to a range of financial risks through its financial assets. The most important component of this financial risk is credit risk. These risks arise from open positions in the interest rate and business environments, all of which are exposed to general and specific market movements. The Commission manages these positions with a framework that has been developed to monitor its customers and return on its investments.
5.1.1 Credit risk
The Commission has exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when due. Key area where the Commission is exposed to credit risk is trade and other receivables and investments. The Commission structures the levels of credit risk it accepts by placing limits on its exposure to the level of credit given to or investment made in a single entity. Annual Report, 2017 62 Financial Statements

Annual Report, 2017 63
5.1.2 Foreign currency risk
Most of the transactions for the Commission are carried out in Zambian Kwacha. The exposure to foreign currency risk is low.
5.1.3 Capital management
The Commission’s objective when managing capital is to safeguard the Commission’s ability to continue as a going concern so that it can continue to provide benefits to stakeholders. The Commission’s capital is supported by grants from the Government of the Republic of Zambia (GRZ) and its internally generated fees.
6. Income
The main sources of income were:
2017
ZMW
%
9 months ended
31 December 2016
ZMW %
Grants from GRZ 9,668,005 48 7,251,004 47 Registration of securities 85,317 - 1,453,303 9 LuSE trade commissions 2,216,974 11 486,321 3 Other fees and revenues 8,329,081 41 6,692,595 42 20,299,377 15,883,223
7. Surplus for the period
(Deficit)/ Surplus for the year is stated after charging:- Depreciation 318,734 196,663 Auditor’s remuneration:
Internal audit 60,000 66,574 External audit 110,000 87,000 170,000 153,574 Commissioners’ and committee expenses 1,008,234 902,085 Financial Statements

Income tax expense
The Commission is exempt from income tax.
Motor vehicles, furniture and equipment
Motor
Vehicles
ZMW
Office equipment
ZMW
Office furniture
ZMW
Computer equipment
ZMW
Total
ZMW
Cost
At 1 April 2016 1,141,096 81,948 284,462 401,099 1,908,605 Additions 405,429 - 21,910 51,934 479,273 Disposal (184,687) - - - (184,687) At 31 December 2016 1,361,838 81,948 306,372 453,033 2,203,191 Additions 1,044,386 174,941 130,538 135,389 1,485,254 Disposals (184,687) - - - (184,687) At 31 December 2017 2,221,537 256,889 436,910 588,422 3,503,758 Depreciation At 1 April 2016 869,859 67,621 236,416 312,756 1,486,652 Charge for the period 120,487 8,375 33,561 34,240 196,663 Disposal (138,515) - - - (138,515) At 31 December 2016 851,831 75,996 269,977 346,996 1,544,800 Charge for the year 193,503 9,148 45,823 70,260 318,734 Disposals (176,004) - - - (176,004) At 31 December 2017 869,330 85,144 315,800 417,256 1,678,848 Net book value At 31 December 2017 1,352,207 171,745 121,110 171,166 1,816,228 At December 2016 510,007 5,952 36,395 106,037 658,391 Annual Report, 2017 64 Financial Statements

Annual Report, 2017 65
2017
ZMW
2016
ZMW
10. Short term deposit
Standard Chartered Bank PLC 7,000,000 4,500,000 Barclays Bank PLC - 6,000,000 7,000,000 10,500,000
11. Trade and other receivables
GRZ Grant 805,667 805,667
Issuers fees 518,298 184,708 Sundry debtors 8,900 8,900 Accrued income - interest 1,089,063 1,380,889 Prepayments and deposits 286,246 470,750 2,708,174 2,850,914 Staff debtors 168,167 82,334 Provisions for doubtful debts (36,400) (88,000) 2,839,941 2,845,248
12. Cash and cash equivalents
Cash in hand and at bank 2,848,986 2,647,155
13. Trade and other payables
Provisions and accruals 3,497,257 3,285,880 Market Development Fund 429,920 718,847 Amount due to Compensation Fund 71,489 121,859 Due to Zambia Revenue Authority 25,554 741,941 4,024,220 4,868,527 Financial Statements

Financial assets and liabilities
Financial assets
The Commission’s principal financial assets are investments, prepayments, bank balances and cash. The Commission maintains its bank accounts with major banks in Zambia of high credit standing. Prepayments are stated at their nominal value reduced by appropriate allowances for estimated irrecoverable amounts. Financial liabilities The Commission’s financial liabilities are creditors and accruals. Financial liabilities are classified according to the substance of the contractual arrangements entered into, and are stated at their nominal value. (a) Credit risk Credit risk is the risk of financial loss to the Commission if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from trade receivables and other receivables. In order to manage this risk the Commission has a defined credit policy which is documented and forms the basis of all credit decisions. The Commission also makes allowance for impairment against nonperforming accounts, where recovery is doubtful. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: - Classes of financial assets Carrying amount 31 December 2017 ZMW 31 December 2016 ZMW Short term deposit 7,000,000 10,500,000 Trade and other receivables 2,839,941 2,845,248 Cash and cash equivalents 2,848,986 2,647,155 12,688,927 15,992,403 The credit risk for cash and cash equivalents and short-term deposits is considered negligible, since the counterparts are reputable banks with high quality external credit ratings. The credit risk for investments is considered to be low, since the Fund Manager is a reputable group. In respect of trade and other receivables, the Commission is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. Based on historical information about default rates, management considers the credit quality of trade receivables that are not past due or impaired to be good. Annual Report, 2017 66 Financial Statements

Annual Report, 2017 67
The aged analysis of trade receivables which were not impaired at the reporting date are as follows:- 2017 ZMW 2016 ZMW Days 0 – 30 386,220 35,910 31 -60 48,106 18,031 61 – 90 47,572 61,917 Over 90 - 68,850 481,898 184,708 (b) Interest rate risk The Commission is exposed to interest rate risk to the extent of the balance of any loans and other borrowings taken and outstanding. During the period under review, the commission was not subject to any interest rate risks as it had no any loans, and other borrowings taken and outstanding (2016: +/- 1%). These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on a change in the average market interest rate for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant. Profit for the year Equity +1% -1% +1% -1% ZMW 31 December 2017 - - - - 31 December 2016 - - - - Financial Statements

At 31 December 2016:
Within
6 Months
Within
6 to 12 Months
1 to 5
Years
ZMW
Non – derivative
Financial liabilities
Trade and other payables 2,765,745 2,102,782 - Totals 2,765,745 2,102,782 - The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying values of the liabilities at the reporting date. (d) Cash flow risk In the opinion of the directors, the risk that future cash flows may not be sufficient to meet its working capital requirements is medium. (e) Fair value The carrying amounts of financial assets and liabilities are representative of the Commission’s position as of 31 December 2017 and are in the opinion of the directors not significantly different from their respective fair values due to generally short periods to maturity dates. Interest-bearing loans and borrowings Fair value is calculated based on expected future principal and interest cash flows. Trade and other receivables/payables For receivables/payables the carrying amount is deemed to reflect the fair value. (c ). Liquidity risk Liquidity risk is the risk that the Commission will be unable to meet its obligations as they fall due. The contractual maturities of financial liabilities as at 31 December 2017 is summarised below:
At 31 December 2017:
Within
6 Months
Within
6 to 12 Months
1 to 5
Years
ZMW
Non – derivative
Financial liabilities
Trade and other payables 1,757,291 865,742 1,401,187 Totals 1,757,291 865,742 1,401,187 Annual Report, 2017 68 Financial Statements

Annual Report, 2017 69
(f). Categories of financial instruments At 31 December 2017 Receivables ZMW Fair value ZMW Financial assets Receivables 2,839,941 2,839,941 Short term deposit 7,000,000 7,000,000 Cash and cash equivalents 2,848,986 2,848,986 Total financial assets 12,688,927 12,688,927 Financial Liabilities at amortised Cost ZMW Fair value ZMW Financial liabilities Trade payables 4,024,220 4,024,220 Total financial liabilities 4,024,220 4,024,220 Net positions 8,664,707 8,664,707 At 31 December 2016 Receivables Fair value Receivables 2,845,248 2,845,248 Short term deposit 10,500,000 10,500,000 Cash and cash equivalents 2,647,155 2,647,155 Total financial assets 15,992,403 15,992,403 Financial Liabilities at amortised Cost ZMW Fair value ZMW Financial liabilities Trade payables 4,868,527 4,868,527 Total financial liabilities 4,868,527 4,868,527 Net position 11,123,876 11,123,876 Financial Statements

Related party transactions
The following transactions were carried out with related parties:
2017
ZMW
2016
ZMW
(i) Key management compensation Salaries and other short term benefits 3,258,140 3,628,708 Defined contribution pension schemes 32,206 72,581 3,290,346 3,701,289 (ii) Commissioners’remuneration Fee for service as Commissioners 429,607 902,085 (iii) Loans to key management - -
Capital commitments
There were no capital commitments either contracted or authorised at 31 December 2017 (2016 – ZMW nil).
Contingent liabilities
The Commission has engaged a legal Counsel to represent it in litigation against the Commission. The Counsel estimate legal fees of ZMW160,000, which are yet to be agreed with the Commission - (2016:
ZMW155,000. This amount has not been provided for in these financial statements
Events subsequent to the reporting date
There has not arisen since the end of the financial year any item, transaction or event of a material and unusual nature likely, in the opinion of the Commissioners, to affect substantially the operations of the Commission, the results of those operations or the financial position of the Commission. Annual Report, 2017 70 Financial Statements

Annual Report, 2017 71
DETAILED STATEMENT OF COMPREHENSIVE INCOME FOR THE NINE MONTHS PERIOD ENDED 31 DECEMBER 2017 2017 ZMW 2016 ZMW INCOME Grants Revenue grants 9,668,005 7,251,004 Fees and other income Authorisation fees 2,003,207 2,692,099 Commission- LuSE trades 2,216,975 486,321 Licensing fees 1,361,060 1,288,166 Registration fees 85,317 1,453,303 Scrutiny fees 316,335 116,668 Sundry income 297,414 267,602 Interest received 196,412 32,478 Issuers fees 940,000 505,333 Investment income 1,956,948 1,265,629 Inspection fees - 40,530 Annual fees 143,120 67,224 Levy on Collective Investment Schemes (CIS) 414,009 416,783 Interest staff loans - 83 Administrative Fines 223,000 - 477,575 - 10,631,372 8,632,219 Total Income 20,299,377 15,883,223 EXPENDITURE Advertising expenses 465,506 143,846 Audit fees 110,000 153,574 Bank charges 60,373 47,749 Bad debts provision 36,400 88,000 Board and committee expenses 1,008,234 902,085 Consultancy fees 264,151 156,561 CISNA - 528,632 Depreciation 318,734 196,663 Employee benefits costs 11,671,927 7,128,227 Entertainment 19,660 43,347 Finance charges (5,141) 43,347 Insurance 587,156 397,590 Motor vehicle expenses 276,583 233,278
SCHEDULE
Financial Statements

info@seczambia.org.zm
Plot 3827, Parliament Road,Olympia | P.O.Box 35165, Lusaka - Zambia +260 211 227 012 | Fax: +260 211 225 443 www.seczambia.org.zm SECURITIES AND EXCHANGE COMMISSION Protecting investors in the capital markets. Are you an Investor in shares or unit trusts? Remember to do your part by asking for your account statement from your stock broker or fund manager. DETAILED STATEMENT OF COMPREHENSIVE INCOME FOR THE NINE MONTHS PERIOD ENDED 31 DECEMBER 2017 (CONTINUED) 2017 ZMW 2016 ZMW EXPENDITURE (CONTINUED) Office operational costs 334,858 251,326 Postage and telephones 359,620 256,164 Electricity and water 54,018 25,745 Printing and stationary 202,683 128,130 Publicity and Education 2,172,708 970,890 Rent 1,305,192 840,965 Repairs and maintenance 29,351 21,396 Security 127,543 95,819 Subscription and publications 229,625 34,106 Workshop and seminars 1,971,528 955,027 21,600,709 13,601,123 (Deficit)/ Surplus for the year (1,301,332) 2,282,100 Annual Report, 2017 72 Financial Statements

APPENDICES
Appendix I
Name Position Date left
Mr. Phillip K. Chitalu Chief Executive Officer - Mrs. Diana Sichone Commission Secretary and Director – Enforcement and Legal Services - Ms. Mutumboi Mundia Director - Market Supervision and Development - Mr. Bruce Mulenga Manager - Market Transactions and Investments - Mr. Mateyo Lungu Manager – Finance - Mr. Saul Nyalugwe Manager – Administration - Mr. Abraham Alutuli Manager – Market Supervision - Mr. Nonde Sichilima Manager – Market Supervision - Mrs. Dingase Makumba Manager – Market Development - Mrs. Sitali Mugala Surveillance Officer - Ms. Racheal M. Banda Human Resource Officer - Ms. Priscilla Mwale Personal Assistant to the CEO - Ms. Leah Kusensela Accounts Assistant - Mr. Lubunda Ngala Officer – Enforcement and Legal Services – - Mr. Mubanga Kondolo Manager – Financial Inclusion - Ms. Gertrude Buyungwe Analyst - Mr. Benson Mwileli Analyst - Mr. Thomas Thole Investigations Officer - Ms. Siberia Tembo-Siamayuwa Pool Secretary - Mrs. Glendajoelinda C. Ng’andwe Secretary – Market Supervision and Development 13.06.2017 Mr. Sydney Katumba Information Technology Officer - Mrs. Theresa Chimbila Accounts Assistant - Mr. Saviour Mooya Driver - Mr. Alexander Tondo Office Assistant - The SEC Staff, (Past and Current) Annual Report, 2017 74

Annual Report, 2017 75
Appendix II
List of Authorised Capital Market Players for 2017 In order to ensure that only fit and proper persons and entities are allowed to offer securities services to the investing public, the Commission approved the applications of the following entities to conduct securities business in the categories shown below:
Dealer’s Licenses
The following corporate entities held a Dealer’s license during the period under review:
Item Company Name 2018 2017 YES NO YES NO

Aflife Capital Zambia Limited √ √
Aflife Holdings Zambia Limited √ √
3 Aflife Private Wealth √ √
ABC Investment Services Limited √ √
ABC Zambia Limited √ √
African Life Financial Services √ √
Altus Capital √ √
Autus Securities Zambia Limited √ √
Barclays Bank Plc √ √
Citibank Zambia Limited √ √
11 Equity Capital Resources Plc. √ √
Finance Securities Limited √ √
First National Bank Zambia Limited √ √
Grofin Zambia Limited √ √
Investrust Bank Plc √ √
Kukula Capital Plc √ √
Laurence Paul Investment Services Ltd √ √
Madison Asset Management Company Ltd √ √
Pangaea Renaissance Securities Ltd √ √
Prudential Life Assurance Limited √ √
Stanbic Bank (Z) Limited √ √
Standard Chartered Bank (Z) Limited √ √
Stockbrokers Zambia Limited √ √
Zambia National Commercial Bank Plc. √ √
Appendices

Dealer’s Representative Licenses The following persons held a Dealer’s representative’s license during the period under review:
Item Name of Representative Dealer 2018 2017 YES NO YES NO

Mukudzei-Ishe Zhou Aflife Capital √ √
Fortunate Ngatsha Aflife Holdings √ √
3 Danny Mulenga African Banking Corporation Investment Services Limited √ √
Miyanda H Hamusankwa African Banking Investments Services
Limited
√ √
Christopher K Mwelo African Banking Corporation (Z) Limited √ √
Theresa Chiluba African Banking Corporation Limited √ √
Mubanga Bwalya African Banking Corporation Limited √ √
Geoffrey Musekiwa African Life Financial Services Limited √ √
Pethel Chambwe Phiri African Life Financial Services Limited √ √
Jones Phiri African Life Financial Services Limited √ √
11 Muuka Mukongolwa Banda African Life Financial Services Limited √ √
Ms. Wane Chirwa African Life Financial Services Limited √ √
Mr. Ken Simwaba Altus Capital Limited √ √
Mukudzei Ishe Zhou
Wonder Nyasha
Aflife Capital Zambia Limited √ √
Fumanikile Bbuku Autus Securities Zambia Limited √ √
Joseph Simate Autus Securities Zambia Limited √ √
Boston Nkuname Barclays Bank Zambia √ √
Lesa Mulenga Barclays Bank Zambia √ √
Tiyezyeko Chilembo Barclays Bank Zambia √ √
Hanakoma Hamubwatu Barclays Bank Zambia √ √
Mudenda Sikapoto Barclays Bank Zambia √ √
Geofrey Mchangila Citibank Zambia Limited √ √
Ngosa Mary Kafwembe Citibank Zambia Limited √ √
Steven Chitete Citibank Zambia Limited √ √
Cornwell Fungai Musana Equity Capital Resource Plc √ √
Sabera Khan Equity Capital Resources Plc √ √
Tushar Thaker Finance Securities Limited √ √
Gerald Ndhlovu First National Bank √ √
Kapumpe Chola Kaunda First National Bank √ √
Annual Report, 2017 76
Appendices

Annual Report, 2017 77
Item Name of Representative Dealer 2018 2017 YES NO YES NO
30. Llewellyn Foxcroft First National Bank √ √
31. Naomi Hara Palale First National Bank √ √
32. Chibamba Kizito Lopa Grofin Zambia Limited √ √
33. Enerst Kando Grofin Zambia Limited √ √
34. Robinson Daka Grofin Zambia Limited √ √
35. Harry Mafuta Investrust Bank Plc Limited √ √
36. Richard Mutukwa Investrust Bank Plc Limited √ √
37. Jito Kayumba Kukula Capital Limited √ √
38. Tue Nyboe Andersen Kukula Capital Limited √ √
39. Aaron Yobe Zulu Lawrence Paul Investment Services
Limited
√ √
40. Brian Chintu Madison Asset Management Co. Limited √ √
41. Likonge Banda Madison Asset Management Co. Limited √ √
42. Muchindu Kasongolo Madison Asset Management Co. Limited √ √
43. Cecilia Kamba Siabusu Madison Asset Management Co. Limited √ √
44. Claire M Lungwe Madison Asset Management Co. Limited √ √
45. Sipiwe Nkunika Madison Asset Management Co. Limited √ √
46. Mupanga Chilungu Madison Asset Management Co. Limited √ √
47. Blessing Chilombe Madison Asset Management Co. Limited √ √
48. Ceaser Siwale Pangaea Securities Limited √ √
49. Peter Zulu Pangaea Securities Limited √ √
50. Tidale Mwale-Chisunka Pangaea Securities Limited √ √
51. Wendy Nsamwa Nglaze
Tembo
Pangaea Securities Limited √ √
52. Matete M. Sichizya Prudential Life Assurance Ltd √ √
53. Prabhleen Kohli Prudential Life Assurance Limited √ √
54. Cheng Besa Mwenechanya Stanbic Bank (Z) Ltd √ √
55. Dean Nathaniel Stanbic Bank (Z) Limited √ √
56 Mwila Pascal Mwenya Stanbic Bank (Z) Ltd √ √
57. Musenge Komeki Stanbic Bank (Z) Limited √ √
58. Prudence Khumbo Mhango Stanbic Bank (Z) Limited √ √
59. Veronica Sinkala Stanbic Bank (Z) Limited √ √
60. Mr. Fred Siwila Stanbic Bank (Z) Limited √ √
61. Victor Chileshe Stanbic Bank (Z) Limited √ √
62. Aaron Phiri Standard Chartered Bank (Z) Plc √ √
Appendices

Item Name of Representative Dealer 2018 2017 YES NO YES NO
63. Chimuka Muyovwe Standard Chartered Bank (Z) Plc √ √
64. Derek Bobo Standard Chartered Bank (Z) Plc √ √
65. Donna Forte-Regis Muleba Standard Chartered Bank (Z) Plc √ √
66. Edna Towela Lungu Standard Chartered Bank (Z) Plc √ √
67. John Keyala Standard Chartered Bank (Z) Plc √ √
68. Keyaba Mwenechanya Standard Chartered Bank (Z) Plc √ √
69. Mubanga Yvonne Mukuka Standard Chartered Bank (Z) Plc √ √
70. Muchindu Lombe Standard Chartered Bank (Z) Plc √ √
71. Mulolwa Nkata Kamana Standard Chartered Bank (Z) Plc √ √
72. Mwaka Kalengo Mfula Standard Chartered Bank (Z) Plc √ √
73. Mwali Chisala Standard Chartered Bank (Z) Plc √ √
74. Nana Mukwiza Standard Chartered Bank (Z) Plc √ √
75. Nana Nkasah Asare Standard Chartered Bank (Z) Plc √ √
76. Sampa David Shiyunga Standard Chartered Bank (Z) Plc √ √
77. Tamara M. Bbuku Standard Chartered Bank (Z) Plc √ √
78. Tsugai Mabuto Standard Chartered Bank (Z) Plc √ √
79. Wiggins Mupango Standard Chartered Bank (Z) Plc √ √
80. Mark Penyani Katemangwe Standard Chartered Bank (Z) Plc √ √
81. Davy Nanduba Standard Chartered Bank (Z) Plc √ √
82. Kabwe Mwaba Standard Chartered Bank (Z) Plc √ √
83. Jimmy Mwambazi Stockbrokers Zambia Limited √ √
84. Kamungoma Mate Stockbrokers Zambia Limited √ √
85. Chanda Mutoni Stockbrokers Zambia Limited √ √
86. Charles Kamungu Zambia National Commercial Bank √ √
87. Cliff George Sakala Zambia National Commercial Bank √ √
88. Fredrick Mulenga Kaputo Zambia National Commercial Bank √ √
89. Ignatius Innocent Kashoka Zambia National Commercial Bank √ √
90. Kunda Catherine Chikumbi Zambia National Commercial Bank √ √
91. Virginia Mwalilino Zambia National Commercial Bank √ √
92. Lishala Clarence Situmbeko Zambia National Commercial Bank √ √
93. Austin Hamukonka
Chijikwa
Zambia National Commercial Bank √ √
94. Munakupya Hantuba Aflife Private Wealth √ √
95. Zangonse Mwanza African Banking Corporation
Investments Services Ltd
√ √
96. Mataka Nkhoma Autus Securities √ √
Annual Report, 2017 78
Appendices

Annual Report, 2017 79
Investment Adviser’s License The following corporate entities held an Investment Advisors license during the period under review:
Item Company Name 2018 2017 YES NO YES NO

Asset Protection International Limited √ √
Charles Sichangwe √ √
3 Entrust Financial Services Limited √ √
Riscura Limited √ √
DeVere and Partners Investment Services (Z) Limited √ √
Selekane Asset Consultants Limited √ √
Investment Adviser’s Representative License The following persons held an Investment Advisors Representatives license during the period under review:
Item Company Name Investment Advisor 2018 2017 YES NO YES NO
Errol Neal Molver Asset Protection International Limited √ √
Lynda Syamunyangwa deVere and Partners International Limited √ √
Maureen Nabulyato deVere and Partners International (Z) Limited √ √
Musenge Kataya deVere and Partners International (Z) Limited √ √
Stella Nkole Sata deVere and Partners International (Z) Limited √ √
Elizabeth Nampasa deVere and Partners International (Z) Limited √ √
Gift Kapande deVere and Partners International Limited √ √
Julian Visser deVere and Partners International Limited √ √
Lerato Siame deVere and Partners International Limited √ √
Gervase Saenela Phiri deVere and Partners International (Z) Limited √ √
Aubrey Mofya Mulopa deVere and Partners International (Z) Limited √ √
Albert Shawn Bowa deVere and Partners International (Z) Limited √ √
Mwila Bowa deVere and Partners International (Z) Limited √ √
Joseph Deasis Chilepa deVere and Partners International (Z) Limited √ √
Mukelabai Luwabela deVere and Partners International (Z) Limited √ √
Chilando Muchuta deVere and Partners International (Z) Limited √ √
Carol Kapesa Musonda deVere and Partners International (Z) Limited √ √
David Brown Entrust Financial Services Limited √ √
Charity Siwale Riscura Zambia Limited √ √
Cindy Waheeb
Taudrous
Riscura Zambia Limited √ √
Joseph Lupupa
Chikonde
Selekane Asset Consultants Limited √ √ Appendices

Securities Exchange Licenses The following exchanges were operational during the period under review:
Item Company Name 2018 2017 YES NO YES NO

Lusaka Securities Exchange PLC √ √
Bonds and Derivatives Exchange of Zambia Limited √ √
3 Pan African Exchange Zambia Plc √ √ Annual Report, 2017 80 Appendices

Appendix III
Annual Report, 2017
Contact Details of Capital Market Players Stock Exchange Details LuSE PLC BaDEx PLC PANEX PLC Chief Executive Officer:
Mrs. Priscilla Sampa
Address (physical):
Lusaka Securities Exchange
2nd floor, Mamco House
Plot 316B, Independence Avenue Address (postal):
P.O. Box 34523
Lusaka
Telephone:
+260 (211) 228391/228537
Facsimile:
+260 (211) 225969
E-mail: info@luse.co.zm
Chief Executive Officer:
Mr. Peter Sitamulaho
Address (physical):
Bonds and Derivatives Exchange Zambia Plc Plot No 7450, Katopola Road Rhodespark, Off Great East Road Address (postal):
Post. Net Box 334
Private bag E10 Arcades
Lusaka
Telephone:
+260 (211) 220537
Facsimile:
+260 (211) 220574
E-mail: info@badex.co.zm
Chief Executive Officer:
Mr. Jacob Maaga
Address (physical):
Pan African Exchange Zambia Plc Unit No. 2 and 3B, Manda Hill Shopping Centre Stand 19255 Corner of Great East and Manchinchi Roads Telephone:
+260 975 435589
E-mail: jmaaga@panexchange.com Dealers’ Details a) Members of the LuSE Autus Securities Limited The Colosseum Block A, Ground floor Bwinjimfumu Road Lusaka P. O. Box 320308 Tel: +260 (211) 220460 Fax: +260 (211) 841033 Email: joshua@autussecurities.com Equity Capital Resources 4th Floor Godfrey House Kabelenga Road Lusaka Tel: +260 955 37 84 89 Email: fungai@ecrzambia.com Website: www.ecrzambia.com Intermarket Securities limited Ground Floor, Farmers House Central park P.O. Box 35832, Cairo Road Lusaka Tel: +260 (211) 227227-8 Fax: +260 (211) 231334 Email: joseph.mazila@intermarket.co.zm 81 Appendices

Annual Report, 2017 b) Non–Members of the LuSE ABC Investment Services Limited Ground Floor, Pyramid Plaza Corner Church and Nasser Roads P.O. Box 39501 Lusaka Tel: +260 (211) 257980 Fax: +260 (211) 257970-6 E-mail: abcz@africanbankingcorp.com Website: www.africanbankingcorp.com African Life Financial Services Independence Avenue Mpile Office Park Lusaka P. O. Box 51331 Tel: +260 (211) 252265/253772 Fax: +260 (211 253112 E-mail: info@aflife.co.zm Aon Zambia Pension Fund Administrators Limited Acacia Park Plot 22768 Thabo Mbeki Road, Arcades Lusaka P. O. Box 35403 Tel: +260 (211) 367288 E-mail: aon_zambia@aon.co.zm Barclays Bank Zambia Plc Elunda Office Park Plot 4643 / 4644 Addis Ababa round about, Rhodes Park Lusaka Private Bag E308 Tel: + (260) (211) 366150 / 169 Fax: + (260) (211) 225553 Email: customerservice.zambia@barclays.com Website: www.home.barclays.co.zm Citibank Zambia Limited Citibank House Stand 4646, Addis Ababa Round about, Lusaka Zambia Tel: +260 (211) 444400 Fax: +260 (211) 226064 Email: public.affairs.zambia@citi.com Website: www.citigroup.com Madison Asset Management Company Ltd MLife Building, Dar es Salaam Place Cairo Road P.O. Box 37013 Lusaka Tel: +260 (211) 233940/16 Fax: +260 (211) 233936 Email: likonge@madisonassets.co.zm Pangaea Renaissance Securities Ltd 3rd Floor, North Wing Farmers House, Central Park P.O. Box 30163, Cairo Road Lusaka Tel: +260 (211) 220707 Fax: +260 (211) 220925 Email: wtembo@pangaea.co.zm Stockbrokers Zambia Limited 32 Lubu Road, Longacres P O Box 38956 Lusaka Tel: +260 (211) 227303/232456 Fax: +260 (211) 224055 Email: enambeye@sbz.com.zm 82 Appendices

Annual Report, 2017
Credit Rating Agency
Suite 5, Third Floor
Farmers House, Central Park Lusaka P.O. Box 320445 Telephone: +260 0977 365094 Email: info@creditratingagency.net Website: www.creditratingagency.net Focus Financial Services Limited 1st floor, Building 3 Acacia Park Thabo Mbeki Road Lusaka P. O. Box 345536 Tel: +260 (211) 291310-14 Fax: +260 (211) 291311 Website: www.focus.co.zm Grofin Zambia Limited Plot 3827 Parliament Road Olympia Lusaka P.O.Box 33758 Tel: +260 211 295875/6 Fax: +260 211 295876 E-mail: chibamba@grofin.com Investrust Bank Plc Investrust House Plot 4527/8 Freedom Way Lusaka P O Box 32344 Tel: (0211) 238733-5 E-mail: investrust@investrustbank.co.zm Kukula Capital Plc Office 101 1st floor Foxdale Court Office Park Plot 609 Zambezi Road, Roma, Lusaka Tel: +260 211 295792 E-mail: info@kukulacapital.com Laurence Paul Investment Services Limited 5th Floor, Design House Dar es Salaam Place (off Cairo Road) P O Box 35008 Lusaka Tel: (0211) 220302/3 Fax: (0211) 220454 E-mail: info@laurencepaul.com Website: www.laurencepaul.com Professional Life Assurance Limited Professional Life Assurance Finsbury Park, Kabwe Round About Lusaka E-mail: ho@proflife.com.zm Website: www.proflife.co.zm Stanbic Bank Zambia Limited Stanbic House Head Office Plot 2375, Addis Ababa Drive Lusaka P. O. Box 31955 Tel: +260 (211) 370000 – 18 Fax: +260 (211 258439 www.stanbic.co.zm Standard Chartered Bank Zambia Plc Standard Chartered House Cairo Road-South End P O Box 31934 Lusaka Tel: (0211) 229242/229260/229772 Fax: (0211) 222092/225337 E-mail: zm.securities-services@sc.com Website: www.sc.com Zambia National Commercial Bank Plc Head Office Building Cairo Road-South End P O Box 33611 Lusaka Tel: + 260 (211) 228979/ 221355/ 221380/ 221404 Fax: + 260 (211) 223084 E-mail: customerservice@zanaco.co.zm 83 Appendices

Annual Report, 2017
Investment Advisors’ Details Benefits Consulting Services Limited Mpile Office Park 74 Independence Avenue Lusaka P. O. Box 31986 Tel: +260 (211) 254517/252265/250190 Fax: +260 (211) 251926 E-mail: info@bencon.co.zm Website: www.bencon.co.zm Charles Sichangwe Wits Limited 4th Floor, Godfrey House, Kabelenga Road Lusaka Tel: +260 (211) 226441/5 Fax: +260 (211) 227116 Email: wits@zamnet.zm deVere and Partners Investment Services Zambia Limited Plot 284 Cnr Joseph Mwilwa Road and Great East Road Rhodes Park Lusaka Tel: +260 211 295999 Fax: 260 211 257114 Email: deVere@devere-group.com Website: www.devere-group.com Entrust Financial Services Limited Plot 377a/6a, Alstone Cottage Bishops Road, Kabulonga Lusaka P. O. Box 31252 Tel: +260 (211) 260260/260800 Fax: +260 (211) 266399 Email: info@holbornservices.com Website: www.holbornservices.com Imara ECR Asset Management Limited 12 Mushemi Road off Lubu Road Rhodespark Lusaka P. O. Box 37184 Tel: +260 (211) 840313 Email: info@ecrzambia.com Website: www.imara.com Profin Limited 17 Matandani Road Rhodespark Lusaka P.O.Box 31425 Tel: +260 (211) 257913 Fax: +260 (211) 254360 Email: zambia@theprofingroup.com Website: www.theprofingroup.com Riscura Zambia Limited Figtree house Plot No. 1 Warthog Road, Kabulonga Lusaka P.O.Box 320181, Lusaka Tel: +260 (211) 262 773 Fax: +260 (211) 262 773 Email: Zambia@riscura.com Website: www.risura.com 84 Appendices

Annual Report, 2017
Listed Companies’ Details
African Explosives Limited (AEL) Zambia Plc Plot 1168/M Kitwe-Mufulira Road P.O. Box 40092 Mufulira Tel: +260 (966) 990945-9 Fax: +260 (212) 412749 Website: www.ael.co.za Listed on 23rdOctober, 2006 Airtel (formerly Celtel) Zambia Plc Stand 2375 Addis Ababa drive Lusaka Tel: +260 (977) 915000 Website: www.Africa.airtel.com/zambia Listed on 11th June, 2008 Bata Shoe Company Plc Stand 6437, Mukwa Road Heavy Industrial Area Lusaka P.O. Box 30479 Tel: +260 (211) 244397/242328 Fax: +260 (211) 244254 E-mail: batashoe@zamnet.zm Website: www.bata.co.zm Listed on 31st March, 2009 British American Tobacco (BAT) Zambia Plc Plot 20992, Kafue Road Lusaka P.O. Box 30162 Tel: +260 (211)272264/272287 Fax: +260 (211) 272271 E-mail: batzam@bat.com Website: www.bat.com Listed on 15th December, 1996 Cavmont Capital Holdings Zambia Plc Unit C, Counting House Square (behind Arcades Shopping Centre) Thabo Mbeki Road P O Box 32322 Lusaka Tel: (0211) 257772/256055/256064 Fax: (0211) 256074 E-mail: contact@cavmont.com.zm Website: www.cavmont.com.zm Listed on 13th September, 2006 Copperbelt Energy Corporation Plc 23rd Avenue, Nkana East Kitwe P.O. Box 20819 Tel: +260 (212) 244000/244281 Fax: +260 (212) 223445/244040 E-mail: info@cec.com.zm Website: www.copperbeltenergy.com Listed on 21st January, 2008 Investrust Bank Plc Investrust House Plot 4527/8 Freedom Way Lusaka P O Box 32344 Tel: (0211) 238733-5 E-mail: investrust@investrustbank.co.zm Listed on 21st June, 2007 Lafarge Cement Plc Farm No. 1880 Kafue Road Chilanga P.O. Box 30162 Tel: +260 (211) 367400/600 Fax: +260(211) 278134 E-mail: cement.enquiries@lafarge-zm.lafarge.com Website: www.lafarge.com Listed on 22nd May, 1995 85 Appendices

Annual Report, 2017
Madison Financial Services Plc Plot 316 Independence Avenue P.O.Box 37013 Lusaka Tel:378700-5 Email: info@madison.co.zm Website: www.madisonshares.com Listed on 1st September 2014 Metal Fabricators of Zambia (ZAMEFA) Plc Plot 1400 ChaChaCha Road Luanshya P.O. Box 90295 Tel: +260(212) 510599 Fax: +260 (212) 229003/4 Website: www.pdic.com Listed on 9th September, 2004 National Breweries Plc Plot 6438 Mungwi Road Lusaka P.O. Box 35135 Tel: +260 962 249 200 Fax: +260 (211) 246326 Website: www.ab-inbev.com Listed on 16th March, 1998 Pamodzi Hotels Plc Pamodzi Hotel Complex Plot 463, Church Road P.O. Box 35450 Lusaka Tel: +260 (211) 254455/250995 Fax: +260 (211) 254005 E–mail: pamodzi.lusaka@tajhotels.com Website: www.tajhotels.com Listed on December 21st, 2001 Prima Reinsurance Plc Plot 187C Namamboli Road Fairview Lusaka Postnet box 658 P/Bab E891 Tel: +260 (211) 221159 Email: primare@zamnet.zm Website: www.prima-re.com Listed on 21st December, 2004 Puma Energy Plc (formerly BP Zambia) Airtel House Stand No. 2375, Addis Ababa Drive Lusaka P.O. Box 31999 Tel: +260 (211) 376100 Fax: +260 (211) 376149 E–mail: zambia@pumaenergy.com Website: www.pumaenergy.com Listed on 18thJuly, 2002 Real Estate Investments Zambia Plc (formerly Farmers House) Farmers House, Central Park Cairo Road Lusaka P.O. Box 30012 Tel: +260 (211) 227684-89 Fax: +260 (211) 222906 E-mail: robin.miller@zamsaf.co.zm Website: www.reiz.co.zm Listed on 27th September, 1997 Shoprite Holdings Plc Plot 19255 Cnr, Great East and Manchinchi Roads Manda Hill Centre Tel: +260 (211) 251155 Website: www.shopriteholdings.co.za Listed on 19th February, 2003 86 Appendices

Annual Report, 2017
Standard Chartered Bank Zambia Plc Standard Chartered House Cairo Road-South End P O Box 31934 Lusaka Tel: (0211) 229242/229260/229772 Fax: (0211) 222092/225337 E-mail: customer.first@zm.standardchartered.com Website: www.standardchartered.com/zm Listed on 30th November, 1998 Zambeef Products Plc Plot 4970 Manda Road Industrial Area Lusaka P/Bag 17, Woodlands Tel: +260 (211) 369000 Fax: +260 (211) 369050 E-mail: info@zambeef.co.zm Website: www.zambeefplc.com Listed on 5th April 2005 Zambian Breweries Plc Mungwi Road, Plot 6438 Heavy Industrial Area Lusaka P.O. Box 30237 Tel: +260 (211) 246555 Fax: +260 (211) 242124 E-mail: zambrew@zambrew.com.zm Website: www.ab-inbev.com Listed on 9th June, 1997 Zambia National Commercial Bank Plc Head Office Building Cairo Road-South End P O Box 33611 Lusaka Tel: + 260 (211) 228979/ 221355/ 221380/ 221404 Fax: + 260 (211) 223084 E-mail: customerservice@zanaco.co.zm Website: www.zanaco.co.zm Listed on 27thNovember, 2008 Zambia Sugar Plc Nakambala Sugar Estate Livingstone Road P O Box 670240 Mazabuka Tel: +260 (213) 231103/231106 Fax: +260(213) 230385 E-mail: administrator@zamsugar.zm Website: www.illovosugar.co.za Listed on 28th August, 1996 ZCCM Investment Holdings Plc 1st Floor, Mukuba Pension House Plot 5309, Dedan Kimathi Road Lusaka P O Box 30048 Tel: +260(211) 220654/221023 Fax: +260 (211) 220449/221057 E-mail: corporate@zccm-ih.com.zm Website: www.zccm-ih.com.zm Listed on 24th January, 1996 87 Appendices

Annual Report, 2017
Quoted Companies’ Details
Barclays Bank Zambia Plc
Elunda Office Park
Plot 4643 / 4644
Addis Ababa round about, Rhodes Park Lusaka Private Bag E308 Tel: + (260) (211) 366150 / 169 Fax: + (260) (211) 225553 Quoted on 9th March, 2005 Chambishi Metals Plc Sub–division L and M of Lot No. 10/M Kitwe–Chingola Road Chambishi P.O. Box 21151 (Kitwe) Tel: +260 (212) 744006/7 Fax: +260 (212) 744035 E-mail: info@chambishi.com.zm Quoted on 25th January, 2000 Chibuluma Mines Plc Off South Downs Airport Road Lufwanyama P.O. Box 260499 Tel: +260 (212) 749 – 333/777/110 Fax: +260 (212) 749799/749299 E-mail: bsinkala@chib.com.zm Website: www.metorexgroup.com Quoted on 22nd December, 1999 Finance Bank Zambia Plc Finance House, Cairo Road P.O.Box37102, Lusaka, Zambia Tel: +260 (211) 229733-42 Fax: +260 (211) 227544 Website: www.financebank.co.zm Quoted on 13th January 2015 Kansanshi Mining Plc Mine Site Solwezi P.O. Box 110835 Tel: +260 (212) 658000 Fax: +260 (212) 658300 E-mail: Sean.whittome@fqml.com Website: www.first-quantum.com/our-business/ operating-mines/kansanshi Quoted on 29th June, 1999 (as Cyprus Amax Kansanshi Plc) Konkola Copper Mines Plc Stand M/1408 Fern Avenue Chingola P/Bag KCM (c) 2000 Tel: +260 (211) 350604 E-mail: corporate.communications@kcm.co.zm Website: www.kcm.co.zm Mopani Copper Mines Plc Corporate Office Central Street Nkhana West Kitwe P.O. Box 22000 Tel: +260 (212) 247012/247847 Fax: +260 (212) 247445 E-mail: mopani@mopani.com.zm Website: www.mopani-copper-mines Professional Life Plc Finsbury park, Cairo road Northend Lusaka P.O. Box 31357 Tel:+260 (211) 222223/4 E-mail: ho@proflife.co.zm Website: www.picz.co.zm Quoted on 9th December 2014 88 Appendices

Annual Report, 2017 89
Veritas General Insurance Plc Plot 6/60 Kapilingila House Kabulonga Road, Kabulonga Lusaka P. O. Box 31965, Lusaka Tel: + (260) (955) 359 873 Fax: + (260) (211)266366 Email: veritas@veritasgeneral.com Quoted on 19th February, 2015 Engineering Institute of Zambia Properties Plc CL/7 Brentwood drive Longacres Lusaka P.O. Box 51084 (Lusaka) Tel:+260 (211)255161/256205 E-mail: eiz@coppernet.zm Quoted on 9th April 2015 Nanga Farms Plc P.O. Box 670079 Mazabuka Tel: +260 (211) 251894 & 260 (213) 235340/41 Fax: +260 (213) 235341 & 260(211) 251894 E-mail: nanga@zamnet.zm or nanga@iwayafrica.com Quoted on 20th February 2007 Professional Insurance Corporation Zambia Plc Finsbury Park, Kabwe Roundabout P.O. Box 34264 Lusaka Tel: +260 (211) 366703 E-mail: customerservice@picz.co.zm Website: www.picz.co.zm Quoted on 24th September 2014 Ikulileni Investments Plc Building 3, Acacia Park Stand 22768. Thabo Mbeki Road P.O. Box 35464 (Lusaka) Tel: +260 (211)370140-5 Fax: +260 (211) 370018-20 Website: www.stanbic.co.zm Quoted on 18th April, 2015 Appendices

Details of Companies with Listed Debt Securities Veritas General Insurance Plc Plot 6/60 Kapilingila House Kabulonga Road, Kabulonga Lusaka P. O. Box 31965, Lusaka Tel: + (260) (955) 359 873 Fax: + (260) (211)266366 Email: veritas@veritasgeneral.com Quoted on 19th February, 2015 Engineering Institute of Zambia Properties Plc CL/7 Brentwood drive Longacres Lusaka P.O. Box 51084 (Lusaka) Tel:+260 (211)255161/256205 E-mail: eiz@coppernet.zm Quoted on 9th April 2015 Nanga Farms Plc P.O. Box 670079 Mazabuka Tel: +260 (211) 251894 & 260 (213) 235340/41 Fax: +260 (213) 235341 & 260(211) 251894 E-mail: nanga@zamnet.zm or nanga@iwayafrica. com Quoted on 20th February 2007 Professional Insurance Corporation Zambia Plc Finsbury Park, Kabwe Roundabout P.O. Box 34264 Lusaka Tel: +260 (211) 366703 E-mail: customerservice@picz.co.zm Website: www.picz.co.zm Quoted on 24th September 2014 Ikulileni Investments Plc Building 3, Acacia Park Stand 22768. Thabo Mbeki Road P.O. Box 35464 (Lusaka) Tel: +260 (211)370140-5 Fax: +260 (211) 370018-20 Website: www.stanbic.co.zm Quoted on 18th April, 2015 Annual Report, 2017 90 Appendices

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