SECURITIES AND EXCHANGE COMMISSION ZAMBIA Annual Report 2021

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3 Securities and Exchange Commission Corporate Office Address: Plot 3827Parliament 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

4 Table of Contents Contents About SEC.................................................................................................................................................................6 SEC Commissioners in 2021.....................................................................................................................................9 SEC Management in 2021 .......................................................................................................................................12 Vice-Chairperson’s Review.................................................................................................................................... 16 Chief Executive’s Statement................................................................................................................................. 19 Financial Performance of the Commission .....................................................................................................20 Reserves ........................................................................................................................................................ 21 Income Earned .............................................................................................................................................. 21 Commission Expenses .................................................................................................................................. 21 Capital Expenditure....................................................................................................................................... 22 Staff Complement and staff matters............................................................................................................... 22 Training and Workshops ...................................................................................................................................24 Corporate Governance.......................................................................................................................................... 25 Board Composition............................................................................................................................................26 Board Meetings .................................................................................................................................................27 Committees and Committee Membership.......................................................................................................27 Audit Function ...................................................................................................................................................30 Commission Secretary....................................................................................................................................... 31 Board Performance Self-Evaluation ................................................................................................................. 31 Report on regulatory and operational efficiency ...............................................................................................40 Extent of implementation of the Commission’s oversight function and their effectiveness ...................... 40 Cost Savings resulting from the Commission’s Operations ............................................................................ 41 Cost to the Nation for not having the Commission ......................................................................................... 41 Actual and Projected efficiencies the Commission has achieved as a result of the continuing regulatory activities .............................................................................................................................................................42 Nature of the working relations with Capital Market Operators....................................................................43 Immediate and Projected capabilities of the Commission..............................................................................43 Operational Activities............................................................................................................................................44 MARKET DEVELOPMENT................................................................................................................................. 44 Development of the Capital Markets Master Plan (“CMMP”)...................................................................45 Regulatory Sandbox Framework for Capital Markets – Innovation and Digitisation ...............................47 Green Bonds Projects and other greening efforts ......................................................................................50 Financial Inclusion.........................................................................................................................................52 Capacity Building...........................................................................................................................................52 Awareness and Education: Town Hall Meetings .........................................................................................53 MARKET SUPERVISION.....................................................................................................................................58 Universe of Capital Markets Operators .......................................................................................................58 Supervisory Tools..........................................................................................................................................59 Licensing........................................................................................................................................................ 61 Inspections ....................................................................................................................................................62

5 Surveillance and Complaints Handling.........................................................................................................62 Collective Investment Schemes ...................................................................................................................63 Risk-Based Supervision.................................................................................................................................65 ENFORCEMENT AND LEGAL SERVICES............................................................................................................67 DELS Functions..............................................................................................................................................67 Enforcement and legal actions taken ..........................................................................................................67 Compliance with regulatory requirements and international best practice ............................................ 69 Cooperation with law enforcement agencies and financial sector regulators ......................................... 71 Dispute resolution mechanisms in the capital markets .............................................................................. 71 Legal and legislative reforms .......................................................................................................................72 Capacity building...........................................................................................................................................75 MARKET TRANSACTIONS .................................................................................................................................77 2021 Financial Statements.....................................................................................................................................78 Statement of Commissioners’ Responsibilities........................................................................................... 81 Statement of Comprehensive Income For The Twelve-Month Period Ended 31 December 2021 ............82 Statement of Changes In Equity For The Twelve Months Period Ended 31 December 2021.....................83 Statement of Financial Position - 31 December 2021.................................................................................. 84 Statement of Cash Flows For The Twelve Months Period Ended 31 December 2021................................85 Notes to the Financial Statements - 31 December 2021 ............................................................................. 86 Detailed Statement of Comprehensive Income for the Twelve Months Period Ended 31 December 2021 .....................................................................................................................................................................103 APPENDICES ....................................................................................................................................................104 Appendix I........................................................................................................................................................104 The SEC Staff in 2021.......................................................................................................................................104 Appendix II ......................................................................................................................................................105 List of Authorised Capital Market Players as at 31st December, 2021..........................................................105 Dealer’s Licenses.........................................................................................................................................105 Dealer’s Representative Licenses ..............................................................................................................105 Investment Adviser’s License.....................................................................................................................109 Investment Adviser’s Representative License ..........................................................................................109 Securities Exchange Licenses ......................................................................................................................110 Appendix III .......................................................................................................................................................111 Contact Details of Capital Market Players ......................................................................................................111 Securities Exchanges contact details...........................................................................................................111 Dealers’ Contact Details................................................................................................................................111 Investment Advisors’ Contact Details.........................................................................................................117 Self Regulatory Organisations.....................................................................................................................118 Listed Companies’ contact details ..............................................................................................................118 Quoted Companies’ Contact Details...........................................................................................................123 Details of Companies with Listed Debt Securities......................................................................................125

6 About SEC Vision A dynamic Regulator that protects investors and promotes capital markets development Mission To safeguard interests of investors and promote the growth of capital markets

7 Values The Commission depends on the following core values in the performance of its staff by which their conduct and behaviour is anchored: Transparency – We are open in the execution of our mandate Accountability – We take responsibility for our actions and decisions Confidentiality – We do not disclose privileged information to unauthorised persons Impartiality – We treat all our stakeholders fairly Team work – We are committed to pursuing our common goal while showing support and concern for each other Professionalism – We perform our duties with the highest level of dedication and competence Integrity – We exhibit strong moral standards and honesty in the execution of our duties Mandate The Securities and Exchange Commission (SEC) was established pursuant to section 3 of the repealed Securities Act, Cap 354 of the Laws of Zambia and its existence has been continued under the new Securities Act, No. 41 of 2016. The Commission’s mandate is to ensure that investors in the Zambian capital markets, both local and foreign, are protected. It is also the mandate of the Commission to develop the capital markets. The Commission has to ensure there is a right balance between investor protection and Capital Market Development. The principle function of the SEC is to regulate the capital markets so as to foster fair and efficient trading. The specific functions of the Commission as provided under section 9 of the Act are as follows: a) ensure compliance with the Act and regulations or rules made in accordance with the Act; b) license securities exchanges, regulate the activities of securities exchanges and the settlement of securities transactions; c) license and regulate capital markets operators; d) license and regulate clearing and settlement agencies and other participants in the capital markets; e) license and regulate credit rating agencies and provide conditions for the issuing of credit ratings; f) approve the constitutions, charters, articles, by-laws and rules governing and pertaining to securities exchanges, clearing and settlement agencies and other participants in the capital markets; g) promote and encourage high standards of investor protection and integrity among members of securities exchanges, capital markets operators, clearing and settlement agencies, self-regulatory organisations and other participants in the capital markets;

8 h) support the operation of a free, orderly, fair, secure and properly informed capital markets; i) regulate the manner and scope of securities transactions; j) regulate margin requirements, capital adequacy requirements, disclosure and reporting requirements and clearing and settlement requirements, as may be prescribed; k) take all reasonable steps to safeguard the interest of persons who invest in securities and guard against illegal and improper practices as provided in the Act; l) authorise the establishment of collective investment schemes and other schemes; m) regulate the activities of managers, trustees and custodians; n) authorise and regulate the establishment of venture capital funds; o) consider and suggest proposals for the reform of the Act and rules and regulations made in accordance with the Act; p) promote and develop a system of self-regulation by securities exchanges, clearing and settlement agencies, self-regulatory organisations, other participants in the capital markets and capital markets operators, as maybe prescribed; q) encourage the development of securities and securities exchanges and the increased use of such exchanges; r) provide, promote or otherwise support financial education, awareness and confidence with regard to financial products, institutions and services; s) prescribe certification standards and accreditation for licensees; t) co-operate with, provide assistance to, receive assistance from, and exchange information with other regulatory bodies and trade organisations in Zambia and elsewhere; and u) exercise and perform such other functions as may be conferred or imposed upon it by or in accordance with the Act or any other written law. IOSCO Core Objectives In exercising its statutory mandate, the Securities and Exchange Commission is guided by the following three core objectives of securities regulation set by the International Organisation of Securities Commissions (IOSCO):

• investor protection;
• ensuring markets are fair, efficient and transparent; and
• reduction of systemic risk.

9 SEC Commissioners in 2021 During the period under review, the SEC Commissioners appointed from institutions specified in the Securities Act, No. 41 of 2016 were the following: Board Chairperson (until November 2021) Mr. Amos Siwila Mr. Siwila, a legal practitioner, was the SEC Board Chairperson until the expiry of his tenure of office on 26th November 2021. He previously served as the SEC Board Vice-Chairperson from November 2015 to August 2016. He then served as Acting Chairperson from August 2016 until his election as Board Chairperson in June 2017. Mr. Siwila is a Partner in the law firm Mambwe Siwila and Lisimba Associates and he represented the Law Association of Zambia (LAZ) on the Board. Board Vice-Chairperson (until February 2021) Mr. George Nonde Mr. Nonde, a chartered accountant, was the Board’s elected Vice￾Chairperson since June 2017 until the expiry of his tenure of office on 28th February 2021. He had served on the SEC Board as a Member since September 2014. He is the Finance Director for CFAO Zambia and Honorary Treasurer for Zambia Chamber of Commerce and Industry (ZACCI). He represented ZACCI on the Board and also chaired the Board’s Staff and Remuneration Committee. Board Vice-Chairperson Mrs. Ruth Mugala Mrs. Ruth Simwanza Mugala, a seasoned Accountant and business consultant, is the Board’s elected Vice-Chairperson since March 2021. She brings to the Board a wealth of knowledge and experience in the financial and advisory fields gained in the public and private sectors with a career spanning over 35 years. She is a holder of a Bachelor degree in Accountancy and holder of the Association of Chartered Certified Accountants (ACCA) of UK and a Fellow of the Zambia Institute of Chartered Accountants (ZICA). She is currently Executive Director of Massy Capital Services and Massy Wellness Services and chairs the Board’s Risk and Audit Committee.

10 Commissioner Mr. Paul Nkhoma Mr. Nkhoma, a development economist, with a wealth of management, arbitration and insurance knowledge, has been a Board Member since 10th March 2021. He is a founding member of Hollard Insurance, one of Zambia's largest insurance companies and is now the Group Chief Executive Officer for Hollard Holdings Zambia. He represents the Zambia Chamber of Commerce and Industry (ZACCI) on the Board and chairs the Staff and Remuneration Committee. Commissioner Mr. Mulele Maketo Mulele Mr. Mulele, an economist, modeler, statistician and planner and is currently serving as Director-Economic Management Department in the Ministry of Finance since February 2020. Mr. Mulele has been a SEC Board Member since May, 2020 representing the interest of the Ministry of Finance and Government at large. Considering his vast work and professional experience from both development planning and economic management as well as policy analysis, he brings with him a wealth of knowledge to the SEC Board required in providing direction towards the development of the capital markets under the jurisdiction of SEC. Commissioner (until November 2021) Dr. Jonathan Chipili Dr. Chipili, an economist at the Bank of Zambia (BoZ), was a SEC Board Member since August 2012 until the expiry of his tenure of office on 26th November 2021. Dr. Chipili is the Director of Economics at BoZ and represented the Central Bank on the Board. He chaired the Market Transactions Committee of the Board.

11 Commissioner Ms. Mainza Masole Ms. Masole, a social security professional, has been a SEC Board Member since May 2017. Ms. Masole is the Prudential Supervision Manager – Pensions at the Pensions and Insurance Authority and she represents the Pensions and Insurance Authority on the Board. She chairs the Commission’s Property Acquisition and Development Committee. Commissioner Mrs. Natasha N. Kalimukwa Mrs. Kalimukwa, a legal practitioner, has been a SEC Board Member since March 2018. Mrs. Kalimukwa is the Administrator General and Official Receiver for the Republic of Zambia and she represents the Ministry of Justice on the Board. She also chairs the Commission’s Compensation Fund Committee. Ex-officio 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.

12 SEC Management in 2021 During the period under review, the following were the Commission’s Management team in the period under review: Chief Executive Officer 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, and further holds the International Global Certificate for Securities Regulators from the Harvard Law School/IOSCO. Commission Secretary and Director – Enforcement & Legal Services 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. Mrs Sichone holds the International Global Certificate for Securities Regulators from the Harvard Law School/IOSCO. She is also an advocate of the High Court for Zambia, a qualified legislative drafter and trained commercial Arbitrator. Director - Market Supervision & Development 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.

13 Manager – Market Transactions & Investments Bruce Mulenga Mr. Mulenga has been with the Commission since February 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 – Finance 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 – Administration 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 by the Chartered Institute of Arbitrators.

14 Manager – Market Supervision 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 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 Development 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 Marketing-UK

15 Manager – Financial Inclusion Mubanga Kondolo Mr. Kondolo has been with the Commission since 2017. He holds a BA (Hons) in Business and Management from University of Sunderland and various certifications from the Cambridge Centre for Alternative Finance, Chartered Institute for Securities and Investments, Toronto Centre and Zambia College of Pensions and Insurance Trust. Manager – Law Reform and Enforcement Dubholukulu Mulondiwa Ms. Mulondiwa, a legal practitioner, has been with the Commission since 2020. She holds a Bachelor’s degree in law from Oxford Brookes University and she is also an advocate of the High Court for Zambia and a qualified legislative drafter. SEC Senior Management Team – From left to right: Ms Mutumboi Mundia, Mr. Phillip K. Chitalu and Mrs. Diana Sichone

16 Vice-Chairperson’s Review I am glad, on behalf of the Commission, to present the 2021 annual report. This report is a requirement of the Securities Act, Number 41 of 2016 and the Public Finance Management Act, No. 1 of 2018. In line with the Securities Act, No. 41 of 2016, the Commission is required to report on several issues including, but not limited to, 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; 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 on regular basis reviewed its performance in line with the expectations of the Securities Act’s requirements. To this end, and as with previous annual reports, we report below the Commission’s performance based on the areas listed above. This report has also reported on other activities and projects embarked on in the year under review. It is our view that all these activities contributed to achieving our statutory mandate. The Commission believes in investor education and awareness as one of the tools for achieving investor protection and market development. As such, during the year, the Commission, despite covid-19 disruptions to the normal way of doing our regulatory services, continued awareness programmes as an aware (informed) society is the beginning of investor protection. The Commission further believes that a protected investor can attract more people to save or invest and thus help grow and develop our markets. To this end and taking into consideration covid-19 general guidelines, virtual townhall meetings were held every last Thursday of the month. In these townhall meetings, the public was not only made aware of the risks associated with making investments but was informed of other capital market initiatives and opportunities. In the quest to further develop the markets, I am glad to report further progress was made in 2021 on the Green Bonds and Sandbox Guidelines implementation. We can confirm that the race

17 to having Zambia’s debut green bond is on and also there is work in progress for a potential green outcomes fund on the backdrop of a partnership of players. This is commendable and, on its part, the Commission has continued to engage policy makers on various matters that will help position the country as a preferred destination for green funds. In this vein, the Commission has continued engaging relevant stakeholders and other players pursuing green funding for projects such as solar power generation. We are hopeful that before too long, Zambia will witness at least one green project funded through capital markets. On the innovations front, it is gratifying to note that what was a mere dream is now a reality as we witness SME financing platforms now testing their innovations under our Sandbox environment. The Commission believes that SMEs, the engine of our economy, will have alternative access to funding at a lower cost going forward. With regard to our overarching supervisory methodology, the Commission has made notable progress on the journey to transition the Zambian capital markets to Risk-Based Supervision (RBS). After being in development for the last three years, it is anticipated that in 2022, the Commission will shift its supervisory model to RBS. With the supervisory philosophy anchored on addressing the inherent risks in Capital Markets Operators’ (CMOs) significant activities, the Commission will use its limited resources to address those areas with the highest risk and impact on the CMO and thus the market. Suffice to mention, the Commission completed a pilot of the RBS on selected CMOs. The pilot results provided further insights into key areas of focus as the market and we the regulator continue on the RBS trajectory. The Commission, in the same quest, further progressed with the development of Rules/ Regulations and also issued several Guidelines that will further enhance our capital markets oversight role. The process to finalise the Rules and Regulations delayed due to the covid-19 pandemic that restricted the holding of physical meetings. However, the Commission used alternative stakeholder engagement strategies through electronic platforms which proved slower but still effective for the purposes of meeting the requirements of the Law for enacting Rules and Regulations. I am also glad to report that the Commission’s 2019 Directive on the reporting of bond trades has revealed that secondary market bond trading was very active in 2021. The collected data has given the Commission enough information to assess activity in the GRZ bonds secondary market trading. The Commission is still analysing the data which we hope to start publishing within 2022 for the information of the public especially on the pricing of bonds, which is currently not readily available. The Commission strongly believes information on bond price will aid investor decision making. In looking ahead, the Commission is desirous of seeing capital markets further contributing to the efficient allocation of savings in a safe environment. Notwithstanding the progress made on green financing, SME financing through the Sandbox innovations, and other regulatory tools such as the RBS model and the Rules and Regulations, the Commission finalized the development of the Capital Markets Master Plan (CMMP) with the direction of the Ministry of Finance and National Planning as well as the Financial Sector Deepening Africa (FSDA). The Ministry of Finance and National Planning has since approved the CMMP, and this strategy document is expected to be approved by Cabinet within 2022. This policy document, once

18 approved and implemented, will anchor the country’s long term capital markets development strategy. In the same vein, we are working on a five-year 2022 to 2026 Commission strategic plan which will be anchored on the CMMP and other national policy positions. The Commission will engage various stakeholders in the development of the 2022 to 2026 strategic plan. With all the exciting things and the progress made on a number of fronts as reported above, the Commission continued to deliver on its mandate of investor protection and market development in a challenged environment. It is our view that most of these challenges which centre around the Commission’s funding model will be addressed with the adoption and implementation of the CMMP. The CMMP will only succeed with adequate allocation of financial resources. The limitation in funding affects the mobilisation of adequate human capital, supervisory tools, and adequate office space for a conducive working environment. The Commission is however indebted on the continued support that government, through the Ministry of Finance and National Planning continues to give to the Commission in enhancing the Securities Act, Regulations and Rules. In conclusion, on behalf of the Board, management, and staff, the Commission continues to thank the Ministry of Finance and National Planning, supporting partners and all capital market players for the cordial and supportive environment that has characterized capital markets. We also wish to thank the Commission’s former Chairperson, Mr. Amos Siwila, the former Vice Chairperson of the Board Mr. George Nonde, and Dr. Jonathan Chipili, a Board Member all of who retired from the Board during the year after having served their two 3-year terms. These Commissioners tirelessly contributed to shaping the Commission into a financial services sector regulator that the public has now become aware of and looks up to as an investor protection entity. We wish them well. I thank you. Ruth S. Mugala (Mrs) VICE BOARD CHAIRPERSON

19 Chief Executive’s Statement The Commission’s dual mandate of investor protection and market development depends on effective operational efficiencies. These operational efficiencies are largely achieved when the Commission can undertake strategic and routine activities supported by a sound financial performance. While the Chairman’s report has covered several strategic activities and forward-looking plans that the Commission embarked on during 2021 extending into 2022, we report below the Commission’s operational performance for the year ended 31st December 2021. On the backdrop of the operational challenges faced in 2020, it is gratifying to report that the Commission’s financial performance including cash flows in 2021 were better than in 2020. It is the Commission’s view that while financial performance is key to achieving other strategic initiatives, poor funding negatively affects the delivery of that which the Commission was established to provide to the public. Therefore, the improved 2021 cash flows and thus expenses cover ratios helped the Commission have a better operational performance with more awareness initiatives and some strategic plan activities undertaken. The Commission’s operational performance, as a service sector player also depends on a healthy work force. In this regard, compared to 2020, the Commission’s staff were not as affected as in 2020 by covid-19 effects due to better preparedness and thus better managed adherence and other work-from-home procedures. While the country experienced covid-19 outbreaks, the Commission’s experiences from the 2020 attacks when about half the work force was affected by the illness were avoided in 2021. To a great extent, the effects of covid-19 did not affect the Commission’s operational efficiencies in 2021 as the Commission continued to adhere to health guidelines and its Work-from-Home Policy. The Commission had also designed and tested remote working tools and procedures during the 2020 disease outbreaks which helped with continuing to provide the markets oversight role and the mandate to develop the market even when the country experienced covid-19 flare ups and mandatory needs to either work from home or rotate staff. As reported above, the Commission’s financial performance, which is an enabler for good operational efficiency continued to improve on the backdrop of improved securities trading fee income, the Commission’s human capital, a key service delivery component, was still below that required to effectively supervise and thus protect investors and develop the capital markets. Of

20 the Commission’s staff establishment, the staffing levels were 50% below the numbers needed to effectively deliver on the 2018- 2021 strategic plan. It is envisaged that the Commission’s graduate trainee programme as well as the approvals to employ more staff within the approved establishment given by Board in Q4 of 2021 will improve staffing levels going forward. This is part of the Commission’s drive to supervise the markets more effectively. While the Commission continued to hold townhall meetings as part its drive to have an informed market, the year under review continued to experience increased reports of Ponzi like financial schemes. It is sad to note that members of the public continued to invest in very risky and unregulated products. With limited resources such as human capital as reported above and the fact that the Commission does not have a mandate to prosecute, a number of these scams were investigated and cases referred to relevant law enforcement agencies for appropriate action to be taken. The increasing number of these scams continued to put pressure on the Commission’s limited surveillance, supervision, and enforcement resources. In a bid to reduce the risks associated with these scams, at least six townhall virtual meetings were held for the Commission’s continued awareness efforts which are meant to educate members of the public as a way of making the public become smart investors and thus with awareness, the public’s uptake of unregulated products could be reduced in future. This report, as required by the Securities Act Number 46 of 2016, and as reported in the Chairperson’s section, gives an update on the Commission’s performance in 2021. While the Commission’s main mandate is to protect investors in the capital markets and ensure that capital markets are developed, this is only possible in an environment where the limited financial and other resources are efficiently and effectively utilised. To this end, the Commission presents below financial statements for the year ended 31st December 2021. This is in line with both the requirements of the Public Finance Management Act and the Securities Act as well as good corporate governance principles. It is a resolve by the Board to continue to demonstrate that the Commission’s financial resources are continually managed in a prudent and efficient manner and reported on to the relevant stakeholders. The Commission achieves its investor protection role by ensuring that the K69billion of savings (about 18% of GDP) by ensuring that the performance of the equity, corporate debt, and Collective Investment schemes (CIS) segments of the capital markets sector remained sound. These areas under the supervision of the Commission, are all important as they demonstrate the capital markets prowess of channelling of savings into various economic sectors in Zambia. We now report below the performance of these savings vehicles. Financial Performance of the Commission To safeguard savings made through the capital markets, government continued to support the Commission in meeting operational costs. The Commission also continued to support government efforts by generating revenues that support the Commission’s 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.

21 In the period ending 31st December 2021, the Commission recorded an operating surplus of K 91,765,563 (2020 – K3,478,168) from a combined income of K 118,130,318 (2020-K28,784,660) against total operating costs of K 26,364,815 (2020 K25,306,552). The Commission during the year met all its obligations on time by utilizing the available cashflows. The surplus in the year is mainly attributed to the bond trade commissions and the GRZ Grants which was fully funded. Reserves The Commission’s accumulated fund (reserves) position at 31st December 2021 stood at K 93,854,762 compared to K 2,089,199 recorded at 31st December 2020. This increase, as explained above, was due to the trade commission received from both the sell and buy side of the trade from the market the diagram below shows that since 2014, the Commission had been managing to contain costs and thus improve on its reserve position but due to subdued market activities from 2016, the Commission’s reserve position declined as depicted below. However, the position has since changed post 2020 were there has been an upward trend. Income Earned During the year ended 31st December 2021, the Commission internally generated 92% of its income while GRZ grant support accounted for 8%. This is on the backdrop of subdued market activities as explained above and due to the Covid 19 pandemic. Commission Expenses The Commission being in the services sector, human capital is 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 2021, the Commission’s total staff costs were 67% (2020 – 69%) of its total expenditure. Being a service-oriented 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 -50000000 0 50000000 100000000 2015 2016 2017 2018 2019 2020 2021 Movement in reserves

22 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 The Commission’s capital expenditure was as follows during the period under review: Type 2021 ZMW 2020 ZMW Computer hardware 118,383 69,575 Office equipment 66,568 - Office furniture - - Motor vehicles - - Land and Buildings - - Total 118,383 69,9575 Staff Complement and staff matters During the review period, the Commission’s staff complement remained at 24 compared to an approved structure of 43 staff as per the 2018–2021 Strategic Plan. This staff head count is below the minimum required to effectively run with the Commission’s legal mandate of protecting investors in the capital markets. At the request of the Board, staff consented to the Commission suspending certain aspects of the Conditions of Service as a way of keeping the operating costs within the Commission’s cash flows. This move was necessary for the Commission to continue in operational existence following the financial resource challenges that started in 2018 and became more pronounced in 2019. With this and other operational rationalisations, the Commission, was one of the few entities that did not experience staff going without pay in 2020. The full list of employees during the period under review is provided in Appendix I while the approved structure is highlighted below:

23 SEC ORGANIZATIONAL STRUCTURE Board Committees Risk &Audit Committee • Compensation Fund Committee • Licensing Committee • Market Transactions Committee • Staff & Remuneration Committee • Risk &Audit Committee SEC Board Chief Executive Officer Director￾Mkt Supervision & Devpt Director￾Finance & Administration Director-Enforcement & Legal Services / Commission Secretary Manager￾Law Reform & Enfor Manager￾Financial Inclusion Manager￾Market Devpt Mkt Supervision (Markets) Manager￾Mkt Supervision (CISs) Manager￾Investigations & Enforcement Manager￾Mtk Transactions Manager￾Admin Internal Auditor Exec. Assistant Surveillance Officer Licensing Officers (*2) Financial Analyst Econ. Research Officer Mkt Research & Product Devpt. Officer Investor Educ. Officer HR Officer Record Mgt Officer Resource Centre Officer Personal Assistant IT Officer Secretary Secretary Office Assistant Manager￾Finance Secretary S1 S3 S2 S4 S4 S5 S6 S9 S8 S7 Investigation Officers (*2) Accounts Officers (*2) Legal Officers (*2) Inspectors (*4) Drivers (*3) SEC GRADE

24 Training and Workshops The Commission continues to prioritise staff training and capacity building as a deliberate policy to ensure staff are aware of the developments in this ever-changing capital markets environment. The following table indicates the staff members that attended online and with one exception, a physical course: Course Location Dates Attended by Fintech and Regulatory Innovation Online September to December 2021 Mutumboi Mundia, Diana Sichone, Abraham Alutuli, Bruce Mulenga, Mubanga Kondolo, Nonde Sichilima, Dingase Makumba, Dubholukulu Mulondiwa, Thomas Thole, Leah Simasiku, Sichone Chanda Toronto international Securities Online 5 th May to 14th May 2021 Mubanga Kondolo FATF Standards Training Course Online 24th May to 3rd June 2021 Diana Sichone FIC/Milken Institute USA August 2021 to April 2022 Gertrude Buyungwe Multi-national and Regional Conferences and Summits Attended by Commission Staff The advent of COVID-19 pandemic disrupted the regular way of doing things. With the world under lockdown, most international institutions opted to use technology to conduct their meetings on online platforms such as Microsoft Teams and Zoom. Consequently, the Commission did not send any of its staff for conferences but instead attended them virtually. Phillip K. Chitalu CHIEF EXECUTIVE OFFICER

25 Corporate Governance The new normal The corporate governance landscape for the Commission in 2021 did not materially change despite several challenges such as the prevailing COVID-19 pandemic that prevented in-person meetings. The achievement of the Commission’s regulatory dual mandate and objective of investor protection and capital market development has been made possible by leveraging on the use of electronic meeting platforms to conduct its committee and board meetings. Governance and the Commission The Commission takes governance very seriously and considers corporate governance as a key tool that ensures that the Commission is properly managed and controlled. The Commission Board therefore ensures that the distinct roles of management and the Board oversight are not confused. The latter function is highlighted in Section 8 of the Securities Act, No. 41 of 2016, which provision constitutes the Commission Board and highlights its roles and functions as well as the power to delegate its functions to the Chief Executive Officer or a Committee of the Board. The exercise of these functions not only ensures the attainment of the three key objectives of securities regulation being investor protection, ensuring markets are fair, efficient and transparent as well as the reduction of system risk but they also ensure that the governance principles of transparency, responsibility, accountability and fairness are complied with. Further, the clear and objective statement of the Commission’s responsibilities in the Securities Act is in line with the International Organisation for Securities Commissions Objectives and Principles of Securities Regulation, which is international best practice. In addition, the Commission has a Board Charter that prescribes the conduct and operations of the Board and its Members, individually and severally. The Charter guides Members on declarations of interest, gift acceptance restrictions as well as the prohibition of trading on non-public, price-sensitive information. The Commission also enforces a Code of Conduct to the Commission staff which prescribes the conduct and behaviour of staff on governance issues, especially regarding conflict of interest. The Code of Conduct requires staff to declare interest in matters in which staff could have personal interest. It is also a requirement that staff declare gifts received from any person or entity, whether regulated by the Commission or not, among other things. In order to ensure that the Commission is kept abreast with international corporate governance trends, the Commission requires all senior management staff to be members of the Institute of Directors of Zambia.

26 Board Composition Appointment Section 8(2) and (3) of the Securities Act prescribes the Commission Board’s composition to be eight (08) Members. The Act requires the Commission’s Chief Executive Officer to be an ex￾officio Member of the Board and also empowers the Minister responsible for finance to appoint the other seven Members as non-executive Board Members from a nomination made by each of the following institutions: a) Bank of Zambia; b) Law Association of Zambia; c) Zambia Institute of Chartered Accountants; d) Zambia Chamber of Commerce and Industry; e) Ministry responsible for finance; f) Ministry responsible for justice; g) Pensions and Insurance Authority; and h) the Commission’s Chief Executive Officer as ex-officio Member. Gender mainstreaming and election of Chair and Vice-Chair of the Board 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. The Minister does not appoint any of the Members to be the Board Chairperson or Board Vice-Chairperson. Instead, the Act empowers the Members to elect, from amongst their number, a Chairperson and Vice-Chairperson of the Board. Changes to Board Composition There were four changes to the composition of the Board in 2021 as follows: Name of Board Member Institution Represented Date of change Reason for change Mr. George Nonde Zambia Chamber of Commerce and Industry 28th February 2021 End of 2nd term of office Mr. Paul Nkhoma Zambia Chamber of Commerce and Industry 10th March 2021 New appointment to replace Mr. George Nonde Mr. Amos Siwila Law Association of Zambia 26th November 2021 End of 2nd term of office Dr. Jonathan Chipili Bank of Zambia 26th November 2021 End of 2nd term of office 2021 Board Composition During the period under review, the Commission Board consisted of the following Members: Name of Board Member Institution Represented Position Appointment date Mr. Amos Siwila* Law Association of Zambia Chairperson 28.08.2018 Mr. George Nonde** Zambia Chamber of Commerce and Industry Vice￾Chairperson 01.09.2017 Mr. Paul Nkhoma*** Zambia Chamber of Commerce and Industry Vice￾Chairperson 10.03.2021

27 Name of Board Member Institution Represented Position Appointment date Mr. Mulele M. Mulele Ministry responsible for finance Member 29.05.2020 Mrs. Natasha N. Kalimukwa Ministry responsible for justice Member 13.03.2018 Dr. Jonathan Chipili**** Bank of Zambia Member 28.08.2018 Ms. Mainza Masole Pensions and Insurance Authority Member 12.06.2020 Mrs. Ruth S. Mugala Zambia Institute of Chartered Accountants Member 02.10.2018 Phillip K. Chitalu SEC Chief Executive Officer ex-officio Member

• Mr. Amos Siwila’stenure of office came to an end on 26th November 2021. ** Mr. George Nonde’s tenure of office came to an end on 28th February 2021. *** Mr. Paul Nkhoma was appointed on 10th March 2021 as the new representative for the Zambia Chamber of Commerce and Industry. **** Dr. Jonathan Chipili’s tenure of office came to an end on 26th November 2021. Board Meetings The Board held four scheduled meetings in March, July, September and December 2021. In addition, the Board held two Special Meetings in March and December, respectively, in order to deal with urgent regulatory matters. The following table highlights the Board attendance at the scheduled and special meetings: NAME 5 th March (Special Meeting) 25th March (Scheduled Meeting) 1 st July (Scheduled Meeting) 30th September (Scheduled Meeting) 17th December (Scheduled Meeting) 30th December (Special Meeting) Mr. Amos Siwila ✓ ✓ ✓ ✓ N/A N/A Mr. Paul Nkhoma N/A ✓ ✓ ✓ ✓ ✓ Mr. Mulele M. Mulele ✓ ✓ ✓ ✓ ✓ ✓ Mrs. Natasha N. Kalimukwa ✓ ✓ ✓ ✓ ✓ ✓ Dr. Jonathan Chipili ✓ ✓ ✓ ✓ N/A N/A Ms. Mainza Masole ✓ ✓ ✓  ✓ ✓ Mrs. Ruth S. Mugala ✓ ✓ ✓ ✓ ✓ ✓ Mr. Phillip K. Chitalu ✓ ✓ ✓ ✓ ✓ ✓ ✓ Meeting attended  Meeting not attended and apology given N/A Member not yet appointed as Board Member or no longer on the Commission Board Committees and Committee Membership 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 – a) the Compensation Fund Committee; b) the Licensing Committee; c) the Market Transactions Committee; d) the Risk and Audit Committee; e) the Staff and Remuneration Committee; and f) the Property Acquisition and Development Committee (ad hoc).

28 Compensation Fund Committee The Compensation Fund Committee is a Board Committee established pursuant to section 176 of the Securities Act. The Committee is responsible for overseeing matters relating to the Compensation Fund and reporting to the Board. In particular, the Committee administers the Fund and make determinations for the settlement of claims against the Fund as provided for under the Securities (Compensation Fund) Regulations. Licensing Committee The Licensing Committee is a Board Committee established pursuant to section 13 of the Securities Act and is responsible for licensing market players and overseeing and reporting on the existing and new policies as stipulated in the Act and the Rules made pursuant to the Act as well as enforcement matters. Market Transactions Committee The Market Transactions Committee is a Board Committee established pursuant to section 13 of the Securities Act and is responsible for overseeing, and reporting to the Board on approval of applications for registration of securities required to be registered under Part VIII of the Act as well as the quanta and efficacy of capital formation. Risk and Audit Committee The Risk and Audit Committee is a Board Committee of the Board constituted under section 13 of the Securities Act. In addition, it is a statutory requirement under the Public Finance Management Act, No. 1 of 2018, for this Committee to be established. The Committee is responsible for overseeing financial management, reviewing internal controls, checks and balances and risk management. Staff and Remuneration Committee The Staff and Remuneration Committee is a Board Committee established pursuant to section 13 of the Securities Act and is responsible for overseeing, and reporting to the Board on recruitment, skills training, capacity building and retention of staff. Property Acquisition and Development 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. This Committee did not hold any meetings in the period under review. Decision-making timeframes In order to enhance efficient decision-making, the Securities Act of 2016 has introduced timeframes within which particular decisions, such as the grant of a license, should be made. The Board has therefore pursuant to section 14 of the Act delegated final decision-making powers with respect to time-sensitive matters such as those relating to the grant of different categories of licences to the Licensing Committee and final decisions on market transactions including registration of securities for capital raising and other authorisations to the Market Transaction Committee. The delegated function ensures that decisions are expeditiously made without having to wait for the Board to approve the decisions at its next scheduled quarterly Board meeting.

29 Other Statutory Committees Although the Procurement Committee is not a Board Committee as per the Public Procurement Act, No. 12 of 2008 which places the procurement function on a procurement unit that is headed by the Chief Executive of an institution, this Committee is important to highlight as it is procedurally operated in compliance with the governance principles of transparency, responsibility, accountability and fairness. The Committee composition in 2021 was as follows: COMMITTEE MEMBERSHIP REPRESENTATION MEMBER LICENSING COMMITTEE Board Member representing MoF and Committee Chairperson Mr. Mulele M. Mulele Board Member representing ZICA Mrs. Ruth S. Mugala BoZ Representative Mrs. Hellen L. Banda ERB Representative Mr. Fred Hang’andu PIA Representative Mrs. Namakau Mundia-Ntini Ex-officio Board Member Mr. Phillip K. Chitalu MARKET TRANSACTIONS COMMITTEE Board Member representing BoZ and Committee Chairperson Dr. Jonathan Chipili Board Member representing ZACCI Mr. George Nonde/Paul Nkhoma Board Member representing MoF Mr. Mulele M. Mulele CCPC Representative Mr. Chilufya P. Sampa PACRA Representative Mr. Anthony Bwembya ZDA Representative Mr. Mukula Makasa Ex-officio Board Member Mr. Phillip K. Chitalu STAFF AND REMUNERATION COMMITTEE Board Member representing ZACCI and Committee Chairperson Mr. George Nonde/Mr. Paul Nkhoma Board Member representing BoZ Dr. Jonathan Chipili MoJ Representative Mr. Joe Simachela ZIHRM Representative Mrs. Beatrice N. Mwila RISK AND AUDIT COMMITTEE Board Member representing ZICA and Committee Chairperson Mrs. Ruth S. Mugala Board Member representing PIA Ms. Mainza Masole ZICA Risk Expert Mr. Kapembwa Sindano MoF Representative Ms. Namaambo Kaliyangile LAZ Representative Ms. Matilda C. Kaoma COMPENSATION FUND COMMITTEE Board Member representing MOJ and Committee Chairperson Mrs. Natasha N. Kalimukwa BAZ Representative and Committee Vice￾Chairperson Mr. Fanwell Phiri CMAZ Representative Mr. Nicholas Kabaso ZACCI Representative Dr. Francis M. Ndilila LAZ Representative Ms. Abigail Chimuka

30 COMMITTEE MEMBERSHIP REPRESENTATION MEMBER MoF Representative Mrs. Mwila K. Zulu PROCUREMENT COMMITTEE SEC CEO and Committee Chairperson Mr. Phillip Chitalu Procurement specialist Mrs. Mary Banda Procurement specialist Mr. Christopher S. Mwandu SEC Member Mrs. Diana Sichone SEC Member Ms. Mutumboi Mundia SEC Member Mr. Mateyo Lungu PROPERTY ACQUISITION AND DEVELOPMENT COMMITTEE Board Member representing PIA and Committee Chairperson Ms. Mainza Masole Board Member representing ZICA Mrs. Ruth S. Mugala MoJ Representative Mr. Joe Simachela Ministry of Works and Supply Representative Mr. Geoffrey C. Phiri Show Society of Zambia Representative Mr. Vasco Sikanyeu Audit Function Audit and corporate governance The audit function plays an integral role in the Commission’s corporate governance environment. Audit is therefore one of the controls that the Commission Board uses to ensure that the Commission 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. The Commission, therefore, uses audit as one of the most important oversight tools of its corporate governance. Internal Audit function The Commission has both an internal and external audit function. Due to the size of the Commission, the internal audit function is not performed by a member of staff engaged as an internal auditor but has been outsourced to an audit firm. From around 2018 when a substantial increase in audit fees was caused through the enactment of the Accountants (Client Fees) Regulations, Statutory Instrument No. 34 of 2018, the Commission resolved to suspend the engagement of the firm providing the internal audit function and consequently the Risk and Audit Committee of the Board took up an interim oversight internal audit role to enhance the Commission’s adherence to internal controls, procedures and processes. During the period under review, however, the Commission resolved to engage the audit firm to conduct internal the Commission’s internal audit function. In essence, the internal audit function is meant to ensure that internal controls are effectively functioning in managing risk in the Commission. The Commission’s Audit Committee achieves this by reviewing the control systems for the Commission and providing an independent assurance of risk management of the Commission to the Board.

31 External Audit function Section 10 of the First Schedule to the Securities Act requires the Commission’s external auditors to be appointed by the Commission subject to approval by the Minister responsible for finance. The external auditors are required to perform an annual audit and present a report to the Board on the Commission’s financial statements as well as stating the level of compliance by the Commission to the law, regulations and policies. The financial statements are thereafter presented to the Minister of Finance as part of the Commission’s Annual Report. Commission Secretary Appointment of Commission Secretary The Commission’s Board Secretary is appointed pursuant to Section 17 of the Securities Act and is in charge of the corporate secretarial affairs of the Commission, under the general supervision of the Chief Executive Officer. The law further allows the Secretary to perform other functions directed by the Board under the general supervision of the Chief Executive Officer. The Director – Enforcement and Legal Services is the Board-appointed Secretary to the Commission Board and performs the secretarial functions as required under section 17 of the Securities Act. The Commission Secretary and Corporate Governance The Commission Secretary, among other roles, is responsible for advising the Commission Board on good corporate governance practices as well as the Commission’s compliance with rules and regulations that affect it. Additionally, the Commission Secretary assists the Board and its Committees to function effectively in line with the Securities Act and the Board Charter that outlines Terms of Reference for the Board and each Committee. The Commission Secretary is therefore an important link between the oversight functionality of the Board of Directors and the operational aspects of the Commission through the Management and staff. Board Performance Self-Evaluation Mandate for performance self-evaluation Section 11 of the Commission’s Board Charter mandates the Board and its Committees to undertake a performance self-evaluation in order to assess the effectiveness of the Board, its Committees, and its individual Board Members. The Board has over the last six years been undertaking an annual performance self-evaluation, in the last quarter of the financial cycle, as a corporate governance performance monitoring tool. The performance self-evaluation is a collective, introspective, and comprehensive reflection by the Board to assess how the Board can be made more effective. The evaluation process is meant to identify strengths and weaknesses, to flag areas for improvement, and to plan for further action as appropriate. For the process to be effective, Board members are required to be open and submit positive ideas and opinions. The Board has developed an appropriate methodology to conduct the Performance Evaluations through a questionnaire that has been developed and which is required to be filled in by each Board Member. The responses are then collated and the results of the evaluation presented to the Board for further consideration.

32 During the period under review, the self-evaluation exercise was based on the submissions and views of six respondents because two of the Board Members were no longer on the Board as their tenure of office had come to an end at the time of the assessment. The Board performance self-evaluation was done for the following eight major areas: Board Activity; Mission and Purpose; Governance/Partnership Alignment; Board Organisation; Administration and Staff Support; Time and Location of Meetings; Recording/Minute Taking; and Membership. The analysis of each of these areas was done and the results for each area assessed. Results of the self-evaluation The self-evaluation revealed that there had been a marginal increase in the Board’s performance for 2021 of 0.87% from 87.34% in 2020 to 88.21% in 2020. The lowest rating was recorded for the area of Time and Location of Meetings at 77.92% whilst the highest rated area was the assessment of Recording/Minute Taking at 95%. Comparative analysis of Board performance over six-year period A comparative analysis of the Board’s performance over the last six years for which the Board Performance Self-Evaluation has been conducted is shown in the following charts: 90.89 86.67 87.5 89.17 89.17 77.92 95 89.33 88.20625 70 75 80 85 90 95 100 Board Activity - 90.89% Mission and Purpose - 86.67% Governance/Partnership Alignment - 87.5% Board Organisation - 89.17% Administration and Staff Support - 89.17% Time and Location of Meetings - 77.92% Recording/Minute Taking - 95% Board Membership - 89.33% Overall Board Performance for 2021 - 88.21% 2021 Overall Board Performance

33 Five of the eight areas assessed have indicated a reduction in performance rates on a comparative basis with the assessment done for 2020 with the overall Board performance recording a marginal increase in performance of 0.87% from 87.34% in 2020 to 88.21% in 2020. Individual Board Committee Performance for 2017 to 2021 period The Commission Board has five standing and one ad hoc Committee. The five standing Committees’ performance was assessed using the same methodology adopted for the Board 40 50 60 70 80 90 100 Overall Board Performance Board Membership Recording/Minute Taking Time and Location of Meetings Board Organisation Administration and Staff Support Governmance/Partnership Alignment Mission and Purpose Board Activity Comparative of Performance per area for 2016 to 2021 2021 2020 2019 2018 2017 2016 80 85 90 2016 2017 2018 2019 2020 2021 Comparative of Board Overall Performance for 2016 to 2021 Rate

34 and which was aimed at identifying strengths and weaknesses, flagging areas for improvement and planning for further action as appropriate. The Committee Performance of the Property Acquisition and Development Committee was not assessed in 2021 for a third year in a row as the Committee only had one meeting in the year and an assessment of the annual performance could not be conducted on that basis. The self-evaluation was conducted for the following seven major areas: Purpose of the Committee; Support for the Committee; Administration and Staff Support; Time and Location of Meetings; Attendance; Recording/Minute Taking; and Membership. Compensation Fund Committee Self-assessment The self-assessment of the Compensation Fund Committee revealed the following results: From the assessment, the Compensation Fund Committee’s overall performance for 2021 was 88.87% compared to the 2020 assessment rate of 87.67%. Comparatively, the assessment rates for 2019, 2018 and 2017 were 84.18%, 77.44% and 85.36%, respectively. In this assessment, the 60 65 70 75 80 85 90 95 100 Overall Committee performance - 88.87% Committee Membership - 89.17% Recording/Minute Taking - 95% Attendance - 85% Time and Location of Meetings - 87.5% Administration and Staff Support - 93.33% Support for the Committee - 83.33% Purpose of Committee - 88.79% Overall Committee performance - 88.87% Committee Membership - 89.17% Recording/Mi nute Taking - 95% Attendance - 85% Time and Location of Meetings - 87.5% Administratio n and Staff Support - 93.33% Support for the Committee - 83.33% Purpose of Committee - 88.79% 2017 85.36 90 91.67 61.67 87.92 94.17 91.67 80.42 2018 77.44 85 83.33 70 78.75 70.83 77.5 76.67 2019 84.17857143 86.67 90 73.33 85 86.67 80 87.58 2020 87.67285714 95 86.67 78.33 89.17 90 83.33 91.21 2021 88.87428571 89.17 95 85 87.5 93.33 83.33 88.79 Compensation Fund Committee Self-Assessment - 2017 to 2021 2017 2018 2019 2020 2021

35 highest rated area is Recording/Minute Taking at 95% while the lowest rated area is Support for the Committee at 83.33%. Licensing Committee Self-assessment The self-assessment of the Licensing Committee revealed the following results: From the assessment, the Licensing Committee’s overall performance for 2021 was assessed to be 86.28% which was an increase from the 2020 assessment rate which was at 81.92%. Comparatively, the overall Committee performance as assessed in 2019, 2018 and 2017 was 87.71%, 86.16% and 82.38%, respectively. The areas rated the highest and lowest have been consistent as assessed in the 2020 period. The highest rated area in 2021 was Recording/Minute Taking at 93.33% while the lowest rating was Attendance at 76.67%. Market Transactions Committee Self-assessment The self-assessment of the Market Transactions Committee revealed the following results: 60 65 70 75 80 85 90 95 Overall Committee performance - 86.28% Committee Membership - 90.83% Recording/Minute Taking - 93.33% Attendance - 76.67% Time and Location of Meetings - 81.85% Administration and Staff Support - 90% Support for the Committee - 85% Purpose of Committee - 86.3% Overall Committee performance - 86.28% Committee Membership - 90.83% Recording/Mi nute Taking - 93.33% Attendance - 76.67% Time and Location of Meetings - 81.85% Administratio n and Staff Support - 90% Support for the Committee - 85% Purpose of Committee - 86.3% 2017 82.38285714 86.67 90 66.67 81.48 86.67 86.67 78.52 2018 86.16142857 88.33 93.33 80 82.59 90.67 80.83 87.38 2019 87.71142857 88.33 91.67 91.67 90.74 90.83 80 80.74 2020 81.91857143 86.67 91.67 70 80 87.5 78.33 79.26 2021 86.28285714 90.83 93.33 76.67 81.85 90 85 86.3 Licensing Committee Overall Performance for 2017 to 2021 2017 2018 2019 2020 2021

36 From the assessment, the Market Transactions Committee’s overall performance for 2021 was found to be at 87.44% which is an increment from the 2020 overall assessment rate of 82.96%. comparatively, the Committee’s overall performance for 2019, 2018 and 2017 were 91.63%, 90.46% and 85.36%, respectively. The area with the highest rating was Administration and Staff Support at 94.17% while the lowest rated area was Committee Member Attendance at 76.67%. Risk and Audit Committee Self-assessment The self-assessment of the Risk and Audit Committee revealed the following results: 60 65 70 75 80 85 90 95 100 Overall Committee performance - 87.44% Committee Membership - 89.17% Recording/Minute Taking - 91.67% Attendance - 76.67% Time and Location of Meetings - 90.42% Administration and Staff Support - 94.17% Support for the Committee - 85% Purpose of Committee - 85% Overall Committee performance - 87.44% Committee Membership - 89.17% Recording/Min ute Taking - 91.67% Attendance - 76.67% Time and Location of Meetings - 90.42% Administration and Staff Support - 94.17% Support for the Committee - 85% Purpose of Committee - 85% 2017 85.36 90 91.67 61.67 87.92 94.17 91.67 80.42 2018 90.45857143 93.57 92.86 78.57 94.64 95.71 90 87.86 2019 91.63285714 93.57 98.57 78.57 91.79 95.71 91.43 91.79 2020 82.96 85 90 70 86.43 86.43 80 82.86 2021 87.44285714 89.17 91.67 76.67 90.42 94.17 85 85 Market Transactions Committee Self-Assessment for 2017 to 2021 2017 2018 2019 2020 2021

37 From the assessment, the Risk and Audit Committee’s overall performance for 2021 was found to be at 91.29%, an increase from the 2020 assessment rate of 78.9%. The Table also indicates the rates for the 2019, 2018 and 2017 periods at 84.58%, 87.65% and 87.88%, respectively. The highest rating was made for Recording/Minute Taking and Support for the Committee at 100% while the lowest rating was Attendance at 86%. Staff and Remuneration Committee Self-assessment The self-assessment of the Staff and Remuneration Committee revealed the following results: 60 65 70 75 80 85 90 95 100 Overall Committee performance - 91.29% Committee Membership - 78% Recording/Minute Taking - 100% Attendance - 86% Time and Location of Meetings - 93.78% Administration and Staff Support - 94.4% Support for the Committee - 100% Purpose of Committee - 86.86% Overall Committee performance - 91.29% Committee Membership - 78% Recording/Mi nute Taking - 100% Attendance - 86% Time and Location of Meetings - 93.78% Administration and Staff Support - 94.4% Support for the Committee - 100% Purpose of Committee - 86.86% 2017 87.88142857 87.5 95 65 96.67 96 100 75 2018 87.65142857 93 94 82 90.22 87.2 88 79.14 2019 84.58714286 89 90 82 87.11 84 84 76 2020 78.90142857 88 92 66 81.78 80 72 72.53 2021 91.29142857 78 100 86 93.78 94.4 100 86.86 Risk and Audit Committee Self-Assessment for 2017 to 2021 2017 2018 2019 2020 2021

38 From the assessment, the Staff and Remuneration Committee’s overall performance for 2021 was 96.22% which is a marginal increase from the 2020 assessment rate of 94.36%. Comparatively, the Committee’s overall performance for 2019, 2018 and 2017 were 94.68%, 89.64% and 90.65%, respectively. The highest rated category was the assessment for Recording or Minute Taking at 100% while the lowest rating was Purpose of the Committee at 88.33%. Overall Board Committee Performance for 2017 to 2021 period The following table shows the overall performance of each of the Committees in one table: 75 80 85 90 95 100 Overall Committee performance - 96.22% Committee Membership - 98.33% Recording/Minute Taking - 100% Attendance - 96.67% Time and Location of Meetings - 98.52% Administration and Staff Support - 998.33% Support for the Committee - 93.33% Purpose of Committee - 88.33% Overall Committee performance - 96.22% Committee Membership - 98.33% Recording/Mi nute Taking - 100% Attendance - 96.67% Time and Location of Meetings - 98.52% Administratio n and Staff Support - 998.33% Support for the Committee - 93.33% Purpose of Committee - 88.33% 2017 90.65428571 92.5 92.5 90 93.33 92.5 90 83.75 2018 89.64285714 95 90 90 95 93.75 80 83.75 2019 94.68285714 98.75 97.5 90 96.11 95 92.5 92.92 2020 94.36428571 98.75 100 97.5 97.22 91.25 85 90.83 2021 96.21571429 98.33 100 96.67 98.52 98.33 93.33 88.33 Staff and Remuneration Committee Self-Assessment from 2017 to 2021 2017 2018 2019 2020 2021

39 Conclusion The Board has found the conduct of performance self-evaluation exercise to be a beneficial one and it has helped to streamline processes and made the Board more efficient with the conduct of its business. Diana S. Sichone (Mrs.) COMMISSION SECRETARY 75 80 85 90 95 100 Staff and Remuneration Committee - 96.22% Risk and Audit Committee - 91.29% Property Acquisition and Development Committee - 0% Market Transactions Committee - 87.44% Licensing Committee - 86.28% Compensation Fund Committee - 88.87% Table 16: Board Committee Performance for 2017 to 2021 2017 2018 2019 2020 2021

40 Report on regulatory and operational efficiency Section 11(3) of the First Schedule to the Securities Act, No. 41 of 2016 requires the Commission to report on its regulatory and operational efficiency as part of the reporting requirements introduced by the Securities Act of 2016 and include this information in its Annual Report. Thus, the Commission is required to highlight the following: a) the extent to which the Commission has fully implemented its regulatory oversight functions as provided under the Securities 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 the 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 expects to 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 Section 8 of the Securities Act empowers the Board to oversee the administrative affairs of the Commission by putting in place effective, efficient and transparent systems of corporate governance and generally providing strategic direction to the Commission, among other responsibilities. The Board, which is comprised of Members representing different institutions as required under the Securities Act, therefore, has the statutory mandate under the Securities Act to implement the provisions of the Act. In addition, the Board has also constituted Committees to which it has delegated some of its decision-making functions so as to assist the Board in exercising its statutory functions. The Commission’s Board Charter also provides guidance to the Board Members in their conduct of Board business to ensure that there is a right balance between the oversight role of the Board and the secretarial function of the Commission. Further, the Commission applies 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. 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

41 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, price-sensitive information. The Commission reports that during the year under review, none of the Board members and staff were sanctioned with respect to this governance structure that is in place. In addition, the Commission has been able to implement its oversight functions by undertaking regulatory actions in response to infringements, by capital market operators, of the legal and regulatory framework. Some of these regulatory actions include the taking of supervisory possessions and the imposition of administrative sanctions including fines, censures and recompense directives, among others. 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 prudently manages its resources to achieve its strategic objectives and therefore does not spend outside the approved budgets including in the review period. Cost to the Nation for not having the Commission In pursuance of its investor protection mandate, the Commission was protecting over ZMW69 billion worth of investments as at 31st December 2021. The investments were in products ranging from shares or stocks, corporate bonds as well as assets under management in collective investment schemes. These investments are made directly by not less than 260,000 investors and indirectly much more considering that the pension schemes and other institutional investors invest in the capital markets on behalf of the Zambian public. As the majority of the institutional investors are pension funds which invest employee contributions into several investment portfolios including the capital markets, the investments of these funds would be susceptible to fraud and other criminal activities without the Commission being present. Thus, in order to effectively undertake its investor protection mandate over the savings or investments earlier highlighted, the Commission requires issuers to make prompt and full disclosure of non-public price-sensitive information by a company’s directors to the general public which disclosures enable investors and the general public to make informed decisions. With the large pool of savings subject to which the Commission exercises its regulatory investor protection mandate, the Commission’s importance or relevance cannot be overemphasised as the savings could be lost, eroded or misapplied without the Commission’s oversight function. This would have an adverse impact on financial market confidence as well as the capacity of the capital markets to play the important function of savings mobilization.

42 The Commission is there to ensure that it protects the interests of investors in the capital markets and in the process ensure maintenance of financial sector confidence which is key to resource mobilisation through bond issuances and other instruments. Actual and Projected efficiencies the Commission has achieved as a result of the continuing regulatory activities The Commission has enhanced enforcement activities which has resulted in an increase in compliance by capital market operators which has a corresponding increase in market confidence. This has translated into increased capital mobilisation especially in Collective Investment Schemes (CISs) and Corporate Bonds. For the 2021 period, the Commission Board approved the following Key Performance Indicators (KPIs) to enable the Commission achieve its strategic objectives in an efficient and effective manner:

1. increase the capital market investor base from 140,000 to 123,326 by December 2021;
2. complete the issuance of ten Rules and Regulations by December 2021;
3. issue the Venture Capital (VC) and Exchange Traded Funds (ETFs) Guidelines by the end of June 2021;
4. address and resolve 70% of complaints received in 2021; and
5. enhance revenue mobilisation by achieving targets set in the 2021 budget (i.e. K25 million). The implementation of some of these performance indicators was adversely affected by factors including limited human resource and the COVID-19 pandemic that prevented physical consultative meetings from being convened to consult the market on the draft laws. However, the Commission was able to see the number of investors increase by over 120,000 and was able to complete the stakeholder consultative process, which is the most critical part of the law review process. The draft laws including the regulatory impact assessment prepared as required under the Business Regulatory Act, No. 3 of 2014 were ready for submission to the Business Regulatory Agency post the reporting period. Additionally, the extended stakeholder consultations with respect to the Venture Capital and Exchange Traded Funds Guidelines caused by the need to virtually and not physically consult stakeholders entailed that the Guidelines were only finalised post the reporting period. It is anticipated that once the Rules, Regulations and Guidelines come into effect, the capital markets disclosure regime will be more pronounced leading to further enhancements of the Commission’s investor protection mandate. Despite the highlighted challenges, the Commission was able to implement what it could of the performance indicators as would enhance the Commission’s regulatory efficiencies.

43 Nature of the working relations with Capital Market Operators The Commission has a very good working relationship with the capital market operators represented by the Capital Markets Association of Zambia (CMAZ) to which each capital market operator is, by law, required to be a member of. The Commission holds regular stakeholder meetings with the market as well as with the public at large through holding of monthly townhall meetings at which topical issues affecting capital markets are presented and discussed. These meetings have been highly interactive and facilitate the exchange of information from the Commission to the relevant stakeholders including the capital market operators. Immediate and Projected capabilities of the Commission The Commission has, as one of its strategic objectives, the enhancement of regulatory capacity for the Commission staff. In 2021, the Commission continue to leverage on partnerships with cooperating partners such as Toronto Centre, CISI and IOSCO to undertake training of Commission staff in topical areas including risk-based supervision. The Commission also took advantage of electronic platforms made necessary by the unfolding COVID-19 pandemic to enhance the regulatory capacity of Commission staff with the majority of the staff being trained in fintech and regulatory innovation that was run by the University of Cambridge Judge Business School. The trainings and capacity building that Commission staff underwent in 2021 have ensured that the Commission is always in tune with current developments in the capital markets space. For instance, the full roll out of the RBS framework that was in its final year of implementation would ensure that the Commission uses the limited resources it has to address the riskiest areas of the market.

44 Operational Activities In 2021, like most public institutions, the Securities and Exchange Commission (SEC) was affected by the COVID-19 pandemic. However, despite the adverse effects of the pandemic on the Commission, the Commission was able to execute its dual mandate of market supervision and market development under the ‘new normal’ leveraging on technology and electronic meeting platforms to ensure that the performance of the Commission’s investor protection and market development mandate could continue as seamlessly as possible despite the adverse effects of the pandemic. In undertaking its investor protection mandate, the Commission ensures that the markets are free, fair and transparent by requiring 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. DIRECTORATE OF MARKET SUPERVISION AND DEVELOPMENT ANNUAL REPORT - 2021 MARKET DEVELOPMENT The Directorate of Market Supervision and Development (DMSD) had a busy and remarkable 2021. Primarily the directorate continued to champion a number of the Commission’s key strategic initiatives both with regard to the market supervision function specifically and market development generally. Pursuant to the Commission 2018 -2021 Strategic Plan, these initiatives were premised on a clear path aimed to progress beyond key milestones achieved in past years. Among these initiatives are four key projects which include:

1. Capital Markets Master Plan Project
2. Risk-Based Supervision Project
3. Green Bonds & Sustainability Project
4. Regulatory Sandbox Project With a new Government in place following the August 2021 general elections the Commission found itself to be in good stead owing to the fact that its strategic direction was in line with the broad areas of focus by the new Government. These include: 1) Good Governance 2) Sustainable environments and greening of the Economy 3) Enhancing Digitization and 4) Small and Medium Entities support. It is pleasing to note that the SEC, in collaboration with a number of cooperating partners and market players, were already spearheading key projects that fall within the foregoing focus areas.

45 Figure 1: Capital Markets Alignment to Key National Agendas Development of the Capital Markets Master Plan (“CMMP”) In 2021, we continued to pursue the development of the Capital Markets Master Plan (CMMP), which is poised to serve as the primary roadmap for developing the capital markets over the next ten (10) years. Building on progress made in the previous year, the Commission made notable strides as shared below; o CMMP Stakeholders workshop - we coordinated a multisectoral stakeholders (public and private sector) workshop to adopt the draft CMMP and to solicit a collective consensus on the implementation plan. During the workshop, key submissions were made and incorporated in the draft CMMP document. o Ministerial approval of the CMMP – Following the workshop, we updated the CMMP document and submitted it to the Ministry of Finance and National Planning (“Ministry”) for approval to be considered by Cabinet. In this regard, the draft document was approved by the Honourable Minister of Finance and National Planning, Dr. Situmbeko Musokotwane, MP. The CMMP Vision “To reposition the Zambian Capital Markets to become an attractive international destination for long-term investment and be the primary source of long-term capital for Zambia that will enable sustainable growth, development, and stability of the country”.

46 While the draft CMMP document awaits Cabinet approval (earmarked for Quarter 2 – 2022), we have made good progress on other major projects that align with both the national development goals as well as the CMMP aspirations, especially that it is cross cutting. As such, we have made advancements towards implementing major projects that we believe shall form foundational building blocks for the CMMP development areas which are depicted in Figure 1 below. These projects include; the Risk-Based Supervision Project, the Green Bonds Project, and the Regulatory Sandbox Project. Figure 1 – CMMP Development Areas and Building Blocks At the same time, the Joint CMMP Secretariat (the Ministry and the Commission) continued to liaise over the establishment of a CMMP Secretariat that will be mandated to coordinate the implementation of the Masterplan. Our anchor partners on the Project, the Financial Sector Development Africa (FSDA), have re-affirmed their continued support. The CMMP launch is envisaged for Quarter One, 2022. Suffice to mention that the Governance approach proposed was to have a multi-sectoral governance structure that would ensure full participation of both private sector and public sector stakeholders. Remarks by Ms. Mutumboi Mundia, Director – Market Supervision & Development “This first ever master plan for the Zambian capital markets is worth our commitment and dedication as capital markets stakeholders. We have introspected enough and have a fair

47 understanding of what has worked or not worked in our market. We also have taken stock of our strengths and weaknesses. It is now time to address the challenges with a view of fixing what needs fixing, whilst embracing new ‘normals’ as well as the upsurge in innovations that entail ways of doing things. Indeed, it is an exciting time of our markets’ development trajectory!” Regulatory Sandbox Framework for Capital Markets – Innovation and Digitisation The Regulatory Sandbox Framework is a novelty that enables regulators like the SEC to allow the live testing of financial innovations in a safe manner, as well as understand their development and scrutinise their application. The key objective of having such a framework is to embrace innovation while upholding investor protection. Figure 3 – The SEC journey to developing a Regulatory Sandbox Picture: A group photo taken during the launch of the live Testing phase The Regulatory Sandbox (“Sandbox”) Guidelines for Capital Markets were developed and issued in record time within 2020. In 2021, the Commission officially launched the Framework on 17th March 2021 and has since continued to advance efforts in Zambia’s digital economy agenda. Thus, the following milestones were achieved in 2021; o Established the Sandbox Technical Committee – we facilitated the setup of a multi￾sectoral committee charged with oversight responsibilities in the Sandbox. The committee comprises of representatives from the SEC, the Bank of Zambia (BoZ), the Pensions and Insurance Authority (PIA), the United Nations Capital Development Fund (UNCDF) and the Capital Markets Association of Zambia (CMAZ). The committee is also supported by resources from the pool of former SEC interns (who also make up a SEC initiative – the Capital Markets Think Tank) and Bongohive Innovation and Technology Hub.

48 o Launch of the Sandbox framework on 17th March 2021 – we opened the public window for applications to participate in the first (1st) Sandbox cohort. o Successfully admitted 4 participants – firms admitted in the 1st cohort were as follows; Kukula Capital Plc, Lupiya Circle Ltd, Lusaka Securities Exchange Plc, and Premier Credit Zambia Ltd. More details on their innovations are provided in Figure 2 below. o Launch of Sandbox webinar series – as part of the preparation phase of the Sandbox, we held weekly webinars with the Sandbox participants covering various Securities Regulations. The objective of the webinars was to help participants acquaint themselves with the Securities Regulations and thus, enable them to be compliant and identify areas that would require regulatory flexibility. o Launch of Live Testing Phase – we held a hybrid event (virtual and physical) to launch the live Testing phase for the four (4) Sandbox innovations at Mulungushi International Conference Centre. The event was graced by the Honourable Minister for Technology and Science, Mr. Felix C. Mutati MP and included some of the following highlights: ✓ Sharing of the SEC journey to developing a Sandbox ✓ Presentations on insights concerning the Sandbox innovations ✓ A keynote address by the Honourable Minister, Mr. Felix Mutati, ✓ A signing ceremony of certificates of collaboration between the SEC and two innovation hub partners namely: BongoHive Technology and Innovation Hub and Zanaco Innovation Lab. Figure 2 – Summary of successfully admitted Participants in the Sandbox

49 o Regulatory navigation for Zambian Fintechs – The SEC alongside other regulatory partners namely BoZ, PIA and Zambia Information and Communications Technology Authority collaborated with the UNCDF to develop a Regulatory Playbook for Zambian Fintechs (“Playbook”). The Playbook is targeted at Zambian Fintechs with the aim of simplifying and demystifying the regulatory navigation process and as such outlines Zambia’s current regulatory environment and highlights pertinent issues that Fintechs must be aware of as they seek to operate in the Zambian market.

50 o Exposure and Peer exchange visit – the SEC participated in a UNCDF organised exposure and peer exchange visit to Ghana. The objective of the programme was to learn how digital financial services can better be delivered to underserved and unserved people, enabling for example digital payments for utilities and other critical products and services. Green Bonds Projects and other greening efforts To advance the readiness in the agenda of greening the economy, the SEC engaged the Honourable Minister of Green Economy and Environment, Mr. Collins Nzovu MP., who assured the Ministry’s support of the Commission’s vision to position Zambia as an international green investments’ hub. The Green Bonds Guidelines provide the necessary infrastructure for which the SEC has provided a platform through new or existing projects to raise funding to finance projects that generate climate or other environmental benefits that conform to green guidelines and standards. It is envisaged that these bonds will help cushion the financial burden on the part of government to finance for biodiversity related projects. The issuers of these bonds will include but not restricted to stakeholders from the Manufacturing, Agriculture, Mining, Banking and other applicable sectors of the economy. In efforts to pursue Zambia’s debut green bonds issuance, the SEC, in collaboration with the Capital Markets Association of Zambia (CMAZ), the United Nations Biodiversity Finance Initiative (BIOFIN) and the Worldwide Fund for Nature (WWF), held several stakeholder engagements including a meeting with members of the British Chamber of Commerce and British Embassy officiated by the Hon. Minister of Green Economy & Environment.

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Another development on the front of greening efforts is the joint effort as financial sector regulators in the creation of a mainstreaming green finance working group. The working group comprising of representatives from the SEC, the BoZ and the PIA is mandated to spearhead a coordinated approach to mainstreaming green finance in the Zambia financial sector. BIOFIN is providing technical assistance to the working group and was recently joined by Commonwealth & Development Office (FCDO). Key workstreams include the following: Working Group Workstreams: Capital Markets - Green bonds | venture capital Banking - Retail finance | Commercial Finance Pensions & Insurance￾Institutional Investments Cross Cutting Issues • International standards and frameworks: Integrate international frameworks for financial sector into regulations by considering any of the following - IOSCO, AFI, Basel Network on greening the financial system • Drafting Taskforce: development of disclosure regimes (policies & frameworks) for green finance and sustainability for operators in the Zambian Financial Market • Biodiversity and Climate related financial risks: Promote the development of effective supervisory practices in order to mitigate biodiversity loss (physical risks) and climate-related financial risks • Zambia’s green growth strategies: identify the role of the financial sector in contributing to Zambia’s green growth strategies and integrate in the National Financial Inclusion Strategy (NFIS) • Green Finance Investments, Resource Mobilization and Financing: help mobilize private sector and bilateral and multilateral investments to meet Zambia’s green growth strategies • Green finance products: support the development of green finance products to maximize opportunities for Zambian businesses in this rapidly growing area. • MSME agenda: enabling frameworks for business support aimed at connecting micro, small and medium scale, local projects to sources of finance • International agenda: help positioning Zambia (through various initiatives) as a desired destination of green investments Initial focus will include the following four (4) key projects: i) Green bonds ii) Green finance policy on disclosure regime iii) Green Loans Guidelines and iv) Green tagging 17-18 June & 9 December 2021: Workshop on aligning financial flows with the post 2020 Global Biodiversity Framework 28 September 2021: Green finance event between SEC and Britsh Chamber of Commerce & British Embassy 23 Novemebr 2021: SEC & FSDA meeting 26 November 2021: SEC & Private Financing Advisory Network meeting

52 Financial Inclusion As a co-implementor of the National Financial Inclusion Strategy (NFIS), the SEC continued to promote financial inclusion in our capital markets. Below were the key highlights concerning financial inclusion in 2021; o Workshop on State of the Digital Economy – The Commission participated in a data collection workshop on the state of the inclusive digital economy in Zambia using a tool known as the Inclusive Digital Economy Scorecard (IDES). The IDES is a policy tool used by Governments in helping them set priorities for their country’s digital transformation. Therefore, it is envisaged that the IDES shall help Zambia identify the key market constraints hindering the development of an inclusive digital economy and help set the right priorities with public and private stakeholders to foster a digital economy and financial inclusion that leaves no one behind. This exercise was a key step towards developing a Digital Transformation Policy and Strategy for Zambia. o Review of the NFIS – The Ministry of Finance and National Planning initiated plans to conduct a review of the NFIS to track progress made. As such, the SEC, alongside the BoZ and the PIA was co-opted to participate in the review process which would be concluded in 2022. Capacity Building Capacity Building – Partnership with the Cambridge Centre for Alternative Finance As part of our operational preparedness for the implementation of the Sandbox, we partnered with the University of Cambridge’s Centre for Alternative Finance (“CCAF”) who facilitated a scholarship for SEC staff in their prestigious capacity building programme for regulators known as the Cambridge Fintech and Regulatory Innovation (“CFTRI”), an eight-week long online programme designed for global executives, financial regulators, and policy makers. SEC staff benefitted from the good insights concerning issues around Fintech regulation and innovation, regulatory sandboxes and innovation offices, regulatory technology, regulatory reform, and international cooperation (among other things). Capacity Building – Toronto Centre Virtual International Leadership Program for Securities Regulators and Supervisors The SEC participated in a Toronto Centre Virtual International Program for Securities Regulators and Supervisors dubbed “the Securities Regulators and Supervisors’ Evolution and Adaptation to a New Environment”. The program was designed to assist participants on how to balance and manage urgent challenges such as the Covid-19 pandemic and pre-existing challenges such as climate change and cyber security. Therefore, participants equipped on to better evolve and adapt while pursuing mandates for financial stability.

53 The programme was attended by regulators from various jurisdictions, namely, Bangladesh, Barbados, Cambodia, Cayman Islands, Colombia, Costa Rica, El Savador, Jamaica, Kenya, Malawi, Malaysia, Namibia, Nigeria, Peru, South Africa, Trinidad and Tobago and Zambia. This presented a good platform for networking and peer-peer knowledge exchange. Awareness and Education: Town Hall Meetings As part of our efforts to increase the SEC’s visibility in 2021, the Market Development Team launched the Virtual Town Hall meetings which focus on raising awareness about the benefits and opportunities in the Capital Markets. To promote the growth of capital markets, it is envisaged that the issuing and investing publics need to understand how the capital markets function and thus be able to make informed decisions. The Town Hall meetings provide the Commission, with an opportunity to get immediate feedback from the stakeholders on the forum.

54 A Snapshot of Market Development Engagements undertaken in 2021 In pictures

E-flyers used to market the Town Halls Virtual Town Halls Meetings: March - December Financial Literacy Week March SEC/ZANACO/UNZABECA pre-accelerator programme World Investor Week 10 - 14 October Regulatory Navigation Webinar for Zambian Fintechs June Social Media Campaign on Fraud and Consumer Protection Phase II World Savings Day Financial Literacy Awards 30 October Zambia Impact Investment Summit November Implementation of the NSFE II - YOUTH

55 Regulatory Navigation webinar for Zambian Fintechs A photo taken during a Digital Economy exposure and peer exchang in Ghana

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58 A participating student in the UNZABECA Pre-accelerator programme MARKET SUPERVISION Universe of Capital Markets Operators The Commission is responsible for the regulation of the following categories of market players by virtue of them being licensed, authorised, recognised by or having their securities registered by the Commission. Figure 2: Capital Markets regulatory universe Capital Markets Operators Issuers •Listed Companies •Quoted Companises •Corporate Bond Issures Dealers licenses •Brokers •Bank Dealers •Fund Managers •Custodians Financial Market Infrastructures •Securities Exchanges •Clearing and Settlement Agencies Self￾Regulatory Organisations Investment Advisors Share Transfer Agents Collective Investment Schemes Venture Capital Funds Representatives licenses •Dealer's representatives •Investment Advisers representative •Share Transfer Agent reprentative Credit Rating Agencies

59 As of 31st December 2021, there were 207 licensees, 45 Issuers of registered securities, 10 authorised local Collective Investment Schemes, 25 authorised Foreign Collective Investment Schemes and One (1) recognised Self Regulatory Organisation. Issuers comprise of 23 Listed companies, 13 Quoted companies and 9 Corporate Debt Issuers. A breakdown of licensees by license type is provided under the section for licensing below, while details of authorised collective investment schemes are discussed under the CIS section. Supervisory Tools The Commission approved its Risk Based Supervision (“RBS”) Policy on 14th June 2021. Approval of the RBS Policy is part of the Commission’s project to migrate the Zambian Capital markets from a compliance based supervisory approach to an approach that focusses on risk. In line with the RBS Policy, the Commission has also developed an RBS Framework which will enable the Commission to apply a consistent supervisory approach that takes into account the unique aspects of different types of CMOs and the unique aspects of their business models. The RBS Framework is aligned to the International Organisation for Securities Commissions (“IOSCO”) objectives of securities regulation which are: ▪ protecting investors; ▪ ensuring that markets are fair, efficient and transparent; ▪ reducing systemic risk. The Commission undertakes its supervisory functions using a number of supervisory tools as follows: Licensing, Registration, Authorisation & Recognition of CMOs Issuing statutory instruments, directives, guidance notes, guidelines and other regulations Conducting Surveillance & Off-site monitoring Enforcement and supervisory actions Inspections & Investigations Investor education and awareness campaigns, Complaints handling Figure 2: List of SEC supervisory tools

60 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 or financial market infrastructures must be authorized and licensed as securities exchanges or clearing and settlement agencies 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, Venture Capital Funds and other investment vehicles must be authorized by the Commission. Parties to these investment schemes must be authorised by the Commission Market Supervision encompasses the three amin functions of licensing, inspections and surveillance and complaints handling as highlighted in the following table: Figure 3: Market Supervision core activities Capital markets players are required to submit to the Commission monthly, quarterly and yearly returns. For example, • All capital markets operators are required to submit audited financial statements; • Dealers and Investment advisers are required to submit a separate auditors report addressed to the Commission and management confirmation of compliance; • All dealers are required to submit Monthly Capital Adequacy Reports; • Fund managers are required to submit monthly and quarterly returns; and • Issuers are required since 2019 to submit a Gap Analysis Report and other reports under the Internal Controls Over Financial Reporting Framework. These reports are used by the Commission for offsite monitoring as well as for planning on-site inspections of capital markets operators. Licensing The MS Team reviews and processes license applicactions in line with the Securities Act provisions Inspections The MS Team reviews and assesses ’ work procedures & their compliance to the Act, Rules and Directives On-going monitoring, Surveillance & Complaints handling The MS Team undertakes surveillance using various tools, including attending Annual General Meetings. The Team also deals with complaints lodged with the Commission. On going monitoring involves review of annual and periodic submissions from market players

61 Licensing Licensing acts as the entry point into the Zambian capital markets for persons seeking to undertake activities that require a SEC license. The Commission’s licensing processes seeks to apply a risk-based approach that takes into account requirements of the Act, SEC RBS Policy and the need to encourage market development by ensuring the licensing process does not form an entry barrier for entities wishing to enter capital markets. In line with its endeavour to align its processes to international best practices and to embrace modern regulatory approaches, the SEC 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 SEC. At Licensing, the SEC has in place a transparent and well￾established set of procedures leading to the issue of a licence or the rejection thereof. In assessing applications, the SEC is required to conduct a number of assessments - including the fit and proper test of applicants. In conducting the fit and proper test, the Commission assesses the financial soundness of the applicants, lawfulness and moral standards of the proposed activity, source of funds of the proposed activity, integrity of the shareholders, directors and key managers and any other relevant issues. For corporate applicants the Commission also analyses beneficial ownership information to ensure that only people of high integrity can operate in the Capital Markets. Where applications may cause harm to the good repute of the jurisdiction, such applications are recommended for rejection. Licences in issue as at 31st December 2021 The Commission issued 37 licenses in the year to December 2021 bringing the total number of licenses to 207. As of 31st December 2020, there were 207 licenses in issue. The movement in the number of licensees by category for the year ending 31st December 2021, is provided in the table below: Table 1: Movement in number licensees LICENSE NUMBERS At January 2021 Issued during the year Cancelled, revoked or surrendered during the year At December 2021 Dealer’s License 27 5 - 32 Dealer’s Representative License 117 25 (4) 138 Investment Advisor’s (“IA”) License 9 3 - 12 IA’s Representative License 20 3 (1) 22 Securities Exchange License 2 - - 2 Credit Rating Agency Licenses - 1 - 1 Total 175 37 (5) 207

62 The Commission rejected Two (2) license applications on grounds that the applicants were not fit and proper persons to operate in the Zambian capital markets. Inspections In 2021, inspections were undertaken as part of the pilots under the Risk Based Supervision Project. The Commission concluded inspections on two (2) market players and two (2) thematic reviews of Fund Managers and Investment Advisers. The Commission has incorporated the results from the pilots were incorporated in the final RBS Policy and RBS Frameworks approved in June 2021. Feed back from the pilot candidates has been incorporated in the Commission’s RBS Rollout plan which will be implemented from January, 2022. Surveillance and Complaints Handling Market Surveillance Market surveillance includes various activities such as monitoring trade operations on licensed exchanges using daily analysis of market trades, reviewing periodic reports, investigating anomalies and other activities. It also involves analysing information gathered through complaints, social, electronic and print media, among others. Surveillance activities also includes the Commission attending in an observer capacity Annual General Meetings (“AGMs”) for listed entities and local CISs. The goal is to ensure that there are no market malpractices are being perpetrated in the capital markets to address regulatory breaches and provide the necessary protection to investors. The Commission made the following observations with regards to AGMs held during the year: • Attendance: Following the covid 19 restrictions, AGMs were held either physically (with adherence to covid guidelines), virtually or in most cases a combination of both. Most issuers were able to navigate through the covid-19 disruptions to ensure that they held their AGMs. • Investor Participation: The adoption of the combination of physical and virtual meetings, saw the increased participation for shareholders residing outside Lusaka. Most of the AGMs were engaging and it appears that most investors seemed well involved in the monitoring of the performance of the companies in which they have invested. Complaints: In 2021, Market Supervision received 19 complaints. 13 complaints (68%) were closed within DMSD and while nine (9) were referred to DELs. The table below shows a summary of complaints that were handled by DMSD during the year 2021: Table 2: Status of complaints handling at 31st December, 2021 As at 31st December 2021 As at 31st

December 2021 Complaints brought forward as at Jan ‘21 a 5 New complaints received b 19 Total Complaints a+b=c 24 Complaints referred to DELS d (9)

63 Total Complaints not referred to DELS c-d=e 15 Complaints closed in DMSD f (13) Number of active complaints e-f=g 2 DMSD complaint closure rate f/e 87% Below is a four-year trend of complaints received by the Commission and their status. Figure 4: Four year trends of complaints There was a 66% decline in the number of complaints received from 2020 to 2021. The chart below shows which companies were complained against and the nature of complaints received. Table 3: Analysis of complaints received by type Type of complaint Number of complaints received As % of total number of complaints received Late/Non-payment of investment maturities/ sales proceeds 7 37% Missing Shares 4 21% Failure to provide contract notes and account statement 2 11% Non sale of shares 2 11% Non-payment of dividends 2 11% Suspected Ponzi scheme 1 5% Tracking wrongful deduction 1 5% 53% of the complaints received in 2021 were against Madison Asset Management Limited (32%) and Laurence Paul Investment Services Limited (21%) relating to non-payment of redemptions and investment maturities. These make up 77% of complaints referred to DELS for 2021. Collective Investment Schemes Collective Investment Schemes (CISs) remain a prime area of focus for market supervision as this is a product that is best suited to promote financial inclusion among Zambians. Secondly, the CIS space has seen significant growth over the past five years with Assets Under 18 9 6 3 30 10 18 5 56 16 40 5 19 13 9 2 0 10 20 30 40 50 60 Complaints received Complaints Closed Complaints referred to DELs Outstanding Complaints Register 2018 2021 2020 2021

64 Management (“AUM”) increasing year on year. Below is a snapshot of the CIS industry at December 2021. Figure 5: Snapshot of the Collective Investment Schemes Collective Investment Schemes – A SNAPSHOT AT DECEMBER 2021 K1.4 billion AUM => representing a 24% increase annually K1,166 million invested in local CISs K277 million invested in foreign CISs 204,157 investors across 10 local umbrella funds comprised of 58 sub-funds 479 investors in 25 foreign CISs 70% of CISs held their Annual General Meetings in 2021 This growth in assets under management for local CISs was largely driven by growth in contributions by investors driven by marketing activities by fund managers. The sector reached a significant milestone of K1 Billion in assets under management in June 2021. The number of local authorised CISs remained at Ten (10). In terms of deployment of AUM, 68% of the local CIS AUM were invested in Real Estate, Term Deposits and GRZ Bonds (Refer to Figure below). Figure 6: Distribution of AUM at Dec 2021 Term Deposits 26% Real Estate 26% GRZ Bonds 16% CIS 13% Equities 7% Bank balances 4% Treasury Bills 2% Commercial paper 2% Other assets 2% Corporate Bonds 1% Loans and advances 1% Distribution of AUM at Dec 2021 - Local CIS

65 Risk-Based Supervision The implementation of Risk Based Supervision in partnership with the Toronto Centre of Canada Long-Term Country Engagement (LTCE) reached an advanced stage in 2021. A component of the RBS implementation relates to process which require the Commission to determine an optimal organisational structure and align its supervisory processes in a manner that will facilitate the efficient application of RBS in the Zambian Capital Markets. The Commission has achieved various milestones under the project as follows: Table 6: Status of RBS activities earmarked for 2021

1. Approval of RBS Policy by the SEC Board Approval of RBS Framework by SEC CEO Both documents were approved in June 2021
2. Development of small firms strategy Developed & concluded in Q4 2021
3. Develop & implement Communications Strategy Implemented in Q2 to Q4 of 2021. Extended to 2022 as RBS is being rolled out 4.• Re-engineering supervisory processes Work in progress - activity was deferred pending finalisation of the SEC Strategic plan for 2021 to 2026 and revised Organisation Structure 5.• Finalise implementation Plan (Q4 2021) Draft workplan developed and key elements discussed in detail below. In 2022, the Commission will focus on launching RBS with a view to rolling it out fully to all Capital Markets Operators over next 5 years. The launch is scheduled for April 2022. Based on the Draft RBS Rollout Plan, the Commission will focus on three core areas: Fig 8: RBS Roll Out Core Areas The roll out will be done in two phases with Phase 1 focusing on undertaking a self￾assessment of all capital markets operators whilst enhancing capacity through various planned awareness/training programmes. As part of Phase 1, the Commission will issue the Risk Management Guidelines (“RMG”) and the Corporate Governance Code (“CGC”). These documents are fundamental for the successfully implementation of RBS Undertake supervisory work on CMOs following launch of RBS Supervisory Plan Address capacity gaps in markets players and Staff Capacity Building Enhance awareness of RBS by all Key stakeholders Stakeholder Relations

66 as they provide the minimum expected standards for Capital Markets Operators in Zambia. In Phase 2, the Commission will seek to fully implement the RBS Model and thus capital markets operators would need to adhere with the requirements of the RMG and CGC. It will be crucial for the Commission to ensure procurement of key supervisory technology and efforts are currently on-going to secure a system. Figure 9: RBS Roll Out Phases The successful roll out of the RBS Framework is highly dependent on the Commission having implemented an optimal organizational structure and recruitments across all levels in the short and medium terms. Table 1 below sets out a summary of planned activities for 2022 Table 11: Key activities for rolling out RBS to capital markets in 2022

Key deliverables/activities planned for 2022

1. Development of RBS Rollout Plan - Q2 2022
2. Development and roll out of Self-Assessment Templates & Returns for market players (to be gazette) Q2 - Q3 2022
3. Development and issuance of Risk Management Framework ("RMGs") Q4 2022
4. RBS Launch in Zambian Capital Markets - April 2022
5. Development and issuance of Corporate Governance Guidelines (“CGC”) Q1 – Q3 2022
6. Development of a Small Firms Strategy for Collective Investment Schemes - Q3 – Q4 2022
7. Supervisory process re-engineering Q2 – Q3 2022 • Capacity building events for market players • Issuance of Risk Management Guidelines • Self-assessments Questionnaires • Issuance of Corporate Governance Code • Supervisory process re-engineering & system development • Small Firms Strategy for CIS • Detailed risk assessments/ Inspections & Reviews Phase 1: Q2/2022-Q4/2022 • Full implementation of system/Supervisory Technology • Full implementation of Risk Management Guidelines • Full implementation of Corporate Governance Code • Small Firms Strategy for high risk clusters • Internal Control Over Financial Reporting Reviews • Detailed risk assessments/ Inspections & Reviews Phase 2: Q1/2023 - Q1/2025

67 ENFORCEMENT AND LEGAL SERVICES Although 2021 was a challenging year for the Commission and the Directorate of Enforcement and Legal Services (DELS) in particular with Covid-19 and internal resource constraints, the directorate has been able to find solutions that have helped navigate the challenging period which may best be described as a period of crisis. DELS still played its role in protecting the interests of investors by undertaking enforcement action to create a good environment to foster the participation and growth of the Capital Markets. DELS also managed to maintain relations with other law enforcement agencies such as the Zambia Police and the Drug Enforcement Commission which have been instrumental in helping the Commission to undertake investigations especially in cases where such investigations border on conduct with an element of criminality. DELS has further sought to explore ways to improve such relations to ensure that it continues benefiting from its association with these law enforcement agencies. DELS Functions One of the fundamental components of an effective securities regulator is the ability to undertake enforcement of securities law breaches. DELS plays this important function and thus oversees the Commission’s investigations, litigation and legal and regulatory compliance in the implementation of the Commission’s investor protection mandate. Additionally, the Directorate is also responsible for the provision of legal opinions and advice, performing the Commission’s corporate secretarial functions as well as undertaking legal and legislative reform through the review and drafting of Bills and Acts of Parliament, Rules and Regulations as well as other policy and regulatory documents such as Guidelines, Circulars and Directives. Thus, the Commission, through DELS, is responsible for enforcing the Securities regulatory framework as prescribed by the Securities Act, No. 41 of 2016 (Act) and the Rules and Regulations made thereunder. DELS is responsible, inter alia, for ensuring legal and regulatory compliance by capital market operators, identifying and recommending law reform and development of the regulatory framework, and providing corporate legal advisory and Board secretarial services. The core functions of DELS are divided between litigation, investigation and enforcement. DELS undertakes litigation on behalf of the Commission in all courts and Tribunals and investigates alleged violations of the securities regulatory framework to ensure the growth of an orderly capital Markets and to further safeguard the interests of persons who invest in securities in order to guard against illegal and improper practices as provided under the Act and regulations or rules made thereunder. This function has become more pronounced in 2021 with the operationalisation of the Capital Markets Tribunal in which the Commission is defending over eight matters in which capital markets players have appealed against the Commission’s decisions. Enforcement and legal actions taken Since the enactment of the Act, the Commission has continued to enforce the provisions of the Act against defaulting capital market operators. Depending on the circumstances of each case, the enforcement actions taken have ranged from private censures for minor infractions to

68 imposition of fines, revocation of licenses or taking supervisory action under section 11(4) of the Act for serious breaches of the regulatory framework. During the period under review, the Commission continued its supervisory possession of two major Capital Market Operators in its quest to safeguard the interests of investors and ensure compliance with the Act. The Commission also revoked the licenses of two individuals that were considered not to be fit and proper persons to hold dealer’s representative licenses. Additionally, to ensure compliance with the regulatory framework and deter would be offenders, the Commission imposed administrative penalties that consisted of private censures and imposition of administrative fines on capital market operators that breached its regulatory framework. In the first quarter of 2021 DELS had 29 active investigations and presented 7 new matters for enforcement action on issues ranging from the revocation of the grant of approval for appointment of an independent board member of a capital market operator who was subsequently found not to be fit and proper; the approval of the appointment of board of directors of a capital markets operator; and the imposition of a directive and administrative fines against persons for failure/neglect to comply with the securities regulatory framework. There was a revocation of dealer’s representative licence for persons deemed not to be fit and improper to hold a license that issued by the Commission. There was one private censure of a company under section 218 of the securities Act, for its failure/neglect to obtain the Commission’s approval before effecting changes to information supplied during the company’s application for a licence. Lastly DELS had issued a number of show cause letters in order to afford affected capital market operators an opportunity to be heard in the process of enforcing compliance with additional conditions imposed on dealers’ licences. In the second quarter, DELS recorded thirty (30) matters under enforcement, five (5) matters under investigation, one (1) private censure was issued, two (2) imposed fines and five (5) show cause letters. DELS also commenced two (2) legal proceedings on behalf of the Commission and sixteen (16) matters were presented for enforcement action . The matters involved mainly: failure to advise clients during securities transactions; failure to ensure that clients comply with the Commissions directives pursuant to section 81 of the act; failure to ensure that principals comply with the regulatory framework; failure to conduct business in accordance with securities regulatory framework; failure to comply with duties outlined in section 206 of the act; and failure to follow requirements set out in the Securities (Accounting and Financial Requirements) Rules. In the third quarter, DELS had twenty (20) matters to take to the committee under enforcement and twenty-four (24) matters that were under investigation. From the twenty-four investigation matters, one (1) investigation was discontinued, two (2) investigations were concluded and three (3) requests were received from foreign securities regulators under the CISNA or IOSCO MMoU. Under enforcement actions to be taken, DELS issued two (2) private censured, four (4) show cause letters and one (1) revocation/surrender of licences. Under Litigation, we had six (6) legal proceedings against the Commission. DELS also made two (2) referrals to law enforcement agencies for further criminal investigations. Some matters that were presented to the committee with managements recommendations on steps to take included, the approval of board of directors, noncompliance with the securities framework and Commission issued

69 directives, failure to pay annual licencing fees, failure to pay outstanding balances on fines imposed by the Commission, one holding out as a licensed securities exchange when in fact not, breach of rule 28 and 29 of the Securities (Accounting and Financial Requirements) Rules as well as circular No. 1/2019/DMSD and breach of section 76 and 140 of the Act. In the last quarter of the period under review, there were twenty-two (22) cases under investigation, twenty-three (23) matters that were at enforcement, six (6) active cases against the Commission and sixty-five (65) show cause letters sent out under this quarter. In the quarter some Board resolutions were passed which included: to commence show cause processes against issuers, CMOs and their auditors for non-compliance of the Commissions legal framework; the imposition of administrative sanctions for breach of the legal framework; to undertake enforcement proceedings for the revocation of dealer’s licenses; to undertake the removal from office of persons in management in capital market operators for failure to ensure that the principal company complied with the regulatory framework; and to undertake enforcement proceedings due to failure/neglect of fiduciary duties and general obligations. The Board also approved the appointment of board of directors of a securities exchange, the suspension of an investment advisor license and the commencement of legal actions for recovery of unpaid annual fees as debt due and owing to the Commission. The Board further approved the commencement of legal proceedings for outstanding fines as debt owing to the Commission and lastly it slapped an administrative fine on a chief executive officer of a capital market operator due to non-compliance with the securities regulatory framework. These resolutions were implemented post the reporting period. The following table summarises the enforcement matters undertaken during the period under review: Enforcement Action Q1 2021 Q2 2021 Q3 2021 Q4 2021 Matters under enforcement 22 30 20 23 Active investigations 29 28 24 22 Revocation of DR License 1 0 1 0 Administrative fines imposed 2 4 0 0 Private censure 1 1 2 0 Referrals to LEAs 1 0 2 0 Compliance with regulatory requirements and international best practice 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 IOSCO, ESAAMLG, CISNA, AMERC and other regional and international bodies. DELS is the contact point for liaison with foreign capital market regulators on information sharing and exchange of information. With the advent of the COVID-19 pandemic, participation in the regional and international bodies to which the Commission is affiliated as a member had been limited and the Commission was only able to attend meetings virtually. During the period under review, Commission Secretary and Director – Enforcement and Legal Services, Mrs. Diana Sichone, was elected to the Governing Council of CISNA at its 44th bi-annual

70 meeting that was held virtually from 26th to 28th May 2021. CISNA forms part of the Trade, Industry, Finance and Investment Directorate with the Southern African Development Community (SADC) and reports to the SADC Committee of Ministers of Finance and Investment through the Committee for Senior Treasury Officials. CISNA was established in 1998 and consists of the non-banking financial institution authorities, namely, capital markets, collective investment schemes, insurance companies, retirement funds and providers of intermediary services in the SADC. The organisation had been restructured and this was the first time officials had to be elected to serve in the new positions under the new structure. The Governance Council is the highest decision-making organ of CISNA outside the General Meeting. The Commission and Zambia as a whole will, therefore, be represented at that high level. The following lists the members of the Governance Council: The Commission is a signatory to the International Organisation of Securities Commissions (IOSCO) Multilateral Memorandum of Understanding (MMoU) on co-operation and exchange of information. The MMoU sets out the requirements relating to what information can be exchanged and how it is to be exchanged; the legal capacity to compel information; the types of information that can be compelled; the legal capacity for sharing information; and the permissible use of information. The agreement further prescribes how information exchanged should be held confidentially and ensures that no domestic banking secrecy, blocking laws or regulations will prevent securities regulators from sharing this information with their counterparts in other jurisdictions. Since being admitted as a signatory to the IOSCO MMoU in 2018, the Commission has benefitted from the exchange of information facilitated by the MMoU is a signatory of the IOSCO MMoU. With the increase in the number of investigations, enforcement actions and litigation the

71 Commission is involved in, the Commission has made increasing use of the MMoU to request for information from its foreign counterparts thereby improving the quality of enforcement actions taken. During the period under review, the Commission received three (3) requests to conduct investigations on behalf of the different foreign regulators. Cooperation with law enforcement agencies and financial sector regulators Co-operation with Law Enforcement Agencies Section 165(1) of the Act empowers the Commission to consult and cooperate with other regulators in the financial sector. The Act also mandates the Commission to co-operate with, provide assistance to receive assistance from, and exchange information with, other regulatory bodies and law enforcement agencies (LEAs). In view of this mandate, the Commission has, after investigating several cases, referred the cases to organisations such as the Bank of Zambia, the Zambia Police and the Drug Enforcement Commission whenever a matter was outside the Commission’s jurisdiction. As such, during the period under review the Commission had investigated and referred to the law enforcement agencies several cases involving suspected fraud, money laundering and fraudulent practices for further investigation by the relevant law enforcement agencies as the Commission does not have jurisdiction to undertake criminal investigations or prosecutions. MoU with the Financial Sector Conduct Authority (FSCA) of South Africa The FSCA is the South African financial sector regulator responsible for the regulation and supervision of market conduct. It was created following the split of the financial sector regulatory framework under the twin peaks model that regulates conduct on the one hand and prudential requirements on the other. Previously, the Commission had entered into an MoU with the Financial Services Authority which was the regulator for the South African securities industry prior to the implementation of twin peaks. However, with the implementation of the twin peaks model, it became necessary to enter into a new agreement with the FSCA as it is a new entity. The process of finalising the agreement had not concluded by the reporting date as the Commission was awaiting feedback on the proposed edits to the agreement and would further need to subject the agreement for clearance by the Attorney General and Accountant General, respectively. The entry into bi-lateral agreements further enhances the Commission’s capacity to enforce securities law breaches through co-operation and the exchange of information. Dispute resolution mechanisms in the capital markets Operationalisation of the Capital Markets Tribunal The Rules of the Capital Markets Tribunal (“Tribunal”) were gazetted on 23rd April 2021. This important development signalled the operationalisation of the Tribunal. With the gazetting of the Rules, a number of the Commission’s decisions were immediately subject to appeal and the number has been steadily increasing in line with the legal principle giving an aggrieved party an

72 opportunity to be heard. As at the end of the reporting period, the Commission had six (06) active cases before the Tribunal. Key court decisions made affecting the Capital Market Tribunal’s jurisdiction During the relevant period under review, the Commission obtained Judgment in its favour from the High Court of Zambia in the case of Standard Chartered Bank and Another vs. The Commission 2021/HP/0085 to the effect that the Capital Markets Tribunal is a specialized court with the requisite jurisdiction to handle securities and capital market related disputes. This decision requires that any person dissatisfied with the decisions of the Commission has to comply with the appeal process to the Capital Markets Tribunal. The DELS has further taken deliberate steps to challenge Court Judgments and other decisions by market players for the development of the capital markets jurisprudence. This is to ensure that the Courts and Tribunal give meaning and sound interpretation to provisions of the Securities Act and the rules and regulations promulgated. Legal and legislative reforms Amendment of the Securities Act Following the enactment of the Securities Act in 2016, the Commission has identified a number of lacunae in the law requiring legislative review. The first review was with respect to the consequential amendments following the review of the Financial Intelligence Centre Act’s amendments effected in 2020. A number of legislation, including the Securities Act, were required to make consequential amendments that would speak to beneficial ownership information and the vetting of directors and shareholders of persons operating in the financial services sector. However, the Commission took this opportunity for law review to include other pressing amendments including the inclusion of a general penalty provision as well as another clarifying staff immunity for actions taken in the performance of the Commission’s functions. These proposed amendments were submitted to the Ministry of Finance and National Planning for onward submission to the Ministry of Justice for its further action. However, the draft law had not been passed by the end of the reporting period. Review of subsidiary legislation The Securities Act, No. 41 of 2016 repealed and replaced the 1993 Securities Act. However, the subsidiary legislation passed under the repealed Act has not been updated and in some cases does not address the provisions that have been introduced in the new Act. In other cases, there are provisions, in the subsidiary legislation, that are inconsistent with the requirements of the new Securities Act whilst some of the new provisions in the new Act do not have subsidiary legislation to give effect to those provisions. This has created disparities in the law and lacunae which need to be resolved. The Commission has been undertaking the review of the laws with the assistance of the World Bank. The Commission has resolved to undertake the legislative review in a phased approach with the following first set of ten (10) Rules and Regulations having been drafted: a) The Securities (Capital Market Operators) (Complaint Handling Requirements) Rules;

73 b) The Securities (Capital Market Operators) (General Licensing Procedures and Requirements) Regulations; c) The Securities (Capital Market Operators) (Licensing and Operational Requirements) Rules; d) The Securities (Collective Investment Scheme) Rules; e) The Securities (Collective Investment Scheme Authorisation) Regulations; f) The Securities (Compensation Fund) (Amendment) Regulations; g) The Securities (Fees and Levies) Rules; h) The Securities (Registration of Securities) Regulations; i) The Securities (Recognition of Self-Regulatory Organisations) Regulations; and j) The Securities (Self-Regulatory Organisations) (General Requirements) Rules. These subsidiary legislation deal with a diverse range of matters that are required to operationalize the Act from licensing of capital market intermediaries, registration of securities, authorization of collective investment schemes and the management of the same as well as the recognition of self-regulatory organisations. Some of these approval processes, such as the licensing of a credit rating agency, do not currently have enabling Rules or Regulations that an applicant may use to access a service provided by the Commission. One of the revisions to the Rules will result in changes to the current fee structure for the registration of securities through the introduction of a cap or limit on the fees payable by entities wishing to register securities in the market. In addition, the amount of fees for the registration of debt securities is proposed to be reduced from 0.25% to 0.125% of the value of securities being registered with a limit of 6,666,666 fee units or ZMW2,000,000. The proposed revision to the Rules are also meant to streamline the fees and levies so that they are not combined with the licensing framework. The proposed revision also introduces the licensing framework for new license categories such as Clearing and Settlement Agencies, Credit Rating Agencies and Share Transfer Agents which are not provided for under the existing rules. Further, the proposed Regulations have prescribed a regulatory framework for organisations to be recognised as Self-Regulatory Organisations (SROs) and to perform delegated functions of the Commission. Yet another notable proposed revision to the Rules is the provision of clarity to the functions of Trustee and Custodian under the Collective Investment Scheme framework where currently one set of functions is ascribed to both parties and there may be confusion on which party is to perform which function. In addition, the proposed revision to the CIS Rules have introduced a key facts statement which highlights the product and its features for ease of understanding and ease of decision making by an investor. The winding up of CISs is another proposed revision to the existing Rules which have no mechanism for closure of the scheme. The proposed revision to the Registration of Securities Rules has introduced a limit of on the timeframe in which a registration is valid if the issuer does not proceed to list the securities on an exchange. In addition, it has provided a framework for deregistration of securities which currently does not exist.

74 The securities regulatory industry is governed by international standards that highlight how a capital markets industry is supposed to be regulated. IOSCO, as the international standard setting body, sets these international standards for securities regulation which the Commission, as a member, is required to comply with. The IOSCO principles of securities regulation have been incorporated in the principal Act but they require subsidiary legislation to operationalize the law. In addition, there is need to consider whether the Commission is well capacitated to effectively regulate the securities market and have adequate regulatory oversight. There is need to amend or introduce the subsidiary laws in order to achieve this goal of efficient regulatory oversight including delegation of some of the Commission’s functions to self-regulatory organisations (SROs) in line with the requirements of the Act. The following table gives a highlight on the proposed changes to be made to the Rules and Regulations as well as the new Rules and Regulations being introduced: Regulations/Rules Status Implication of rule/regulation the Securities (Capital Market Operators) (Licensing and Operations Requirements) Rules; Revision These Rules have been split from the Fees and Levies Rules to streamline the licensing process Also provide for new license categories such as Clearing and Settlement Agencies, Credit Rating Agencies and Share Transfer Agents that don’t exist in the current rules the Securities (Capital Markets Operators) (General Licensing Procedures and Requirements) Regulations New These Regulations have been split from the Fees and Levies Rules to streamline the licensing process. The Regulations provide for the forms and other procedures for licensing capital market participants the Securities (Registration of Securities) Regulations; New The Regulations are introducing a timeframe within which a registration of securities can be valid. In addition, it streamlines the continuing obligations that issuers of registered securities are meant to comply with. Further the Regulations has introduced the process for deregistration of securities for issuers that no longer wish to have their securities subject to regulation the Securities (Collective Investment Schemes) Rules; Revision/ new The CIS Rules are being revised to clarify the Rules especially regarding the functions of Trustee and Custodian; it introduces the key facts statement and the winding up of CISs the Securities (Collective Investment Schemes Authorisation) Regulations; New Provides the requirements for authorisation of CISs and also provides for suspension and revocation of authorisations the Securities (Self-Regulatory Organizations) (General Requirements) Rules, 2020 New The Rules provide for the guidelines under which SROs will operate once recognised by the Commission as an SRO

75 Regulations/Rules Status Implication of rule/regulation the Securities (Recognition of Self-Regulating Organisations) Regulations; New These Regulations provide for the procedure for recognition of an organisation as an SRO the Securities (Compensation Fund) (Amendment) Regulations; Revision The Regulations are revising the financial year end from March to December; increasing the compensation amount payable in an event of a claim from ZMW1,000 to ZMW100,000 as well as other housekeeping matters the Securities (Capital Market Operators) (Complaints Handling Requirements) Rules; New These Rules introduce procedures for market operators to deal with disputes or complaints from clients and how the dispute settlement can be escalated The Securities (Fees and Levies) Rules, 2020. Revision/ New The aspects relating to licensing have been removed from these Rules which solelt now deal with fees and fines appearing under all Rules and Regulations. All fees and levies will now sit in one set of Rules The stakeholder consultative process was finalized in the period under review following feedback obtained on the impacts of amending existing Rules as well as introducing new Rules and Regulations. Additionally, the Commission held validation meetings for the comments received between 26th and 29th October 2021 and incorporated these comments into the draft Rules and Regulations. At the close of the reporting period, the draft Rules and Regulations were being finalized for submission to BRRA together with the Regulatory Impact Assessment Report, after which they would be sent to the Ministry of Finance and National Planning for onward submission to the Ministry of Justice. Capacity building The Cambridge Capstone Project Three (03) members of DELS staff were part of the Commission staff that participated in the Cambridge Fintech and Regulatory Innovation Executive Online Programme (CFTRI) that ran from 30th September 2021 to 10th December 2021. CFTRI is a programme run by the Cambridge Centre for Alternative Finance that enables global executives, financial regulators, supervisors, and policymakers to understand the mechanics and applications of key innovative technologies employed in FinTech firms; evaluate FinTech business models and respective regulatory and policy implications and responses; utilise analytical tools to assess FinTech business models according to national objectives and capabilities; and assess the viability and suitability of an array of regulatory innovation initiatives and responses. The programme covered modules relating to FinTech Innovation and Regulation; Deconstructing Banking; Digitising Payments; Digital Assets, Digital Lending and Capital Raising; Innovation Office and Regulatory Sandbox; and Regulatory Technologies (RegTech). The programme participants are now equipped with skills and analytical tools to assess FinTech business models according to national objectives and capabilities and also to assess the viability and suitability of an array of regulatory innovation initiatives. The participants also noted that

76 the current legal and regulatory securities framework is technologically neutral. However, through regulatory sandboxes, regulations, and guidelines the Commission can broaden its regulatory and supervisory mandate to accommodate new services, products and platforms that might leverage Information and Communications Technology (ICT) in order to gain access to the Zambian financial sector in general and the Zambian capital markets in particular. The programme ended on Friday 10th December 2021. As part of the programme all the participants were required to come up with project proposals identifying some regulatory and/or supervisory gaps in their legal and regulatory frameworks and propose solutions such as guidelines, regulations and sandboxes. Members of Staff from the Directorate actively participated in the formulation of project proposals that they intend to implement over the course of 2022. IOSCO Technical Assistance Workshop on developing Enforcement Manuals for the Africa/Middle￾East Region The Commission has participated in the Technical Assistance Programme organised by the International Organisation of Securities Commissions (IOSCO) on the development of Enforcement Manuals from its inception in 2017 as part of the first cohort of countries (together with Ghana, Mauritius, Eswatini, Kenya, Uganda and Rwanda) being assisted to develop enforcement manuals. The purpose of the Technical Assistance has been to develop Enforcement Manuals for the selected jurisdictions, including detailed information about the approach to enforcement; conduct of investigations; investigative practices; cooperation; privileges and protection; and settlement. On 28th and 29th September 2021, the Commission, represented by Mrs. Diana Sichone as one of the workshop facilitators, attended a Technical Assistance Workshop at which the Commission highlighted its manual development process. The workshop participants were able to share experiences and learn best practices which the Commission was able to incorporate into the draft Enforcement Manual. Scholarship Agreement with Chartered Financial Analyst Institute (CFA Institute) The CFA Institute is a global association of industry professionals and has provided financial education to investment practitioners or professionals for over 70 years. The Institute offers the Chartered Financial Analyst designation which is a globally recognised qualification that more than 178,000 active charter holders in 162 markets possess. During the period under review, the Commission took the initiative to enter into a scholarship agreement with CFA Institute that allowed SEC staff to obtain professional training and the CFA designation at subsidised rates. The Agreement will assist the Commission not only to build capacity in financial analysis for its staff but will also ultimately lead to a better supervised and protected securities market.

77 MARKET TRANSACTIONS The Securities Act requires securities including collective investments schemes to be offered to the public to be registered with the Commission. The Commission also approves mergers or acquisitions involving entities whose securities are registered with the Commission. The registration of securities and authorization of CIS is among one of the ways the Commission protects investors in the capital markets, while the rules on takeovers and mergers also ensure that takeovers and mergers are conducted in an orderly manner that protects minority shareholders. The Market Transactions section within the Directorate Finance and Administration during the year ending December 2021 received and processed several 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. 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 TRANSACTIONS DATE APPROVED/ DEFERRED PURPOSE OF MEETING 24.02.2021 Cavmont Capital Holdings Zambia Plc De-registration of shares 24.02.2021 To consider the application for the de￾registration of Cavmont Capital Holdings Plc ordinary shares 24.02.2021 BP Investment Limited waiver 24.02.2021 To consider application for exemption from compliance with Rule 65(i) of the Securities (Takeover Mergers) Rules 23.03.2021 Zambia Consolidated Coppermine Investment Holdings Authorization 23.03.2021 To consider the application for authorization of takeover of 90% equity stake in Mopani Copper Mines Plc 25.08.2021 Huaxin (Hainan) Investment Co., Ltd Authorization 25.08.2021 To consider the application for authorization of takeover of 75% equity stake in Lafarge Zambia Plc 25.08.2021 Huaxin (Hainan) Investment Co., Ltd Waiver 25.08.2021 To consider application for a waiver from making a mandatory offer under Rule 56 of the Securities (Takeover & Mergers) Rules 25.08.2021 Deutsche Post DHL Authorization 25.08.2021 To consider the application for authorization of Employee Share Ownership Plan PHILLIP K. CHITALU CHIEF EXECUTIVE OFFICER

78 2021 Financial Statements

79 SECURITIES AND EXCHANGE COMMISSION

FINANCIAL STATEMENTS 31ST DECEMBER 2021 (UNAUDITED)

80 SECURITIES AND EXCHANGE COMMISSION FINANCIAL STATEMENTS – 31 DECEMBER 2021 Contents Page Statement of Commissioners’ responsibilities 1 Statement of comprehensive income 2 Statement of changes in equity 3 Statement of financial position 4 Statement of cash flows 5 Notes to the financial statements 6 - 22 Detailed statement of comprehensive income Schedule

81 1. SECURITIES AND EXCHANGE COMMISSION STATEMENT OF COMMISSIONERS’ RESPONSIBILITIES The Securities Act, No. 41 of 2016 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, No 41 of 2016. 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 2021, 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. Chairman Commissioner

82 2. SECURITIES AND EXCHANGE COMMISSION STATEMENT OF COMPREHENSIVE INCOME FOR THE TWELVE-MONTH PERIOD ENDED 31 DECEMBER 2021 31 December 31 December Note 2021 2020 ZMW ZMW Income Grants and other income 6 118,130,378 28,784,660 Expenditure Employee benefits costs (17,452,372) (17,757,233) Depreciation (350,212) (528,826) Other operating expenses (8,562,231) (5,516,627) (26,364,815) (25,306,552) (Deficit)/surplus for the period 7 91,765,563 3,478,108 Total comprehensive (loss)/income 91,765,563 3,478,108

83 3. SECURITIES AND EXCHANGE COMMISSION STATEMENT OF CHANGES IN EQUITY FOR THE TWELVE MONTHS PERIOD ENDED 31 DECEMBER 2021 Accumulated reserves Total ZMW ZMW At 1 January 2020 (1,388,909) (1,388,909) Total comprehensive loss for the period 3,478,108 3,478,108) At 31 December 2020 2,089,199 2,089,199 Total comprehensive surplus for the year 91,765,563 91,765,563 At 31 December 2021 93,854,762 93,854,762

84 4. SECURITIES AND EXCHANGE COMMISSION STATEMENT OF FINANCIAL POSITION - 31 DECEMBER 2021 Note 2021 2020 ZMW ZMW ASSETS Non-current assets Motor vehicles, furniture, and equipment 9 1,434,896 1,520,219 1,434,896 1,520,219 Current assets Short term deposit 10 85,965,589 3,690,967 Trade and other receivables 11 5,899,928 410,698 Cash and cash equivalents 12 9,137,224 4,641,370 101,002,742 8,743,034 Total assets 102,437,638 10,263,253 EQUITY AND LIABILITIES Funds and reserves Accumulated reserves 93,854,762 2,089,199 93,854,762 2,089,199 Current liabilities Trade and other payables 13 8,582,876 8,174,054 8,582,876 8,174,054 Total equity and liabilities 102,437,638 10,263,253 The financial statements on pages 6 to 22 were approved by the Board of Commissioners. on and were signed on its behalf by: ) CHAIRMAN ) ) ) COMMISSIONER ) )

85 5. SECURITIES AND EXCHANGE COMMISSION STATEMENT OF CASH FLOWS FOR THE TWELVE MONTHS PERIOD ENDED 31 DECEMBER 2021 31 December 31 December 2021 2020 ZMW ZMW Cash flows from operating activities (Deficit)/surplus for the period 91,765,563 3,478,108 Depreciation 350,212 528,826 (Profit)/Loss on sale of assets (49,746) Interest received - (84,922) Decrease in trade and other receivables (5,489,230) (19,962) (Decrease)/increase in trade and other payables 408,822 1,734,857 Net cash (outflow)/inflow (on)/from operating activities 87,035,367 5,587.160 Investing activities Purchase of property, plant, and equipment (264,890) (118,023) Investments purchased - Interest received - 84,922 Investments redeemed Proceeds from disposal of assets - 100,424 Net cash inflow/(outflow) from/(on) investing activities 86,770,477 5,654,483 Increase/(decrease) in cash and cash equivalents 86,770,477 5,654,,483 Cash and cash equivalents at beginning of the period 8,332,336 2,677,853 Cash and cash equivalents at end of the period 95,102,813 8,332,336 Represented by: Cash in hand and at bank 95,102,813 8,332,336

86 6. SECURITIES AND EXCHANGE COMMISSION NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2021

1. The Commission The Commission is a body corporate that came into existence by an Act of Parliament, the Securities Act No. 41 of 2016, with the objective of inter-alia regulating and developing the securities market in Zambia.
2. 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.
3. 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 presentation 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. (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 sub-categories as required by IAS 7. These amendments do not have a significant impact on these financial statements and therefore the disclosures have not been made.

87 7. SECURITIES AND EXCHANGE COMMISSION NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2021 (CONTINUED) 3. Principal accounting policies (continued) (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) replaces IAS 39 ‘Financial Instruments: Recognition and Measurement’. It makes major changes to the previous guidance on the classification and measurement of financial assets and introduces an ‘expected credit loss’ model for the impairment of financial assets. IFRS 9 also contains new requirements on the application of hedge accounting. The new requirements look to align hedge accounting more closely with entities’ risk management activities by increasing the eligibility of both hedged items and hedging instruments and introducing a more principles-based approach to assessing 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.

88 8. SECURITIES AND EXCHANGE COMMISSION NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2021 3. Principal accounting policies (continued) (c) Standards, amendments, and interpretations to existing standards that are not yet effective and have not been adopted early by the Commission (continued) IFRS 9 ‘Financial Instruments’ (continued) • 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 ‘Leases’ and three related Interpretations. It completes the IASB’s long running project to overhaul lease accounting. Leases will be recorded in the statement of financial position in the form of a right-of-use asset and a lease liability. IFRS 16 is effective for annual reporting 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 is in the process of: • performing a full review of all agreements to assess whether any additional contracts will become lease contracts under IFRS 16’s new definition of a lease • 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 current disclosures for finance leases and operating leases as these are likely to form basis of the amounts to be capitalized as right-of-use assets • determining which optional accounting simplifications are available and whether to apply them • considering the IT system requirements and whether a new leasing system is needed. This is being considered in line with implementing IFRS 9 so the Commission only has to undergo one set of system changes • assessing the additional disclosures that will be required

89 9. SECURITIES AND EXCHANGE COMMISSION NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2021 (CONTINUED) 3. Principal accounting policies (continued) (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. 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.

90 10. SECURITIES AND EXCHANGE COMMISSION NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2021 (CONTINUED) 3. Principal accounting policies (continued) (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￾for-sale 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. 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.

91 11. SECURITIES AND EXCHANGE COMMISSION NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2021 (CONTINUED) 3. Principal accounting policies (continued) (i) Financial assets (continued) (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.

92 12. SECURITIES AND EXCHANGE COMMISSION NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2021 (CONTINUED) 3. Principal accounting policies (continued) (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: • significant financial difficulty of the issuer or debtor. • a breach of contract, such as a default or delinquency in payments; • it is 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.

93 13. SECURITIES AND EXCHANGE COMMISSION NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2021 (CONTINUED) 3. Principal accounting policies (continued) (j) Impairment of assets (continued) (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 available-for-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). (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.

94 14. SECURITIES AND EXCHANGE COMMISSION NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2021 (CONTINUED) 3. Principal accounting policies (continued) (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.

95 15. SECURITIES AND EXCHANGE COMMISSION NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2021 (CONTINUED) 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. 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: 2021 2020 ZMW (%) ZMW (%) Grants from GRZ 8,868,595 8 11,058,490 38 Registration of securities 286,195 0 101,250 0 LuSE trade commissions 96,659,386 82 13,306,352 46 Other fees and revenues 12,316,202 10 4,318,568 16 ,118,130,378 28,784,660 7. (Deficit)/surplus for the period Surplus for the year is stated after charging: - Depreciation 350,212 528,826 Auditors' remuneration: Internal audit - - External audit 186,997 400,733 186,997 400,733 Commissioners’ and committee expenses 1,099,768 944,568

96 16. SECURITIES AND EXCHANGE COMMISSION NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2021 (CONTINUED) 8. Income tax expense The Commission is exempt from income tax. 9. Motor vehicles, furniture, and equipment Depreciation Motor Vehicles Office equipment Office Furniture Computer equipment CWIP Total ZMW Cost At 30 June 2021 974,098 340,076 525,380 985,927 1,069,459 3,894,940 Additions 1,350 - 85,676 - 87,026 Disposals - - - - - - At 30 Sept 2021 974,098 341,426 525,380 1,071,603 1,069,459 3,981,966 Additions - 65,218 - 32,707 - 97,925 Disposals/Adjustment - - - - (3,795) (3,795) At 31 Dec 2021 974,098 406,644 525,380 1,104,310 1,065,664 4,076,096 Depreciation At 30 June 2021 936,050 274,359 521,557 761,549 - 2,493,517 Charge for the period 26,530 16,616 3,823 66,664 113,635 Disposals - - At 30 Sept 2021 962,580 290,975 525,380 828,213 - 2,607,150 Charge for the period 11,518 14,017 - 15,696 41,230 Disposals/(Adjustment) (7,179) (7,179) At 31 Dec 2021 974,098 304,992 518,201 843,909 - 2,641,201 Net Book Value At 31 Dec 2021 - 101,652 7,179 260,401 1,065,664 1,434,896 At 30 Sept 2021 11,518 50,451 - 243,390 1,069,459 1,374,816

97 17. SECURITIES AND EXCHANGE COMMISSION NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2021 (CONTINUED) 2021 2020 ZMW ZMW 10. Short term deposit Standard Chartered Bank PLC 43,965,589 635,589 Barclays Bank PLC 42,000,000 3,055,378 3,570,000 -

11. Trade and other receivables GRZ Grant - 1,478,115 Investment income 4,583,743 Staff debtors 931,915 Issuer’s fee 140,000 20,000 Inspection fees 56,700 Trade Commissions 65,948 109,088 Accrued income – interest 62,451 105,840 Prepayments and deposits 49,661 26,211 1,943,089 221,153 Staff debtors 219,170 351,992 Provisions for doubtful debts (20,000) (1,503,866) 2,162,261 453,146
12. Cash and cash equivalents Cash in hand and at bank 95,102,813 8,332,336
13. Trade and other payables Provisions and accruals 5,776,094 5,340,204 Deferred Income 480,000 480,000 Market Development Fund 364,102 364,102 NHIMA - 17,076 Sundry creditors 58,001 - SAYE 500 - Amount due to Compensation Fund 58,250 98,276 Napsa 56,905 54,941 Due to Zambia Revenue Authority 773,340 843,184 7,567,193 7,197,783

98 18. SECURITIES AND EXCHANGE COMMISSION NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2021 (CONTINUED) 14. 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 non-performing 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 31 December 2021 2020 ZMW ZMW Short term deposits 85,965,589 3,690,967 Trade and other receivables 5,899,928 410,698 Cash and cash equivalents 9,137,224 4,641,370 101,002,742 8,743,034

99 19. SECURITIES AND EXCHANGE COMMISSION NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2021 (CONTINUED) 14. Financial assets and liabilities (continued) (a) Credit risk (continued) 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. The aged analysis of trade receivables which were not impaired at the reporting date are as follows:

2020 2019 ZMW ZMW Days 0 – 30 296,083 29,102

• 48,106 61 – 90 79 - Over 90 - - 352,862 29,102 (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 loans, and other borrowings taken and outstanding (2020: +/- 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. Surplus for the year Equity +1% -1% +1% -1% ZMW 31 December 2021 - - - - 31 December 2020 - - - -

SECURITIES AND EXCHANGE COMMISSION NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2021 (CONTINUED) 14. Financial assets and liabilities (continued) (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 2021 is summarised below: At 31 December 2021: Within Within 6 to 12 1 to 5 6 months months years ZMW Non-derivative Financial liabilities Trade and other payables 2,085,374 2,057,249 1,300,000 Total 2,085,374 2,057,249 1,300,000 At 31 December 2019: Within Within 6 to 12 1 to 5 6 months months years ZMW Non-derivative Financial liabilities Trade and other payables 2,020,156 3,296,987 3,,548,521 Total 2,020,156 3,296,987 3,548,521 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 2020 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.

101 21. SECURITIES AND EXCHANGE COMMISSION NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2021 (CONTINUED) 14. Financial assets and liabilities (continued) (f) Categories of financial instruments At 31 December 2021 Fair Receivables value ZMW ZMW Financial assets Receivables 5,899,928 5,899,928 Short term deposit 85,965,589 3,570,000 Cash and cash equivalents 9,137,224 9,137,224 Total financial assets 101,002,742 101,002,742 Financial liabilities at amortised Fair Cost value ZMW ZMW Financial liabilities Trade payables 8,582,876 8,582,876 Total financial liabilities 8,582,876 8,582,876 Net position 93,419,866 93,419,866 At 31 December 2020 Fair Receivables value ZMW ZMW Financial assets Receivables 410,698 410,698 Short term deposit 3,690,967 3,690,967 Cash and cash equivalents 4,641,370 4,641,370 Total financial assets 8,743,034 8,743,034 Financial liabilities at amortised Fair Cost value ZMW ZMW Financial liabilities Trade payables 8,174,054 8,174,054 Total financial liabilities 8,174,054 8,174,054 Net position 568,980 568,980

102 22. SECURITIES AND EXCHANGE COMMISSION NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2021 (CONTINUED) 15. Related party transactions The following transactions were carried out with related parties: 2021 2020 ZMW ZMW (i) Key management compensation Salaries and other short-term benefits 3,959,244 3,521,169 Defined contribution pension Commissions 41,724 41,386 4,000,968 3,493,126 (ii) Commissioners’ remuneration Fees for service as Commissioners 601,321 540,775 (iii) Loans to key management - 16. Capital commitments There were no capital commitments either contracted or authorised at 31 December 2021 (2020 – ZMW nil). 17. Contingent liabilities The Commission has engaged a legal Counsel to represent it in litigation against the Commission. The Counsel estimate legal fees of ZMW 300,000 which are yet to be agreed with the Commission - (2020: ZMW182,400). This amount has not been provided for in these financial statements. 18. 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.

103 SCHEDULE SECURITIES AND EXCHANGE COMMISSION DETAILED STATEMENT OF COMPREHENSIVE INCOME FOR THE TWELVE MONTHS PERIOD ENDED 31 DECEMBER 2021 2021 2020 ZMW ZMW INCOME Grants Revenue grants 8,868,595 11,058,490 Fees and other income Authorisation fees 2,900,629 618,031 Commission – LuSE trades 96,659,386 13,306,079 Licensing fees 1,256,556 874,707 Registration fees 286,195 101250 Scrutiny fees 100,001 233,335 Sundry income 92,146 81,696 Interest received - 84,922 Issuers fee 1,240,000 1,100,000 Investment income 5,034,364 309,525 Inspection fees 54,180 132,615 Annual fees 73,322 75,363 Levy on Collective Investment Commissions (CIS) 1,268,367 802,627 Exchange gain 189,637 - Administrative Fines 107,000 194,100 109,261,783 17,726,170 Total income 118,130,378 28,784,660 EXPENDITURE Advertising expenses 160,686 160,531 Audit fees 186,997 186,996 Bank charges 69,418 51,035 Bad debts provision 20,000 1,503,866 Board and committee expenses 1,099,768 944568 Consultancy fees 231,228 41,000 Depreciation 350,212 238,384 Employee benefits costs 17,452,372 17,762,695 Education &Awareness 239,429 - Medical 1,400,812 - Insurance 309,795 271,368 Motor vehicle expenses 330,114 349460 Office operational costs 269,707 179526 Postage and telephones 444,478 452,032 Electricity and water 44,041 125,782 Printing and stationary 87,926 98,749 Publicity and Education 160,686 - Rent 1,948,567 1,742,250 CISNA 86,709 Repairs and maintenance 292,633 109435 Security 269,327 232,380 Subscriptions and publications 596,993 - Workshops and seminars 473,607 508,268 26,364,815 23,273,860 (Deficit)/surplus for the year 91,765,563 3,478,108)

104 APPENDICES Appendix I The SEC Staff in 2021 Name Position Date Left 1 Mr. Phillip K. Chitalu Chief Executive Officer - 2 Mrs. Diana Sichone Commission Secretary and Director – Enforcement and Legal Services

3 Ms. Mutumboi Mundia Director - Market Supervision and Development - 4 Mr. Bruce Mulenga Manager - Market Transactions and Investments - 5 Mr. Mateyo Lungu Manager – Finance - 6 Mr. Saul Nyalugwe Manager – Procurement and Administration - 7 Mr. Abraham Alutuli Manager – Market Supervision - 8 Mr. Nonde Sichilima Manager – Market Supervision - 9 Mrs. Dingase Makumba Manager – Market Development - 10 Ms. Dubholukulu Mulondiwa Manager – Law Reform and Enforcement 11 Mr. Mubanga Kondolo Manager – Financial Inclusion - 12 Mrs. Sitali Mugala Product Development and Market Research Officer - 13 Ms. Racheal M. Banda Human Resource Officer - 14 Mrs. Leah Simasiku Surveillance Officer - 15 Ms. Tisangechi Sakala Legal Officer – Law Reform and Enforcement 20.08.2021 16 Mr. Thomas Thole Investigations Officer - 17 Ms. Gertrude Buyungwe Analyst/Inspection Officer - 18 Mr. Benson Mwileli Analyst/Inspection Officer - 19 Mr. Sydney Katumba Information Technology Officer - 20 Mrs. Theresa Chimbila Accounts Assistant - 21 Ms. Priscilla Mwale Personal Assistant to the CEO - 22 Ms. Siberia T. Siamayuwa Pool Secretary - 23 Mr. Saviour Mooya Driver - 24 Mr. Alexander Tondo Office Assistant -

105 Appendix II List of Authorised Capital Market Players as at 31st December, 2021 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 as at 31st December, 2021: Dealer’s Representative Licenses The following persons held a Dealer’s representative’s license as at 31st December, 2021: Item Company Name 2022 2021 Yes No Yes No

1. Aflife Capital Zambia Limited √ √
2. Aflife Holdings Zambia Limited √ √
3. Aflife Private Wealth Limited √ √
4. African Banking Corporation Investment Services Limited √ √
5. African Banking Corporation Zambia Limited T/a Atlas Mara Bank Zambia Limited √ √
6. African Life Financial Services Limited √ √
7. Altus Capital Limited √ √
8. Autus Securities Zambia Limited √ √
9. Absa Bank Zambia Plc √ √
10. Citibank Zambia Limited √ √
11. Equity Capital Resources Plc. √ √
12. Finance Securities Limited √ √
13. First National Bank Zambia Limited √ √
14. Hobbiton Investments Services Limited √ √
15. Investrust Bank Plc √ √
16. Kukula Capital Limited √ √
17. Longhorn Associates Limited √ √
18. Pangaea Securities Limited √ √
19. Prudential Pension Management Zambia Limited √ √
20. Stanbic Bank (Z) Limited √ √
21. Standard Chartered Bank (Z) Limited √ √
22. Stockbrokers Zambia Limited √ √
23. Monter Capital Partnership Limited √ √
24. Zambia National Commercial Bank Plc √ √
25. Zambia Industrial Commercial Bank Limited √ √
26. Access Bank Zambia Limited √ √
27. Indo Zambia Bank Limited √ √
28. United Bank for Aftrica √ √

106 Item Name of Representative Dealer 2022 2021 Yes No Yes No

1. Mukudzei-Ishe Zhou Aflife Capital Limited √ √
2. Fortunate Ngatsha Aflife Holdings Zambia Limited √ √
3. Munakupya Hantuba Aflife Private Wealth Limited √ √
4. Nicholas Kabaso African Banking Corporation Investment Services Limited √ √
5. Michelle M. Musonda African Banking Corporation Investment Services Limited √ √
6. Clifford Muzoka African Banking Corporation Investment Services Limited √ √
7. Richard Ndhlovu African Banking Corporation Zambia Limited √ √
8. Christopher K Mwelo African Banking Corporation Zambia Limited √ √
9. Theresa Chiluba African Banking Corporation Zambia Limited √ √
10. Mubanga Bwalya African Banking Corporation Zambia Limited √ √
11. Nancy Lwisa Nambela African Banking Corporation Investment Services Ltd √ √
12. Mwaba Ethel Mupinde African Banking Corporation Investment Services Ltd √ √
13. Geoffrey Musekiwa African Life Financial Services Limited √ √
14. Vannessa K. Wright African Life Financial Services Limited √ √
15. Jones Phiri African Life Financial Services Limited √ √
16. Mumba Musunga African Life Financial Services Limited √ √
17. Valerie M. Mwiinga African Life Financial Services Limited √ √
18. Joseph Mazila African Life Financial Services Limited √ √
19. Nasilele Ngumbi African Life Financial Services Limited √ √
20. Jonathan Bupe Imakando African Life Financial Services Limited √ √
21. Elijah Chanda Kabaso African Life Financial Services Limited √ √
22. Eleutherius Chimansa Nyanga African Life Financial Services Limited √ √
23. Cecilia Kamba Siabusu Altus Capital Limited √ √
24. Mataka Nkhoma Autus Securities Zambia Limited √ √
25. Aaron Phiri ABSA Bank Zambia Plc √ √
26. Boston Nkuname ABSA Bank Zambia Plc √ √
27. Lesa Mulenga ABSA Bank Zambia Plc √ √
28. Stanley Kaweme Tamele ABSA Bank Zambia Plc √ √
29. Mukelebai Wambulawae ABSA Bank Zambia Plc √ √
30. Blessings S. Banda ABSA Bank Zambia Plc √ √
31. Mwela Sunkuntu ABSA Bank Zambia Plc √ √
32. Kamwaya Hamoonga ABSA Bank Zambia Plc √ √
33. Wiza Chinula Access Bank Zambia Limited √ √
34. Calvin Sichilomba Access Bank Zambia Limited √ √
35. John Keyala Access Bank Zambia Limited √ √
36. Ngosa Mary Kafwembe Citibank Zambia Limited √ √
37. Steven Chitete Citibank Zambia Limited √ √

107 Item Name of Representative Dealer 2022 2021 Yes No Yes No 38. Victor Zimba Citibank Zambia Limited √ √ 39. Choongo Chibawe Equity Capital Resource Plc √ √ 40. Barkat Ali Finance Securities Limited √ √ 41. Gerald Ndhlovu First National Bank Zambia Limited √ √ 42. Kapumpe Chola Kaunda First National Bank Zambia Limited √ √ 43. Ignatius Innocent Kashoka First National Bank Zambia Limited √ √ 44. Naomi Hara Palale First National Bank Zambia Limited √ √ 45. Chali Maria Mulenga First National Bank Zambia Limited √ √ 46. Nonde Nsomi First National Bank Zambia Limited √ √ 47. Celine P. Chauwa Hobbiton Investment Management Services Limited √ √ 48. Moses Mvula Hobbiton Investment Management Limited √ √ 49. Yotamu Mwale Indo-Zambia Bank Limited √ √ 50. Richard Mutukwa Investrust Bank Plc Limited √ √ 51. Tue Andersen Kukula Capital Limited √ √ 52. Joy Nanyiza Longhorn Associates Limited √ √ 53. Sindisiwe Malambo Monter Capital Partners Limited √ √ 54. Ceaser Siwale Pangaea Securities Limited √ √ 55. Tidale Mwale-Chisunka Pangaea Securities Limited √ √ 56. Wendy Nsamwa Nglazi￾Tembo Pangaea Securities Limited √ √ 57. Ernest Kando Prudential Pension Management Zambia Limited √ √ 58. Matepa Chingambu Prudential Pension Management Zambia Limited √ √ 59. Alinani Simbule Stanbic Bank Zambia Limited √ √ 60. Chenge Besa Mwenechanya Stanbic Bank Zambia Limited √ √ 61. Chitemwe Ng'ambi Kapaya Stanbic Bank Zambia Limited √ √ 62. Dean Nathaniel Onyambu Stanbic Bank Zambia Limited √ √ 63. Mwila Pascal Mwenya Stanbic Bank Zambia Limited √ √ 64. Musenge Komeki Stanbic Bank Zambia Limited √ √ 65. Prudence Khumbo Mhango Stanbic Bank Zambia Limited √ √ 66. Veronica Sinkala Stanbic Bank Zambia Limited √ √ 67. Victor Chileshe Stanbic Bank Zambia Limited √ √ 68. Mintu Chitebe Stanbic Bank Zambia Limited √ √ 69. Luke Siame Stanbic Bank Zambia Limited √ √ 70. Benjamine N. Mulenga Standard Chartered Bank (Z) Plc √ √ 71. Chimuka Muyovwe Standard Chartered Bank (Z) Plc √ √ 72. Davy Nanduba Standard Chartered Bank (Z) Plc √ √ 73. Derek Bobo Standard Chartered Bank (Z) Plc √ √ 74. Dorothy N. K Moono Standard Chartered Bank (Z) Plc √ √ 75. Edna Towela Lungu Standard Chartered Bank (Z) Plc √ √

108 Item Name of Representative Dealer 2022 2021 Yes No Yes No 76. Joseph Chibwe Ngesa Standard Chartered Bank (Z) Plc √ √ 77. Kabwe Mwaba Standard Chartered Bank (Z) Plc √ √ 78. Kayeba Mwenechanya Standard Chartered Bank (Z) Plc √ √ 79. Mubanga Yvonne Mukuka Standard Chartered Bank (Z) Plc √ √ 80. Muchindu Lombe Standard Chartered Bank (Z) Plc √ √ 81. Mulolwa Nkata Kamana Standard Chartered Bank (Z) Plc √ √ 82. Mwaka Kalenga Mfula Standard Chartered Bank (Z) Plc √ √ 83. Mwali Chisala Standard Chartered Bank (Z) Plc √ √ 84. Oluseggun M. Omoniwas Standard Chartered Bank (Z) Plc √ √ 85. Sampa David Shiyunga Standard Chartered Bank (Z) Plc √ √ 86. Ravi Kapadia Standard Chartered Bank (Z) Plc √ √ 87. Tamara M. Bbuku Standard Chartered Bank (Z) Plc √ √ 88. Wiggins Mupango Standard Chartered Bank (Z) Plc √ √ 89. Valarie M. Chulu Standard Chartered Bank (Z) Plc √ √ 90. Fred C. Kabombo Standard Chartered Bank (Z) Plc √ √ 91. Bwalya Kasito Standard Chartered Bank (Z) Plc √ √ 92. Kangwa Chola Chengo Standard Chartered Bank (Z) Plc √ √ 93. Mulenga Kawimbe Standard Chartered Bank (Z) Plc √ √ 94. Sarudzai Muchechemera Standard Chartered Bank Zambia Plc √ √ 95. Kamungoma Mate Stockbrokers Zambia Limited √ √ 96. Maxime Chiluba Harlaar Stockbrokers Zambia Limited √ √ 97. Charles Mate Stockbrokers Zambia Limited √ √ 98. Jack Kanyanga Stockbrokers Zambia Limited √ √ 99. Boniface Mwamba Stockbrokers Zambia Limited √ √ 100. Bwalya Mwape Stockbrokers Zambia Limited √ √ 101. Mwaka Kopakopa United Bank for Africa Zambia Limited √ √ 102. Austin Hamukonka Chijikwa Zambia National Commercial Bank Plc √ √ 103. Charles Kamungu Zambia National Commercial Bank Plc √ √ 104. Cliff George Sakala Zambia National Commercial Bank Plc √ √ 105. Fredrick Mulenga Kaputo Zambia National Commercial Bank Plc √ √ 106. Kaluba Gloria Kaulugombe Zambia National Commercial Bank Plc √ √ 107. Kunda Catherine Chikumbi Zambia National Commercial Bank Plc √ √ 108. Virginia L. Mwalilino Zambia National Commercial Bank Plc √ √ 109. Lishala Clarence Situmbeko Zambia National Commercial Bank Plc √ √ 110. Tiyeze Chilembo Zambia National Commercial Bank Plc √ √ 111. Nana Mukwiza Zambia National Commercial Bank Plc √ √ 112. Mudenda Sikapoto Zambia National Commercial Bank Plc √ √

109 Item Name of Representative Dealer 2022 2021 Yes No Yes No 113. Ivor Chambwe Zambia National Commercial Bank Plc √ √ 114. Nyangu Florence Mkalipi Zambia National Commercial Bank Plc √ √ 115. Roy Mwambai Zambia National Commercial Bank Plc √ √ 116. Jibinga Kelly Jibinga Zambia National Commercial Bank Plc √ √ 117. Karen Kabage Kapika Zambia Industrial Commercial Bank Limited √ √ 118. Rudolph Ngulube Zambia Industrial Commercial Bank Limited √ √ 119. Lukwesa Munyinda Zambia Industrial Commercial Bank Limited √ √ Investment Adviser’s License The following corporate entities held an Investment Advisors license as at 31st December, 2021: Item Company 2022 2021 Yes No Yes No

1. Amano Capital Limited √ √
2. Charles Sichangwa 1 √ √
3. deVere and Partners Investment Services (Zambia) Ltd 3 √ √
4. DM Investment Advisers and General Business Consultants Limited 6 √ √
5. Enock Bwalya 2 √ √
6. Inside Capital Partners Zambia 7 Limited √ √
7. Riscura Zambia Limited 4 √ √
8. Vunani Asset Management Limited 5 √ √ Investment Adviser’s Representative License The following persons held an Investment Advisors Representatives license as at 31st December, 2021: Item Company Name Investment Advisor 2022 2021 Yes No Yes No
9. Malcom Kasuba Shirley Amano Capital Limited √ √
10. Chibamba Nyangu deVere and Partners International Limited
11. Lynda Syamunyangwa deVere and Partners International Limited √ √
12. Maureen Nabulyato deVere and Partners International (Z) Limited
13. Gift Kapande deVere and Partners International (Z) Limited √ √
14. Julian Visser deVere and Partners International (Z) Limited √ √
15. Arthur Kalumba deVere and Partners International (Z) Limited √ √
16. Dennis Nyirongo deVere and Partners International Limited √ √
17. Wenu Mutiti deVere and Partners International Limited √ √
18. Lwiindi Muzongwe deVere and Partners International Limited √ √
19. Mosses M Sibongo deVere and Partners International (Z) Limited √ √
20. Zamiwe Ndhlovu deVere and Partners International (Z) Limited √ √
21. Theresa Gumbo deVere and Partners International (Z) Limited √ √
22. Mubanga Nundwe deVere and Partners International (Z) Limited √ √

110 Item Company Name Investment Advisor 2022 2021 Yes No Yes No 15. Darious Mumba DM Investment Advisers and General Business Consultants Limited √ √ 16. Rushil Patel Inside Capital Partners Zambia Limited √ √ 17. Charity Siwale Riscura Zambia Limited √ √ 18. Cindy Waheeb Taudrous Riscura Zambia Limited √ √ 19. Munyumba Mutwale Vunani Asset Management Limited √ √ Securities Exchange Licenses The following entities held a securities exchange license as at 31st December, 2021: Item Company Name 2022 2021 Yes No Yes No

1. Lusaka Securities Exchange Plc √ √
2. Bonds and Derivatives Exchange Plc √ √ Credit Rating Agency Licences The following entities held a Credit Rating Agency license as at 31st December, 2021: Item Company Name 2022 2021 Yes No Yes No
3. Premier Rating Agency √ √

111 Appendix III Contact Details of Capital Market Players Securities Exchanges contact details LuSE PLC BaDEx PLC Chief Executive Officer: Mrs. Priscilla Sampa Address (physical): Lusaka Securities Exchange 2 nd 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 Dealers’ Contact Details a) Members of the LuSE Autus Securities Limited 34 Khola Road Woodlands Lusaka P. O. Box 320308 Tel: +260 (211) 840513, +260 761 002002, +260 761 003003 Email: mataka@autussecurities.com www.autussecurities.com Equity Capital Resources Plc 4 th Floor Godfrey House, West Wing Kabelenga Road Lusaka Tel: +260 (211) 840313, 227518 Email: info@ecrinvestments.com Website: www.ecrzambia.com

112 Hobbiton Investment Management Zener Office Park Stand No. 2287/A Corner Lagos & Lubuto Rds Lusaka P.O Box 32350 Tel: +260 (211) 232877, +260 956 529 966, Email: mimi.lungu@hobbiton.co.zm Madison Asset Management Company Ltd Plot 316, Independence Avenue P.O. Box 37013 Lusaka Tel: +260 (211) 255121/257152 Fax: +260 (211) 253417 Email: mupanga@madisonassets.co.zm www.madisonassets.co.zm Pangaea Renaissance Securities Ltd Pangaea Securities Limited 2nd Floor, Pangaea Office Park Stand 2374 Great East Road Lusaka Tel: +260 (211) 220707 Fax: +260 (211) 220925 Email: mbuto@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: jkanyanga@sbz.com.zm Website: www.sbz.com Zambia National Commercial Bank Plc Head Office Building Cairo Road -South End P O Box 33611 Lusaka Tel: +260 211 425 650, Mobile: +260977 873262 Fax: + 260 (211) 223084 E-mail: Kaluba.kaulungombe@zanaco.co.zm Website: www.zanaco.co.zm

113 b) Other Dealers African Banking Corporation Investment Services Limited Atlas Mara Head Office Ground Floor, Pyramid Plaza Corner Church and Nasser Roads P.O. Box 39501 Lusaka Tel: +260 (211) 257970-6 E-mail: nkabaso@bancabc.com Website: www.atlasmarazambia.com Aflife Capital Zambia Limited Plot No. 74 Independence Avenue 4th Floor, Mpile House P.O. Box 37501 Tel: +260 (211) 253772 Fax: +260 (211 253112 E-mail: Faith@aflife.co.zm Aflife Holdings Zambia Limited Plot No. 74 Independence Avenue 4th Floor, Mpile House P.O. Box 37501 Tel: +260 (211) 253772 Fax: +260 (211 253112 E-mail: Faith@aflife.co.zm African Banking Corporation Zambia Limited (Trading as Atlas Mara Bank Zambia Limited) Atlas Mara House, Corner Church and Nasser Roads, P O Box 39501, Lusaka Ground Floor, Atlas Mara House LUSAKA Tel: +260 211 229733-40 E-mail: jkoni@bancabc.co.zm website: www.atlasmarazambia.com Aflife Private Wealth Limited Plot No. 74 Independence Avenue 4th Floor, Mpile House P.O. Box 37501 Lusaka Tel: +260 (211) 253772 Fax: +260 (211 253112 E-mail: fngatsha@aflife.co.zm
Altus Capital Limited Plot 74 Independence Avenue

114 Mpile House Lusaka P.O. Box 35352 Tel: +260 (211) 253566 Fax: +260 (211 253112 E-mail: capital@altus.co.zm African Life Financial Services Limited Independence Avenue 74 Independence Avenue, P. O. Box 51331, Lusaka Tel: +260) 211 254841 Fax: (+260) 211 253112 E-mail: geoff@aflife.co.zm ABSA 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: Thandiwe.BandaMbalashi@absa.africa Website: www.absa.co.zm Citibank Zambia Limited Citibank House Stand No. 4646 Addis Ababa Roundabout Lusaka P. O. Box 30037 Tel: +260 (211) 444400; 0971 025 133 Fax: +260 (211) 226064 Email: victor.zimba@citi.com Website: www.citigroup.com Finance Securities Limited Plot No. 2110/2111 Sepele Road Opp. Finance House Cairo Road Lusaka. Cell: +260 977 791124 E-mail: barkatali_rawjani@hotmail.com First National Bank Zambia Limited Plot No. 22768, Corner Great East and Thabo Mbeki road, P.O. BOX 36187, Lusaka

115 Tel (Gen): +260 211 366800 | Direct: +260 211 36 9639 | Cell: +260 966 116 273 and +260 978 017 761 E-mail: haggai.chipungu@fnb.co.za Web: www.fnb.co.za Investrust Bank Plc Ody’s Park, Great East Road P.O. Box 19028/29 Lusaka Tel: (0211) 238733-5 E-mail: brianm@investrustbank.co.zm Website: www.investrustbank.co.zm Kukula Capital Limited 32A Foxdale Forest Club House Off Zambezi Road, Roma, Lusaka Tel: +260 211 295792 Email: info@kukulacapital.com Laurence Paul Investment Services Limited 5 th 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 Longhorn Associates Limited Office Park |Plot 1146/1, Lagos Road Rhodes Park, P. O. Box 50655 Lusaka +260 211 252540 |+260 973 452635 Email: marlon@longhorn-associates.com LinkedIn & Facebook: Longhorn Associates Website: www.longhorn-associates.com Prudential Life Assurance Zambia Limited Prudential House Plot 32256 Thabo Mbeki Lusaka P.O Box 31357 Tel: +260 211 222233/4 E-mail: tamala@prudential.co.zm Website: www.prudential.co.zm

116 Prudential Pension Management Zambia Limited Prudential House Plot 32256 Thabo Mbeki Lusaka P.O Box 31357 Tel: +260 211 222233/4 Email: jimmy@prudential.co.zm Website: www.prudentialpensions.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 Email: luwabelwaw@stanbic.com Website: www.stanbicbank.co.zm Standard Chartered Bank Zambia Plc Head Office Stand No. 4642 Cnr of Mwaimwena Road and Addis Ababa Drive P O Box 31934 Lusaka Tel: (0211) 422198 -99 Fax: (0211) 222092/225337 Standard Chartered Bank Zambia Plc Phone: +260 211 422203 Mobile: + 260 977 767703 E-mail: KetaiBenjamin.Mvula@sc.com Stockbrokers Zambia Limited Mr. Jack Kanyanga Managing Director 32 Lubu Road LUSAKA Tel: (+260 211) 232456 +26 0977/ 966 853315 E-mail: : jkanyanga@sbz.com.zm Website: www.sbz.com.zm Zambia National Commercial Bank Plc ZANACO Head Office Plot 2118/2119 SapeleRoad/Cairo Road P.O. Box 33611 LUSAKA Email: kunda.chikumbi@zanaco.co.zm http://www.zanaco.co.zm/

117 Investment Advisors’ Contact Details Charles Sichangwa C/o Wits Limited 4 th 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 Enock Bwalya Plot 22956 PHI Chainama Lusaka Mobile +260977807793 | +27605455934|+260950952753 Email: enock.bwalya@africanheights.com|enock.bwalya@yahoo.com Skype:bwalya70 www.africanheights.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.riscura.com Vunani Asset Management Limited Plot 20 Mpulungu Road, Olympia, Lusaka Tel: +260 977790575 Email: vsodala@gmail.com

118 Recognised Self-Regulatory Organisations Capital Markets Association of Zambia Latitude 15, Leopard Hill Road, Kabulonga P. O Box 51583 Lusaka Email: Info@cmaz.co.zm Listed Companies’ contact 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) 412749z Website: www.ael.co.za Listed on 23rdOctober, 2006 Airtel (formerly Celtel and Zain) Zambia Plc Stand 2375 Addis Ababa drive Lusaka Tel: +260 (977) 915000 Website: www.Africa.airtel.com/zambia Listed on 11th June, 2008 British American Tobacco (BAT) Zambia Plc Plot # PH1 IND 54 & 53 LS MFEZ, Chifwema Road P.O. Box 30162 Lusaka Tel: +260968 678 814/ 787 / 671 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

119 Copperbelt Energy Corporation Plc 23rd Avenue, Nkana East P.O. Box 20819 Kitwe 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 First Quantum Minerals Limited C/o Choice Corporate Services Stand 3509/No. 7 Matandani Close, Rhodespark Lusaka Zambia Depository Receipts listed in July 2011 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 Chilanga 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 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 Cha Road Luanshya P.O. Box 90295

120 Tel: +260 (212) 510599 Fax: +260 (212) 229003/4 Website: www.pdic.com Listed on 9th September, 2004 National Breweries Plc Plot No. 1609/10, Sheki Sheki Road P.O. Box 35135 Lusaka Tel: +260 962 249 210 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 Puma Energy Plc (formerly BP Zambia) Head Office Stand No. 1710, Mungwi Road 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: info@reiz.co.zm Website: www.reiz.co.zm Listed on 27th September, 1997 Shoprite Holdings Plc

121 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 Standard Chartered Bank Zambia Plc Head Office Stand No. 4642 Cnr of Mwaimwena Road and Addis Ababa Drive P O Box 31934 Lusaka Tel: (0211) 422198 -99 Fax: (0211) 222092/225337 E-mail: KetaiBenjamin.Mvula@sc.com Website: www.standardchartered.com/zm Listed on 30th November, 1998 Zambeef Products Plc Plot 4970 Manda Road Industrial Area P/Bag 17, Woodlands Lusaka Tel: +260 (211) 369000 Fax: +260 (211) 369050 E-mail: info@zambeef.co.zm Website: www.zambeefplc.com Listed on 5th April 2005 Zambia Bata Shoe Company Plc Stand 6437, Mukwa Road Heavy Industrial Area P.O. Box 30479 Lusaka Tel: +260 (211) 244397/242328 Fax: +260 (211) 244254 E-mail: batashoe@zamnet.zm Website: www.bata.co.zm Listed on 31st March, 2009 Zambia Forestry and Forest Industries Corporation Plc HEAD OFFICE P.O Box 71566, Dola Hill Ndola Tel: +260 212 671482 Fax: +260 212 616030 Email: info@zaffico.co.zm Listed on 12th February 2020 Zambian Breweries Plc

122 Mungwi Road, Plot 6438 Heavy Industrial Area P.O. Box 30237 Lusaka Tel: +260 (211) 246555, +260 962 249200 Fax: +260 (211) 242124 E-mail: zambrew@zambrew.com.zm Website: www.ab -inbev.com Listed on 9th June, 1997 Zambia Reinsurance Plc Plot 187C Namambozi Road Fairview, Lusaka Postnet Box 658 P/Bab E891 Tel: +260 (211) 221159, +260 971 695149 Email: primare@prima -re.co.zm Website: www.prima -re.com Listed on 21st December, 2004 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 ZCCM -IH Office Park Stand No. 16806, Alick Nkhata Road Mass Media Complex Area 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

123 Listed on 24th January, 1996 Quoted Companies’ Contact Details Absa 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: Thandiwe.BandaMbalashi@absa.africa 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 Copperbelt Energy Corporation Africa Plc 2 nd floor Green City Plot 2374, Kelvin Siwale Road, P.O Box 320125 Lus aka Quoted in 2017 EIZ 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

124 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 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 Lusaka Securities Exchange Plc See address information under Securities Exchanges above 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 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 Veritas General Insurance Plc Plot 6/60 Kapingila House

125 Kabulonga Road, Kabulonga Lusaka P. O. Box 31965, Lusaka Tel: + (260) (955) 359 873 Fax: + (260) (211)266366 Email: veritas@veritasgeneral.com Website: www.veritasgeneral.com Quoted on 19th February, 2015 Details of Companies with Listed Debt Securities African Banking Corporation Limited (Trading as Atlas Mara Bank Zambia Ltd) See information on Dealers above. Bayport Financial Services - Debt securities listed on 24th April 2014 Plot 68 Independence Avenue Lusaka P.O. Box 33819 Tel: +260 (211) 257243 Fax: +260 (211) 257432 E-mail: jchola@bayportfinance.com Website: www.bayportfinance.com Focus Financial Services Limited - Debt securities listed on 24th April 2014 1 st 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 Izwe Loans Zambia Limited - Debt securities listed on 15th July 2013 and 1st August 2013 Ground Floor, South Wing Lubuto House, Lubuto Road Rhodes Park P. O .Box 35087 Lusaka Tel: +260 (211) 235273 Email: info@izwezambia.com Website: www.izwezambia.com Madison Finance Company Limited - Debt securities listed on 1st September, 2014 Madison House Plot 318, Independence Avenue Lusaka P. O. Box 34366 Tel: +260 (211)252248/49 Email: customerservice@mfinance.co.zm

126 Website: www.mfinance.co.zm Real Estate Investments Zambia Plc - Debt securities listed on 12th November 2010 (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 Stanbic Bank Zambia Limited Limited - Debt securities listed on 31st October, 2014 See information on Dealers above. Ulendo Road Infrastructure Road Programme (RINP) - Debt securities listed on 11th December, 2015 2 nd Floor, Pangaea Office Park Stand No. 2374 Great East Road, Lusaka P.O. Box 34536 (Lusaka) Tel:+260 (211)291310-14 Fax:+260 (211) 291312 Website: www.focus.co.zm Zambian Home Loans Limited Plot 35370 Garden Plaza, Thabo Mbeki Road Lusaka Post Net Box 301 Tel: +260 211 254325 Email: info@zambiahomeloans.co.zm