REPUBLIC OF ZAMBIA

GOVERNMENT GAZETTE

Published by Authority

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No. 7575] Lusaka, Friday, 5th April, 2024 [Vol. LX No. 40

GAZETTE NOTICE NO. 342 OF 2024

THE SECURITIES ACT
(Act No. 41 of 2016)

THE SECURITIES (EXCHANGE TRADED FUNDS) GUIDELINES, 2024

IN EXERCISE of the powers contained in section 211 of the Securities Act No.41 of 2016, the following Guidelines are hereby made:

1 Title
These Guidelines may be cited as the Securities (Exchange Traded Funds) Guidelines, 2024.

2 Application
2.1 These Guidelines shall, unless exempted by the Commission, apply to Exchange Traded Funds and issuers of physically backed Exchange Traded Funds and excludes synthetic Exchange Traded Funds
2.2 The Commission shall impose administrative sanctions provided in the Securities Act on a person who fails to comply with the provisions of these guidelines.
2.3 In case of any doubt on the application of these Guidelines to a particular Exchange Traded Fund, it is advised that direction or clarification be sought from the Securities and Exchange Commission.

3 Interpretation
In these Guidelines, unless the context otherwise requires -

“Act” means the Securities Act, No. 41 of 2016 and any subsequent amendments;

“Actively managed ETF” means an ETF which does not represent any selective index”

“Arbitrage” means the practice of the Authorized Participants to cause the creation of more ETF units or shares for sale in the secondary market, or to purchase ETF units or shares in the secondary market for redemption, in order to take advantage of the price differential of the ETF’s Net Asset Value and the ETF’s market price;

“Authorized Participant” (AP) means a licensed dealer that has entered into a participating agreement or any similar arrangement with an ETF and participating in the creation and redemption of shares or units in the ETF in accordance with the terms provided under the agreement or arrangement between the Authorized Participant and the ETF;

“Authorized Participant Agreement (APA)” means an agreement entered into by a registered Authorized Participant with an ETF, for its participation in the creation and redemption of units or shares;

“Basket of Securities” means the index constituent (i.e. securities) based on which an ETF share or unit is issued or redeemed;

“Commission” has the same meaning as assigned in the Act;

“Company” has the meaning assigned to it in the Companies Act in force;

“Constitutive document” has the same meaning as assigned in the Act;

“Creation Unit” means the smallest block of ETF shares or units that can be created or redeemed by an Authorized Participant from the ETF as disclosed in the constitutive documents;

“Cumulative Investment Plan (CIP)” means an option of dividend distribution where investors are eligible to receive new ETF units at the day end NAV per unit of preceding trading value at market price against the amount of dividend accrued in the investor favour;

“Custodian” has the meaning assigned to it in the Act;

“Exchange Traded Fund or “ETF”” means a fund under Collective Investment Scheme, which is constituted in the form of a trust or company and shall bear the following minimum criteria; (i) Is structured as an open-ended fund; (ii) Is to be framed as an “actively managed ETF” or “passively managed ETF” or any other type of fund as approved by the Commission from time to time; (iii) tracks a benchmark index or the price of a currency or commodity or other assets; (iv) listed on an exchange, but creation and redemption shall be directly with the fund outside the exchange;

“Index” means a single number that is calculated based on known methodology and is used to gauge the price and/or volume movement of a list of selected securities traded on an exchange;

“Index Provider” means an exchange or person approved by the Commission to serve for this purpose;

“In-Kind Creation” means a basket of securities being delivered by an Authorised Participant for its own account or on behalf of its clients in exchange for a basket of securities that forms one creation unit;

“In-Kind Redemption” means ETF units or shares being delivered to the issuer by the Authorized Participant for its own account or on behalf of its clients in exchange for a basket of securities that forms one creation unit;

“Issuer” has the same meaning assigned to it in the Act;

“Manager” has the meaning assigned to it in the Act;

“Market maker” means an Authorized Participant that assumes the obligation of providing two-way quotes for the purpose of ensuring liquidity and maintaining fair and orderly trading market to the ETF units or shares;

“Net Asset Value” means the aggregate value of a fund as determined by the market value of its underlying securities holdings, including cash in the portfolio less liabilities, computed at the close of the trading hours of the exchange;

“Passively managed ETF” means an index fund that tracks a specific benchmark and any changes thereto.

“Physically backed ETF” means an ETF that directly holds the underlying constituents of the index or benchmark that the ETF is designed to track, by either physical replication or representative sampling.

“Synthetic ETF” means an ETF that adopts synthetic replication strategy by entering into a derivate contract to replicate the index’s performance with out directly holding the underlying constituents of the index or benchmark

4 Authorization of Exchange Traded Funds
4.1 An Exchange Traded Fund shall be authorized by the Commission pursuant to section 121 of the Securities Act and the Securities (Collective Investment Schemes) Rules.
4.2 The name of the fund shall contain the words “Exchange Traded Fund” or “ETF”.

5 Revocation of Authorization
5.1 The Commission may withdraw the authorization of an ETF in accordance with section 126 of the Securities Act in the event of non-compliance with these guidelines and in the interest of the investors.

6 Appointment of Fund Manager or Manager
6.1 The ETF issuer (if different from Manager) shall appoint a Manager who is authorized by the Commission in accordance with section 123 of the Securities Act to act on its behalf for the purpose of managing the ETF.

6.2 In addition to the duties and responsibilities of the Manager specified in clause 16 to the Schedule to the Securities (Collective Investment) Rules, the Manager shall
6.2.1 always uphold the best interests of the shareholders/unitholders in any of its acts and shall avoid conflict of interest situations; if unavoidable, disclosure shall be promptly made to the ETF board of directors/trustee(s), in any case, the ETF shall act accordingly to protect the shareholders or unitholders interests;
6.2.2 have adequate financial, technical, infrastructure and human resources, and employ appropriate systems, technologies procedures, and processes to discharge ETF management services in a proper and efficient manner on an ongoing;
6.2.3 make agreements with the “Authorized Participants”, In the name of “Authorized Participant Agreement (APA)” or with any other parties related with the ETF;
6.2.4 ensure the segregation of the ETF assets and other properties from those of its own account, physically and in the relevant records, by clearly and properly identifying and labelling the said assets and properties;
6.2.5 ensure that the Authorized Participant has sufficient resources and capabilities to satisfactorily fulfil its role and obligations and comply with the requirements on an ongoing basis.
6.2.6 Comply with all the regulatory requirements and any other obligations set forth in all the agreements that it entered as Manager.

7 Appointment of Trustee/Custodian
7.1 The ETF issuer/Manager shall appoint a trustee/custodian wh0 is authorized by the Commission in accordance with section 123 of the Securities Act. The appointed trustee/custodian shall meet the appointment qualifications stipulated in clause 2 of the schedule to the Securities (Collective Investment Scheme) Rules.
7.2 In addition to the appointment qualification in clause 2 of the schedule to the Securities (Collective Investment Scheme) Rules, the appointed trustee/custodian shall have adequate resources, including competent staff, an appropriate system, procedures, and processes to ensure that the ETF assets and properties are held in the following manner;
7.2.1 clearly identified and properly labelled as assets and properties of the ETF;
7.2.2 ETF assets and properties are properly segregated physically and/or on the record of the trustee/custodian;
7.2.3 the ETF assets and properties are registered in the name of or for the account of the ETF;

8 Appointment of Authorized Participant
8.1 An ETF issuer/Manager shall appoint at least two (2) Authorized Participants (AP) provided that at least one (1) of them will act as Market Maker which shall directly participate in the issuance and redemption of ETF units or shares, for its own account or for the account of other persons, and which shall deal with investors in the distribution and secondary trading of the ETF shares/units.
8.2 Before appointment of an Authorized Participant the following conditions shall be fulfilled:
8.2.1 an Authorized Participant shall be a licenced dealer under section 32 of the Securities Act and an authorized trading member of an Exchange;
8.2.2 an Authorized Participant shall enter into a written agreement with the ETF issuer/Manager and the Trustee/Custodian
8.2.3 an Authorized Participant shall possess adequate resources, including competent staff, and appropriate systems, procedures, and processes to execute transactions in ETF shares/units in a proper and efficient manner;
8.2.4 an Authorized Participant shall adopt adequate and effective internal control procedures, including the necessary measures to maintain independence of its different office units, and satisfactory risk management procedures
8.2.5 In case of an Authorized Participant handling more than one ETF, the ETF issuer/Manager, before appointing the Authorized Participant, shall have identified areas that may give rise to conflict-of-interest issues to the Authorized Participant and have discussed and provided measures to avoid, if not eliminate, such conflict;
8.2.6 An Authorized Participant shall perform such additional duties and responsibilities, including acting as market marker, in accordance with the agreement with the ETF, the rules of the Exchange and those of the Commission.

9 Role and duties of an Authorized Participant
9.1 An Authorized Participant shall:
9.1.1 undertake in-kind creation and redemption of shares/units in the market on behalf of the ETF either as principal or on behalf of share/unit holders;
9.1.2 ensure that the creation and redemption of shares/units undertaken on behalf of the share/unit holders shall be segregated from trades carried out as principle;
9.1.3 observe high standards of integrity when dealing in the primary as well as the secondary market in all dealings on behalf of the ETF as principal or on behalf of the share/unit holders;

10 Appointment of Index Provider
10.1 The ETF shall appoint an Index Provider if the ETF is an index linked fund and enter into an agreement with the Index Provider before using the index designed, constructed and calculated by said index Provider.
10.2 The index provider shall fulfil the following conditions:
10.2.1 shall be an Exchange or any recognized (local or foreign) company by the Commission serving as index provider (provided that if the index provider is not an Exchange, it shall have at least 5 years of index providing services);
10.2.2 shall have sound credentials and exposures in index construction, management, and monitoring;
10.2.3. shall have qualified and experienced professionals in this area;
10.3 An ETF shall provide, in its trust deed and prospectus among others, the following information;
10.3.1 description of the index, currency, commodity, or other assets that it plans to track;
10.3.2 initial composition of the index and the corresponding weights;
10.3.3 methodology used in the selection of the securities comprising the index and the rational thereto;
10.3.4 name and brief educational and professional background of the owners, directors, officers, and persons directly responsible for the design and review of the index;

322Zambia Gazette5th April, 2024

10.3.5 other indices designed, constructed, and calculated by the index provider, current and for the last five (5) years if any.

10.4 An ETF and its Index Provider shall disclose the anticipated level of tracking error in normal market conditions and the description of the factors that may affect the ability of the ETF to track the performance of the index. The ETF and the Index Provider shall also disclose the size of the tracking error in annual and quarterly reports together with any explanation of the divergence between the anticipated and realized tracking error for the period.

10.5 An ETF and Its Index Provider shall adopt measures reasonably designed to prevent misuse of non-public information between the ETF and the Index Provider.

11 Appointment of Market Maker

11.1 The ETF issuer/Manager shall appoint at least one Market Maker for an ETF.

11.2 The Market Marker shall be an Authorized Participant and a trading member of the Exchange.

11.3 In order to participate in the ETF trading process, the Market Maker will sign an additional agreement with the Exchange after the appointment by the ETF issuer/Manager for market making undertaking.

11.4 The Market Marker shall fulfil such requirements that may be imposed by the Exchange and the Commission.

12 Appointment of Transfer Agent

12.1 The ETF issuer/Manager shall appoint a share transfer agent licenced pursuant to section 34 of the Securities Act which shall maintain an accurate register of the initial and subsequent transfer of shares/units of the ETF.

13 Issuance and Redemption of Creation Units

13.1 The ETF issuer/Manager shall ensure that

13.1.1 Authorized Participants Agreement sufficiently covers the details of procedure for creation and redemption of ETF shares/units;
13.1.2 All requests for issuance and redemption of creation units are originated or routed through the Authorized Participant only.

13.2 The ETF issuer/Manager may change the creation unit size of the ETF only it is permitted in the constitutive documents; and shall subject to the prior approval of the trustee/custodian and the Commission.

13.3 The ETF issuer/Manager shall ensure that creation and redemption expenses and other charges are disclosed in the constitutive documents

13.4 The Trustee/Custodian shall ensure that issuance of creation units upon completion of transfer of title of the portfolio deposit and cash component is in the name of the Fund.

13.5 Creation and redemption of ETF shares or units shall be conducted at day end NAV per share or unit valued at market prices basis

14 Issuance and redemption of ETF Units In-Kind

14.1 As a general rule, shares or units of an ETF shall be issued only upon delivery of the basket of securities underlying an index by the Authorized Participants: or redeemed, by delivering the basket of securities to the Authorized Participants after surrender of the ETF shares/units.

14.2 In relation to the issuance and redemption of ETF shares/unit, the ETF shall disclose in its constitutive documents the following;

14.2.1 the terms and conditions for the in-kind issuance and redemption of ETF shares/units which among others shall include, the valuation methodology, the price, timing and procedure thereof;
14.2.2 instructions to issue or redeem ETF shares/units or multiples thereof shall be in writing;
14.2.3 only Authorized Participants shall be allowed to submit said issuance and redemption instructions to the ETF, provided that, any person who has accumulated the basket of securities comprising the index or the ETF shares/units equivalent to a creation unit may cause the Authorized Participant to present said basket of securities of ETF units for issuance or redemption on his behalf; and
14.2.4 the ETF shall prescribe the terms and conditions for the redemption of shares/units accumulated by an investor through the Authorized Participant, including the general manner by which such redemption shall be implemented. The more detailed procedure shall be agreed upon between the ETF and the Authorized Participant and stipulated in the written agreement between the two and disclosed to the investors.

15 Issuance of ETF Units in exchange for cash

15.1 In exceptional circumstances, an ETF may allow the issuance of ETF shares/units in exchange for cash subject to the following conditions:

15.1.1 This option, when exercised, is not prejudicial to the interest of existing shareholders/unitholders and will not result in the disruption of an orderly market;
15.1.2 any expenses or fees that are incurred in relation to such issuance shall be for the account of the person /investor causing such issuance;

5th April, 2024Zambia Gazette323

15.1.3 Such an option is prescribed in the constitutive documents. Including the exceptional circumstances under which said option may be exercised;
15.1.4 Only Authorized Participants for their own accounts are allowed to exercise such option;
15.1.5 The ETF shall purchase fully the underlying securities within the period prescribed in the constitutive documents but shall not exceed two months period of such receipt;
15.1.6 The ETF shall promptly report the exercise of such option to the relevant Exchange and the Commission after the underlying securities have been fully purchased; and
15.1.7 The Commission reserves the right to disallow the exercise of the said option after determining that the in-cash arrangement is not consistent with the interest of the public, the protection of investors and/or the conduct of an orderly market;

16 Direct Redemption

16.1 Subject to recommendation of the Trustee/Custodian and approval of the Commission, an ETF may provide for a direct redemption mechanism for the secondary market investors in exceptional circumstances such as, but not limited to:

16.1.1 when an ETF is de-listed;
16.1.2 when the secondary trading of ETF shares/units is disrupted over an extended period; or
16.1.3 when the market price of the ETF shares/units varies significantly from the NAV per share/unit

16.2 The threshold for said price variation and such other market circumstances as well as the manner and procedure for direct redemption shall be stated in the constitutive documents.

17 Pricing and Dealing

17.1 The ETF issuer/Manager shall redeem creation units only at the NAV calculated in accordance with the Constitutive documents.

17.2 The ETF issuer/Manager shall ensure that issuance and redemption of creation are priced on the basis of the NAV of the ETF. However, the share or unit of the ETF shall trade on the Exchange based on the market price.

17.3 The issuance and redemption of Creation units shall be done on historic pricing basis and any transfer of underlying securities into and out of the ETF is also based on the valuation used in determining the ETF's NAV.

18 Dividend distribution process

18.1 Investors shall be given the option of cash distribution or cumulative investment plan(CIP) in the distribution dividend process by an ETF.

18.2 Investors are allowed to take the dividend distribution options by giving confirmation to the ETF/Manager in writing within 15(fifteen) days of divided declaration as to which dividend distribution option is preferred.

19 Arbitrage Mechanism

19.1 An ETF shall operate with an arbitrage mechanism designed to minimize the potential deviation between the market price and the NAV of ETF shares/units.

19.2 In order to facilitate the arbitrage mechanism, the designated Authorized Participant(s) must participate in the arbitrage when there is a price difference between NAV at market price per share or unit and traded price per share or unit of the ETF

19.3 The Commission may directly impose any other condition to facilitate the arbitrage if deemed necessary or appropriate for the protection of investors.

20 Investment Restrictions in an ETF

20.1 Notwithstanding the investment restrictions in Clause 63 to 69 of the Securities (Collective Investment Scheme) Rules, an Index ETF shall:

20.1.1 ensure that the weightage of the component securities in the ETF are entire component securities of the benchmark index except where the ETF is unable to fully replicate the benchmark index due to market limitations. Deviations of up to 10% are acceptable provided that such parameters and features are defined in the constitutive documents. The Commission under special cases may allow partial replication of the index by the ETF.
20.1.2 always ensure that, at least 90% of the assets of the ETF remain invested in the component securities of the benchmark index being tracked by it, while the remaining assets may comprise of cash and cash equivalents.
20.1.3 ensure proper and efficient management of the ETF. The constitutive documents shall define the parameters for the level of cash and cash equivalent to be maintained by the ETF.

21 Disclosures & Reporting

21.1 An ETF shall fulfil the requirements of the provisions Clause 49 to 62 of the Securities (Collective Investment Schemes) Rules relating to disclosures and reporting to the Commission.

21.2 In addition to fulfilment of Guideline 21.1 above, an ETF shall maintain a website which shall be freely accessible by the public and which shall provide the following information on a daily basis:

21.2.1 the index that the ETF is tracking;

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21.2.2 the identities and weightings of the component securities and other assets held by the fund;
21.2.3 the identities and weightings of the component securities and other assets of the index;
21.2.4 the number and type of securities comprising the basket of securities with which the ETF could create or could redeem creation unit; and
21.2.5 the performance of the index together with the NAV

21.3 In order to alert investors of the current relationship between NAV per share/NAV per unit and the market price of the ETF shares or units, the ETF shall disclose on its website, as well as the website of the Exchange where it is traded, the following:

21.3.1 the extent and frequency with which market prices of ETF shares/units have tracked the fund's NAV;
21.3.2 the prior business day's last determined NAV;
21.3.3 the premium/discount of the market closing price to NAV;
21.3.4 the extent and frequency with which market prices of fund shares/units were with premium or discount to NAV on a monthly basis; and
21.3.5 the performance of the index together with the NAV.

21.4 The ETF shall use acceptable channels or modes of communication for dissemination of the above information relating to the ETF and the said modes may include:

21.4.1 hyperlink to the website of the Exchange or the ETF 's own website;
21.4.2 pages made available by information vendors to disseminate trading information of the ETF shares/units in their ordinary course of business and are easily accessible by retail investors/general public;
21.4.3 electronic medium for information dissemination as provided by the Exchange from time to time; or
21.4.4 any other channel considered acceptable by the Commission.

22 Review and updating of these Guidelines

The Commission shall, from time to time, update these Guidelines if need be.

LUSAKA
28th Match 2024.

P. K. CHITALU,
Chief Executive Officer

GAZETTE NOTICE NO. 343 OF 2024	[1558178
The Commissioner for Oaths Act<br>(Laws, Volume 1, Cap. 33)
Appointment of Commissioner for Oaths
IN EXERCISE of powers conferred upon His Lordship the Chief Justice of Zambia, by Section 3 (2) of the Commissioner for Oaths Act Cap. 33 of Laws of Zambia, His Lordship the Chief Justice has made the following appointment of Commissioner for Oaths.
Name	Date of Appointment
Peter Sachika	30th January, 2024
P.O. Box 50067<br>LUSAKA	Y. N. NALOMBA,<br>Registrar-High Court

GAZETTE NOTICE NO. 345 OF 2024	[1558148
The Marriage Act<br>(Laws, Volume V, Cap. 50)
Appointment of Person to Solemnise Marriages
IT IS NOTIFIED for public information that in exercise of the powers conferred upon the Town Clerk for Kabwe Municipal Council under Cap. 50, Section 5(2) of the Marriages Act of the Laws of Zambia, the person named in the Schedule set out hereto is appointed to Solemnise Marriages in the Republic of Zambia.
P.O. Box 80424<br>KABWE	J. NGOMA<br>Town Clerk
SCHEDULE
Name	Church
Pastor Joseph Lupiya	Bread of Life Church International<br>Plot No. 1282, Highridge, Kabwe

GAZETTE NOTICE NO. 344 OF 2024	[1558140
The Marriage Act<br>(Laws, Volume V, Cap. 50)
Appointment of Person to Solemnise Marriages
IT IS NOTIFIED for public information that in exercise of the powers conferred upon the Council Secretary, Kasempa Town Council under Cap. 50, Section 5(2) of the Marriages Act of the Laws of Zambia, the person named in the Schedule set out hereto is appointed to Solemnise Marriages in the Republic of Zambia.
P.O. Box 120001<br>KASEMPA	L. B. MUNGANDI,<br>Acting Council Secretary
SCHEDULE
Name	Church
Reve. Timothy Muke	United Church of Zambia<br>P.O. Box 120059, Kasempa

GAZETTE NOTICE NO. 346 OF 2024	[1557994
The Lands and Deeds Registry Act<br>(Chapter 185 of the Laws of Zambia)<br>(Section 56)
Notice of Intention to Issue a Duplicate Certificate of Title
FOURTEEN DAYS after the publication of this notice, I intend to issue a Duplicate Certificate of Title No. 150008 in the names of Mwansa Mwansa in respect of Stand No. NDO/10184 in extent of 1.660.0000 hectares situate at Lusaka Province of the Republic of Zambia.
All persons having objections to the issuance of the duplicate certificate of title are hereby required to lodge the same in writing with the Registrar of Lands and Deeds within fourteen days from the date of publication of this notice.
REGISTRY OF LANDS AND DEEDS<br>P.O. Box 30069<br>LUSAKA	E. JERE,<br>Registrar of Lands and Deeds

5thApril, 2024
Zambia Gazette
325

GAZETTE NOTICE NO. 347 OF 2024
[1558120
The Lands and Deeds Registry Act
(Chapter 185 of the Laws of Zambia)
(Section 56)

Notice of Intention to Issue a Duplicate Certificate of Title

FOURTEEN DAYS after the publication of this notice, I intend to issue a Duplicate Certificate of Title No. CT 125092 in the names of Mather Maziba in respect of Stand No. CHIBU/4570 in extent of 600.0000 hectares situate in the Copperbelt Province of the Republic of Zambia.

All persons having objections to the issuance of the duplicate certificate of title are hereby required to lodge the same in writing with the Registrar of Lands and Deeds within fourteen days from the date of publication of this notice.

REGISTRY OF LANDS AND DEEDS
P.O. Box 30069
LUSAKA

E. JERE,
Registrar of Lands and Deeds

ADVT—625—1558340/1
The Citizenship of Zambia Act
(Act No. 33 of 2016)

The Citizenship of Zambia Regulations, 2017