The Malawi Stock Exchange is a fully fledged stock market, with a single licensed broker. It was inaugurated in March 1995 and opened for business for the first time on 11 November 1996, under the aegis of the Reserve Bank of Malawi, with 2300 Malawian citizens buying shares in the first company to be listed, Malawi’s largest insurance firm, the National Insurance Company.
International Finance Corporation, a World Bank affiliate, and the Financierings Maatschappij Ontwikkelingslanden, a Dutch development bank with close ties to the Dutch Ministry for Development Co-operation, provided 40% of the $500,000 required for establishing the stock market in Blantyre, and the European Union sponsors seminars and publicity campaigns.
The Exchange has a modest market listing. More stringent listing rules are currently being prepared. Membership of the Exchange is corporate and individual.
The Exchange operates in terms of the Capital Markets Development Act of 1990 and the Capital Market Development Regulations of 1992. It has a supervisory committee which comprises representatives of the central bank, the government and the private sector. It is a member of the African Stock Exchange Association.
Trading occurs on Monday to Friday, between 09h00 and 12h00 local time, using a single price auction system. Equities and government securities are traded. Clearing occurs by transaction, and settlement occurs on a T + 7 basis. There is no depository.
Brokerage rates are as follows:
|< MK 50 000||2%|
|MK 50 000 – MK 100 000, inclusive||1.5%|
|> MK 100 000||1%|
Capital gains tax at marginal rate is applied if shares are sold within a year of purchase. (MK 10 000 of revenue from sale is, however, exempt from tax).
Dividends are tax free.
Foreign investment is allowed, but is limited to 5% of issued share capital for one foreign investor and 49% of issued share capital in total. There are no regulations regarding capital repatriation, provided the investor is registered with the Reserve Bank according to foreign investment guidelines.