Ethiopian Capital Market Authority Begins Oversight of Share Sale Advertisements
The Ethiopian Reporter newspaper has reported that the
Ethiopian Capital Market Authority has initiated stringent measures to regulate
the dissemination of misleading advertisements regarding stock sales through
various media platforms. This action underscores one of the principal mandates
of the Authority, which has operated for over a year, focusing on decentralized
regulation of share transactions within a centralized legal framework.
Despite possessing legal oversight over stock sales, the
absence of comprehensive legal frameworks has allowed numerous entities to
advertise shares with purportedly extravagant profit prospects. Executive
Director Dr. Brooke Taye has highlighted the prevalence of such misleading
advertisements, stressing their inaccuracy regarding profit generation and
capability to fulfill advertised promises.
Dr. Brooke emphasized the imperative for stringent
regulation and collaboration with media authorities to curtail this practice
until comprehensive guidelines are established. Correspondence exchanged
between the Capital Market Authority and media authorities in January 2024
elucidates the directive to abstain from advertising shares for unlicensed
entities, pending the completion of detailed regulatory guidelines.
The Capital Market Authority, pursuant to approved decrees,
mandates that companies seeking to issue investment statements or
advertisements must obtain prior approval. Consequently, efforts are underway
to streamline the process and enforce regulatory compliance, with media outlets
warned of potential legal repercussions for unauthorized broadcasts of such
advertisements.
The implementation of a centralized system for share sales
in Ethiopia not only enhances regulatory oversight but also broadens avenues
for aspiring investors with ambitious initiatives. CEO Dr. Brooke Taye
highlighted the significance of trust in banking institutions and regulatory
approval as prerequisites for engaging in stock transactions, underscoring the
Authority's commitment to fostering a conducive market environment.
In addition to regulatory initiatives, the Authority has
diligently pursued various tasks, including legislative drafting, within its
inaugural year. Notably, preparations for licensing over 15 service providers,
commencing February 11, 2024, signify a pivotal milestone in expanding market
access. Among the inaugural license recipients, Invest Bank stands out as one
of Ethiopia's foremost licensees, indicative of the Authority's progress in
facilitating market entry.
The Director-General further noted heightened interest from
domestic and foreign entities, including commercial banks, in securing
investment licenses. These organizations play a pivotal role in preparing
companies for market entry, underscoring the Authority's pivotal role in
licensing investment banks and shaping the Ethiopian investment landscape.
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