Rules & Regulations

Introduction to the Regulatory Framework

The Securities Act 2005 has come into force on September 28, 2007 by proclamation. The new Act seeks to enhance and upgrade the existing securities legislation in Mauritius. It provides a wider and deeper coverage of the securities market and is based on standards recommended by the International Organisation of Securities Commissions (IOSCO). The main object of the Securities Act 2005 is to ensure a fair, efficient and transparent securities market and most importantly, to strike an appropriate balance between the protection of investors and the interest of the securities market. It establishes a framework for adequate regulation of securities market, market participants, self-regulatory organisations and for the offering and trading of securities. The Securities Act 2005, which replaces the Stock Exchange Act 1988, draws on modern legislation in other jurisdictions and is based on up-to-date regulatory and supervisory standards. To give effect to the provisions of the main Act, a number of regulations are currently being developed by the market regulator, which will be adopted in the near future.

A review of all the existing rules of the SEM is being undertaken to ensure consistency with the new legal and regulatory requirements. Section 158 of the Securities Act states that: “Rules made by the SEM under the Stock Exchange Act and in force immediately before the commencement of this Act, shall remain in force until new rules as approved by the Commission are issued.” The Act also provides for a period of 3 months or such other period as may be agreed upon by the regulator for the SEM to submit, for the approval of the regulator, the relevant amendments to its constitutive documents and rules as are necessary to ensure conformity with the new legal and regulatory framework.

The scope of the SEM’s regulatory responsibilities has been extended under the new Act, as compared to those under the previous legislation. Consequently, SEM will be required to play a more important role as a front-line regulator of the market and eventually as a self-regulatory organization, if so declared by the regulator. One of the main priorities of the SEM after the coming into force of the legislation is reviewing the resourcing requirements and re-organisation of some of some of its key departments. The SEM is also considering the setting up of new structures e.g., a new listing executive committee, disciplinary committee and a regulatory oversight committee as well as procedures in order to properly discharge its responsibilities and obligations under the new Act efficiently.