SECURITIES CENTRAL DEPOSITORIES ACT, 2009.

An Act to facilitate the establishment, operation and regulation of securities central depositories; to provide for the immobilisation and eventual dematerialisation of, and dealings in, securities deposited with securities central depositories in Uganda, and for related matters.

PART I
PRELIMINARY.

1. Application.

This Act applies to a securities central depository and clearing system established under sections 4 and 5 but does not apply to a central depository and clearing system operated by the Bank of Uganda.

2. Interpretation.

In this Act, unless the context otherwise requires—

"access" in relation to a computer system, means the placing of information on that system and the retrieval of information from that system;

"Authority" means the Capital Markets Authority established by section 4 of the Capital Markets Authority Act;

"bank" has the meaning assigned to it in the Financial Institutions Act;

"bare trustee" means a trustee who has no beneficial interest in the subject matter of the trust;

"bearer security" means a security, the title to which is transferable by delivery, with or without endorsement of the certificate representing the security;

"book-entry security" means a security standing to the credit of a securities account which is transferable by way of book-entry in the record of depositors and includes a security in a securities account that is in suspense;

"buying in" means the buying effected by a securities exchange, according to the rules of the securities exchange, of securities which a seller has failed to deliver on a day fixed for settlement;

"certificate" means any document that is a security, or is a document of title to a security;

"charge" includes a pledge or a mortgage;

"computer system", in relation to a central depository, means a computer system established by a securities central depository which forms part of the system for the central handling of securities and which consists of—

(a) the central equipment comprising hardware and software associated with that hardware, located at the premises of the securities central depository; and

(b) the terminals located at the premises of the users;

"court" means a chief magistrate's court and a High Court;

"currency point" has the value assigned to it in the Schedule;

"dealer" means a person who carries on the business of dealing in securities on his or her own account, whether he or she carries on any other business or not;

"dealing in securities" means, whether as principal or agent, making or offering to make with any person, or inducing or attempting to induce any person to enter into or to offer to enter into—

(a) an agreement for or with a view to acquiring, disposing of, subscribing for or underwriting securities; or

(b) an agreement, the purpose or intended purpose of which is to secure a profit to any of the parties from the yield of securities or by reference to fluctuations in the price of securities;

"debt securities" means debentures, bonds, notes, or other similar instruments representing or evidencing indebtedness, whether secured or unsecured;

"dematerialisation" means the process of eliminating physical certificates as prima facie evidence of ownership of securities or where ownership of securities as an accounting record;

"dematerialisation date", in relation to a dematerialised security, means the date prescribed by a securities central depository under section 26 as being the last day on which a certificate representing the security shall be recognised as prima facie evidence of share ownership under the Companies Act;

"dematerialised security" means a book-entry security prescribed by the securities central depository under section 26, by which the underlying physical certificate is no longer recognised as prima facie evidence of ownership under the Companies Act, on or after the dematerialisation date;

"depositor" in relation to any book-entry, means a holder of a securities account;

"eligible security" means a security which has been prescribed by a securities exchange to be immobilised with a central depository under section 15;

"financial institution" means a financial institution as defined by the Financial Institutions Act;

"immobilisation", means any circumstance where underlying physical certificates relating to securities have been deposited with and are held by the securities central depository and an investor does not receive a physical certificate upon purchase of shares;

"immobilisation date", in relation to any eligible security, means the date specified in the notice given by a securities exchange under section 15 as being the last day on which the eligible security may be traded on the securities exchange, unless that security has been deposited with the securities central depository;

"immobilised security" means a security in respect of which the underlying physical certificates have been deposited with and are held by a securities central depository;

"information" includes data recorded in a form which can be processed by equipment operating automatically in response to instructions given for a particular purpose;

"institutional investor" means a person whose ordinary course of business is to hold, manage or invest funds in connection with retirement benefits, insurance contracts, mortgage and saving schemes and any fund or scheme in the nature of a collective investment scheme;

"issuer", in relation to any book-entry security, means the company, corporation, government, or body corporate or any person that issued the security, and includes any person performing the functions of a registrar for the issuer in respect of that security;

"listed" means securities admitted to the official list of a securities exchange in Uganda and listing shall be construed accordingly;

"listed book-entry security" means a book-entry security listed on a securities exchange in Uganda;

"market day" means any day during which a securities exchange is open for business;

"member", in relation to—

(a) a securities exchange, means a person who is recognised as a member of a securities exchange; and

(b) a company, means a person who is recognised as a member of a company under the Companies Act;

"Minister" means the Minister responsible for finance;

"mortgage" means an interest in property created as a form of security for a loan or payment of a debt from the borrower (mortgagor) in favour of the lender (mortgagee) and which is terminated on payment of a loan or debt;

"non-bearer security" means a security other than a bearer security;

"notification date" means the date on which notice under section 15(2) is given by a securities exchange;

"official list", in relation to a securities exchange in Uganda, means a list specifying all securities which have been admitted for listing on that securities exchange;

"pledge" means the transfer of an interest in property by the owner (pledgor) to another (pledgee) as security for a debt;

"record" includes, in addition to a record in writing—

(a) a photograph;

(b) a disc, tape, sound-track or other device in which sounds or other data, not being visual images, are embodied so as to be capable with or without the aid of some other instrument, of being reproduced from it; and

(c) a film, tape or other device in which visual images are embodied so as to be capable, with or without the aid of some other instrument, of being reproduced from it;

and a reference to a copy of a record includes—

(i) in the case of a record falling within paragraph (b) but not this paragraph, a transcript of the sounds or other data embodied in it;

(ii) in the case of a record falling within paragraph (c) but not paragraph (b), a still reproduction of the images embodied in it, whether enlarged or not; and

(iii) in the case of a record falling within both paragraph (b) and this paragraph, the transcript of the sounds or other data embodied in it together with the still reproduction of the images embodied in it;

"record of depositors" means a record provided by a securities central depository to an issuer under section 40;

"Registrar" means a company registrar engaged in the keeping of the register of members and shareholders and performing other auxiliary functions of his or her company or other companies or institutions;

"regulations" means the regulations made by the Authority under section 68;

"SCDS" means Securities Central Depository System;

"SCDS rules" means the operational and procedural rules issued by a securities central depository for the purpose of ensuring orderliness, efficiency and security in the operation of a securities central depository as approved by the Authority;

"securities central depository" means a securities central depository licenced by the Authority under sections 4 and 5—

(a) to establish and operate a system for the central handling of securities—

(i) by which the securities are immobilised or dematerialised and dealings in respect of those securities are effected by means of entries in securities accounts without the physical necessity of certificates; or

(ii) which permits or facilitates the settlement or registration of securities transactions or dealings in securities without the physical necessity of certificates; and

(b) to provide other incidental facilities and services;

"securities central depository agent", in relation to any securities central depository, means a person appointed under section 11 to be an agent of that securities central depository;

"securities" means—

(a) debentures, stocks or bonds issued or proposed to be issued by a government;

(b) debentures, stocks, shares, bonds or notes issued or proposed to be issued by a body corporate;

(c) a right, warrant, option or futures in respect of a debenture, stocks, shares, bonds, notes or in respect of commodities; or

(d) any instruments commonly known as securities; except—

(i) bills of exchange;

(i) promissory notes; or

(iii) certificates of deposits issued by a bank or a financial institution;

(e) any unit, interest or share offered under a collective investment scheme;

"securities account" means an account established by a securities central depository for deposit or for the recording of book-entry securities and cash balances, in respect of dealings in securities by the depositor;

"securities exchange" means a stock exchange or an approved securities organisation by which—

(a) offers to sell, purchase or exchange securities are regularly made or accepted;

(b) offers or invitations are regularly made, being offers or invitations that are intended or that may reasonably be expected to result, whether directly or indirectly, in the making or acceptance of offers to sell, purchase or exchange securities; or

(c) information is regularly provided concerning the prices at which, or the consideration for which, particular persons or particular classes of persons, propose, or may reasonably be expected to sell, purchase or exchange securities;

"selling out" means the selling effected by a securities exchange according to the rules of the securities exchange, of securities which a buyer has failed to accept and to pay for when delivered on a day fixed for the settlement;

"transaction" means a transaction in eligible securities on the securities exchange or otherwise permitted by the SCDS rules involving eligible securities and which effects a deposit, sale, purchase, charge, gift, transfer, delivery or withdrawal of eligible securities, their registration, a change in the information pertaining to a securities account and any other operation provided for in the SCDS rules;

"uncertificated securities" means a transaction in eligible securities not evidenced by a certificate, the issue or transfer of which is registered or recorded in registers maintained for that purpose by or on behalf of that issuer;

"user" means a central depository agent, an issuer, a securities exchange or such other person as may be prescribed by the Authority, who may be given access to a computer system of a central depository.

PART II
SECURITIES CENTRAL DEPOSITORY.

3. Restriction on establishment of securities central depository.

(1) A person shall not establish, maintain or hold himself or herself out as maintaining a securities central depository unless that person has obtained a licence issued by the Authority in accordance with section 5 of this Act.

(2) A person who contravenes subsection (1) commits an offence and is liable on conviction to a fine not exceeding 240 currency points or imprisonment not exceeding 10 years or both.

4. Establishment of securities central depository.

(1) A company incorporated or registered under the Companies Act or a securities exchange which proposes to establish and maintain a securities central depository shall apply to the Authority in writing for a licence.

(2) An application under subsection (1) shall be accompanied by—

(a) SCDS rules made by the applicant in such manner and form as the Authority may by regulations prescribe; and

(b) any other information prescribed by the Authority by regulations.

(3) At any time after receiving an application under this section, the Authority may, by written notice, require the applicant to provide additional information or documents in support of the application.

5. Licence to establish a securities central depository.

(1) The Authority may, approve an application made under section 4 and issue a licence for the establishment and maintenance of a securities central depository if the Authority is satisfied—

(a) where the applicant is a company, that the securities exchange is a shareholder of the applicant;

(b) upon assessment of the proposed SCDS rules of the applicant, that those rules comply with the regulations prescribed by the Authority; and

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