SECURITIES CENTRAL DEPOSITORY (SCD) SYSTEM IN UGANDA

Ownership of shares in a listed company is evidenced by a certificate of ownership. USE, as the market, plays a role in facilitating transfer of share certificates between investors through its trading, delivery and settlement rules. In this respect, USE in conjunction with the listed companies and their registrars, is obliged to provide a conducive, efficient and risk free shares transfer process, and hence USE seeks to implement a Securities Central  Depository (SCD) system for Uganda in 2009

What is a Securities Central Depository (SCD) system?

A Central Depository System is one in which stocks belonging to a particular entity are deposited in the custody of a central depository such that transactions or transfers concerning such stocks are executed in book entry form. The Capital Markets Authority will oversee and regulate the SCD operations.

How does the SCD work?

The SCD acts like a bank of shares, and hence holds shares of investors (shareholders) in a central and integrated manner. By depositing share certificates into a central depository, the delivery of shares in settlement of a transfer of shares executed between a seller and a buyer can easily be achieved with change of records in the central depository instead of physical exchange of certificates. The SCD will accept deposit of securities certificates through the participants (brokers/dealers). Each investor owns a securities account through which shares are registered. Settlement will be done on behalf of the investor by the participants. All Shares to be traded at the USE will have to be deposited into the Depository.

What services are provided by the SCD? The SCD will provide among other things, the following facilities:

 ·         immobilization of physical certificates where certificates deposited are held in a single depository and not by the individual shareholders

·         withdrawal  of deposited  share certificates by the owners whenever they so wish, possibly at a cost;

·         transfer of shares through entries in the SCD account;

·         settlement of trades executed at the Exchange;

·         procedures for mortgaging of shares as security for loans;

·         Receipt for onward transmission to the shareholders of entitlements such dividends, rights issues, bonuses, etc from listed companies.

·         Periodic statement of accounts to holders of active securities accounts or on request.

For more information on operataions of SCD check out this Brochure and Rules.