JIS News

The Senate, on Friday (Jan. 22), passed the Government Dematerialisation Act, 2010, with 27 amendments, during its sitting at Gordon House in Kingston.
The Bill, which was tabled and piloted by Leader of Government Business, Senator the Hon. Dorothy Lightbourne, seeks to make it compulsory for every investor or owner to convert Government securities held into dematerialised or electronic format, and sets out a process for the conversion of already issued securities.
Over the past several years, the Government, as part of its debt management strategy, has sought to ensure that the attendant policies and operational framework are consistent with international best practices. Currently, various laws, which empower the Government to borrow money, restrict the issue of Government securities to physical paper form.
Investors are required to keep their instruments in safe custody because of the process involved in securing copies when original share documentation is lost. This system is also affected by a range of problems, including delay in the transfer of shares, huge transaction costs, longer settlement cycles, and large paper volume utilised in the process, which impede the entry of investors into the market.
To this end, the Government, in partnership with the Bank of Jamaica (BoJ), will continue to facilitate development of a modern and efficient capital market, through the establishment of a Central Securities Depository (CSD), which will facilitate the issuance of new securities in an electronic format of issuing and recording the instruments.
Another facility, immobilisation, entails the recording and custody of beneficial ownership in a paperless format. This facilitates speedy settlement of trading of securities, resulting in cost savings and risk mitigation for the Government and other stakeholders. Once a shareholder opens an account under this (dematerialisation/immobilisation) system, he may buy or sell shares in electronic form without any paperwork.
The Bill also seeks to appoint the BoJ as the Registrar for the purposes of the Act, while making provision for future designation of a licensed central securities agency, person or body, designated as the Registrar to be duly appointed. The Registrar is required to maintain a register, containing such particulars as may be prescribed.
Senator Lightbourne, who is also Justice Minister and Attorney General, pointed out that the Act forms part of the fiscal responsibility and accountability regime, which the administration “has to face, in terms of our negotiations with the International Monetary Fund (IMF)”.