THE Securities and Exchange Commission of Zimbabwe (SECZ) is intensifying efforts to compel listed companies to comply with full disclosure requirements following an unprecedented rise in cases where counters withhold valuable information from shareholders and potential investors.
Listed counters have come under the spotlight in recent months for failing to adhere to the Zimbabwe Stock Exchange (ZSE) Listing Rules, which require them to fully disclose information related to their operations.
Under current regulations, companies do not have the discretion to choose what type of information to avail.
Market watchers say failure to provide full disclosures prevent fair assessment of companies as investors and shareholders make decisions based on information given to them.
SECZ chief executive officer Mr Tafadzwa Chinamo told The Sunday Mail Business last week that the commission will continue to campaign for compliance with full disclosure requirements.
“The commission’s efforts so far are witnessed by the introduction of a review panel that scrutinises all published financial statements while reporting standards to be adhered to by companies and their auditors have also been set.
“The commission, in partnership with the Public Accountants and Auditors Board (PAAB), continues to engage companies falling short of the requirement,” said Mr Chinamo.
He added that a lot still needs to be done to ensure that local capital markets comply with internationally acceptable standards for information disclosure.
The ZSE has engaged a panel of experts, chaired by Mr Simon Hammond, who is also the managing director of Old Mutual Shared Services, to review the level of disclosure by listed companies after noting that most of them were failing to give detailed disclosures. The panel, which goes through all the listed companies’ results and Press releases before they are released, intends to analyse results of all the companies before submitting its findings to the ZSE. Most often shareholders fret over the scant information they get from companies usually before major transactions are concluded.
They feel they should have the right to know the identity of the potential suitor, the nature and level of the negotiations. According to Mr Chinamo, all cautionary statements and notices should conform with stipulated disclosure requirements of the ZSE Listings Rules and be subject to the ZSE approval before publication.
However, it is anticipated that the proposed Listings Rules, currently under review, will deal with “any deficiencies with regards to the content of the cautionary statements to ensure no valuable information is left out”.
Some counters have been criticised for not publishing profit warnings, which is seen as giving an unfair advantage to company insiders.
“The commission is of the view that given its mandate to provide high levels of investor protection and prevent market manipulation under Part II, section 4 of the Securities and Exchange Act Chapter 24:25, equitable treatment of shareholders is achieved through full disclosure of material information to the investing public. Failure to disclose would definitely benefit the insiders,” said Mr Chinamo.
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