HARARE – The Zimbabwe Stock Exchange (ZSE), in collaboration with the Securities Commission of Zimbabwe (SecZim), plans to introduce quarterly reporting as part of a set of new listing rules.
Alban Chirume, ZSE’s chief executive, said the bourse intended to impose the shorter reporting periods as is done in other jurisdictions and in line with current global best practice.
“It is no longer enough that investors only know about the performance of the company once every six months.
“Despite this being an additional cost to the concerned company, it is of immense benefit to other stakeholders,” the former SecZim chief executive told an Institute of Chartered Accountants of Zimbabwe seminar last week.
He said they were also considering a review of interim results by auditors as there was inconsistency in the market.
“We have generally noted that certain sectors such as banking had results reviewed whilst this was not the case in other sectors.
“We therefore have proposed that the half year results be reviewed by auditors,” said Chirume, adding that this implied that results used in any circular will have been reviewed by the auditors, providing comfort to investors.
Some of the new requirements to be imposed by the bourse, and enforced by SecZim, include improved financial disclosure and a limit to multiple directorships among other measures.
Chirume said “they were taking the revision of listing requirements” ? last done in 2002 — “as one of the major projects”.
“We are actually putting out a first draft of revised listing requirements in mid-November,” he said.
“We have already circulated existing listing requirements to stakeholders,” the former SecZim chief executive said, adding that “unfortunately in this country people don’t comment as much as they should, they always comment after things have been done and starting to take off.”
This comes as the current listing requirements for companies have exposed several shortcomings and allowed abuse of minority shareholders, who often do not have an insight into key details regarding the management of their companies.
Chirume said the thrust was to “consult widely so that they produce a document that encompasses best international practice”.
“We propose to register all professionals that are involved in corporate actions of listed companies and will be referred to as ‘sponsors’.
“The regulation of sponsors will compel accountability,” he said adding that professionals that will be captured in the ambit include accountants, lawyers, auditors and advisors.
Chirume noted that the local bourse aimed to have a Memorandum of Understanding (Mou) with each respective apex regulator of the various professionals.
He said they were concerned with cross directorships that exist in the arena of listed companies.
“With the new rules and hopefully the new National Code on Corporate Governance, we propose that there will be a cap in terms of the permissible number of directorships an individual is allowed to hold.”
Chirume pointed out that under statutory instrument 100 of 2010, an individual cannot be a director of more than seven listed companies.
“ZSE will also deal with issues of conflicts of interests that arise as a result of sponsors sitting on the boards of companies they are directly or indirectly advising. We propose that this be prohibited in the new rules,” he said.
Chirume also added that there will be introducing penalties for non-compliance.
“As part of enforcement, ZSE proposes to fine issuers and sponsors where non-compliance with the rules is noted.
“This is a virtually new concept on the ZSE but administrative fines exist in other markets such as the Johannesburg Stock Exchange and London Stock Exchange.”
He added that they were also looking at the concept of disgorgement, where the quantum of penalties on insider trading will be based on the profits made.
“Proving insider trading is a challenge but we hope that the monitoring and surveillance systems that come with the Automated Trading System will go a long way in that regard,” he said.