adminSome counters due to operational viability constraints and corporate governance issues have been delisted from the Zimbabwe Stock Exchange.
Four counters — Cairns, Celsy, Chemco and Steelnet have this year been struck from the local bourse listing register bringing the number of delisted companies on the ZSE to nine.
As a result of the delisting, minority shareholders in most cases have not been able to transact on their shares.
“There is need to expedite the setting up of an investor protection fund so that the shareholders are compensated when a company gets delisted from trading on the stock exchange.
“The investor protection levy if established is just similar to an insurance policy, where the policy holder is compensated in the event of an uncertainty,” said an economist, Mr Christopher Mugaga in an interview yesterday.
He said stock brokers had shown reluctance towards the setting up of the investor protection levy because the fund draws money out of their pockets.
Mr Mugaga said despite their reluctance it was imperative for the shareholders to get protection through the fund in case of a counter delisting from the local bourse.
He said it was also critical to consolidate minority shareholders’ stake in listed companies.
“Through the investor share consolidation, it allows minority shareholders to get more shares than what they are holding.
“Presently, if you look at the share register for most of the companies listed on the stock exchange, you will find out that minority shareholders hold between 15 percent and 20 percent shares while the remainder is held by the major shareholders.
“The trend has to change such that when a company is delisted, the minority shareholders are protected,” he said.
In a separate interview, the dean in the Faculty of Business at Solusi University Mr Bongani Ngwenya said liquidity was a major challenge affecting some listed counters on the ZSE.
He said the counters should improve their capitalisation levels by engaging institutional investors.
“Management of companies listed on the ZSE has to be proactive and ensure that they embrace issues of good corporate governance to ensure that the counters’ operational efficiency is not compromised. It’s high time Government enforces corporate governance framework,” he said.
In a commentary, AfrAsia said the ZSE listing requirement provides various guidelines on how listed counters must provide price sensitive information to the public.
“Profit warning statements and cautionary statements are some of the ways investors are expected to be informed on how certain companies are performing.
“Further, the regulations require suspended companies to update shareholders on a quarterly basis the state of affairs of the suspended company and any action proposed to have the suspension lifted,” said the financial institution.
It said the requirements to have regular updates on progress towards the removal of suspensions have largely not been complied with.
“The listing requirement states that ‘if a listing is suspended and the affected issuer fails to take adequate action to enable the ZSE to reinstate the listing within a reasonable period of time, the ZSE may terminate the listing’. What constitutes “reasonable time” is subject to debate but Barbican and TZI have been suspended since 2004 and have not given any indication of when they will resume trading.”
Online Reporter