adminCorporate governance is basically the system by which companies are directed and controlled, and involves regulatory and market mechanisms, and the roles and relationships between a company’s management, its board, its shareholders and other stakeholders and the goals for which the corporation is governed.
Securities Exchange Commission of Zimbabwe chief executive Mr Tafadzwa Chinamo recently said management with excessive power was compromising the boards of some public companies.
“Owner-managers are the biggest problem that we have around Zimbabwean companies.
“As a result of this ownership structure the board tends to be rendered ineffective and resultantly information is usually managed as improving the share price becomes the key obsession. Some AGMs in this country are mere formalities,” he said.
The commission is thus working on mechanisms to improve disclosure by public listed firms. In an ideal market, firms should clarify and make publicly known the roles and responsibilities of the board and management to provide stakeholders with a level of accountability. They should also implement procedures to independently verify and safeguard the integrity of the company’s financial reporting. At the same time disclosure of material matters concerning the organisation should be timely and
balanced to ensure that all investors have access to clear and factual information. Problems experienced by some indigenous-owned banks in the recent past have been attributed to poor corporate governance practices.
According to the Reserve Bank of Zimbabwe regulations, no single shareholder should hold a stake exceeding 30 percent in a financial institution and they should not be involved in the management structures.
This is to guard against interference in the day-to-day operations that should be entrusted to management.
Online Reporter