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Martin Kadzere in Victoria Falls
Securities and Exchange Commission chief executive Mr Tafadzwa Chinamo said shareholders must stop tolerating incompetent managers as this has led to the collapse of many firms.He said while it might be argued in certain circles that poor performance of companies was a result of economic challenges, he is of the view that a lot of failures were due to poor management.
Mr Chinamo said this while addressing the ongoing 2015 Zimbabwe Association of Pension Funds annual congress in Victoria Falls yesterday.
He said lack of shareholder activism has led to substantial losses, erosion of capital, endless rights issues, low share prices, liquidations and delisting.
Shareholder activism is premised on shareholders rights as laid down in the Companies Act, Articles of Association, shareholders agreements as well as capital markets rules and regulations for listed firms.
“We get all bad things which keep some investors away from capital markets and turn the rest of us into sceptics, namely unchecked poor management decisions running companies into the ground; transactions and deals that benefit a few at the expense of the broader shareholders base,” said Mr Chinamo.
“You don’t have to wait until the company is liquidated.
He said (lightly) it was his wish during his tenure at the SCZ to see an extraordinary general meeting that would call for dismissal of management due to poor performance,” he said.
“We need to see shareholders who say no; we are not happy with how you are running the company.
Mr Chinamo expressed concern over lack of shareholders activism, particularly by the pension funds who own substantial shareholdings in most listed companies and private companies.
He added that shareholders should demonstrate ownership of the companies by guarding their investments and ensure clear polices from the onset.
In addition, he said shareholders should confront conflict of interest, a phenomenon which was prevalent of most ZSE companies.
Furthermore, the SECZ boss urged shareholders to take collaborative approach for an “audible voice” to promote best practice and push for sustainable growth of the companies.
It was important to follow up closely on all corporate events, elections and remunerations of directors, removal of directors, mergers and acquisitions and voluntary winding up of a company.
Such participation in the corporate governance process is done through voting and as such, Mr Chinamo said voting rights provided shareholders with the opportunity to participate in major corporate governance decisions.
Meanwhile, Mr Chinamo said SECZ was pushing for adequate reporting standards to be in line with international standards and they would be a lot of changes next year.
Online Reporter