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Lifestyle is in the process of delisting from the ZSE before its acquisition by a Mauritian entity to avoid capital raising-challenges arising from Zimbabwe’s sovereign risk, which SECZ contends does not hold water since underlying assets would remain here.
SECZ had sought to have the delisting process postponed through an urgent chamber application filed at the High Court, seeking to stop a scheme meeting to consider the initiative.
The application was dismissed on the grounds that it was not urgent, giving Lifestyle the leeway to proceed with its plans. But SECZ chairman Mrs Willia Bonyongwe and chief executive Mr Tafadzwa Chinamo said in an interview yesterday that the commission would not approve the delisting until its concerns have been addressed. Lifestyle had hoped to complete delisting from the ZSE by the end of next month.
Top among the delisting requirements SECZ wants Lifestyle to fulfill are publication of audited financial results, fair valuation of the company by independent financial advisers and provisions to allow minority shareholders to exercise their right to immediately exit or remain part of the group.
“We have advised the Zimbabwe Stock Exchange that we are not comfortable with this because it is not protecting investors,” said Mrs Bonyongwe. “We believe full disclosure must be made. We still expect, as the Securities Commission, that audited accounts will be published, a fair valuation will be done and that provision will be made for those who want to opt out of the Mauritian company.”
According to SECZ, there has not been adequate disclosures since the separation of TN Bank from Lifestyle, the delisting of the bank and now the furniture group. SECZ said it expects full disclosures on the stock market as high as those the Reserve Bank has achieved in the banking sector.
Questions abound on Lifestyle’s valuation and the identity of who did the valuation. SECZ said valuation is critical as shareholders would get shares in the Mauritian firm, TN Luxaire International.
PEOPLE: TAWANDA NYAMBIRAI
SECZ said it was not informed of the value and strategy of the company and why it wanted independent financial advisors.
Mrs Bonyongwe said companies followed strictly laid-out procedures when listing and agreed to be bound by the attendant provisions and should therefore follow similar regulatory guidelines when delisting.
Mr Chinamo said there was nothing personal about the commission’s stance on the Lifestyle Holdings matter, as had been alleged in some quarters, but the SECZ was not comfortable with the manner in which Lifestyle sought to delist.
“It (the manner in which Lifestyle want to delist) also tarnishes the reputation of our markets,” said Mr Chinamo. “The reputation that it will set will open the door to a whole lot of other things.”
Lifestyle allegedly opted for a scheme of arrangement to delist from the ZSE after SECZ, through its members who sit on the ZSE’s Listing Committee, expressed reservations about certain aspects of the scheme of arrangement.
The furniture group obtained approval from the High Court to proceed with its plans. But SECZ maintains that Lifestyle should still fulfill the ZSE delisting requirements to get the commission’s approval to delist.
SECZ, which regulates capital markets in Zimbabwe, said until the Securities Exchange Act has been amended, it would continue to intervene in regulating capital markets issues, such as the Lifestyle one, indirectly through the ZSE.
Lifestyle Holdings chief executive Mr Tawanda Nyambirai said that the company was regulated by ZSE and not SECZ and had complied with requirements of the exchange’s listing committee on which SECZ is represented by ex-officio members.
“They regulate ZSE and not Lifestyle Holdings. Listed companies are regulated by ZSE and we have complied with ZSE requirements and have not received communication from ZSE on their concerns. If they have problems with ZSE they should not draw us into their fights,” he said.
Mr Nyambirai said Lifestyle was not aware of whose agenda SECZ was pushing as 100 percent shareholders at the scheme meeting, representing 87 percent of the total shares had approved the scheme in line with the Companies Act.
He said for a scheme to be approved the majority by numbers and the majority by value should approve the proposal and this provided protection against suppression of minority shareholders’ rights.
Further, he said the company had availed shareholders with the scheme document detailing its plans and the document was endorsed by shareholders at the firm’s extra ordinary general meeting.
Mr Nyambirai said Lifestyle had not published its financial statement because at the time it was obligated to do as such because the financial results were not older than six months as required by law.
Asked to explain on arrangements for immediate paying out minorities, Mr Nyambirai said this was not a priority of the company, but investing in the growth of the company, a resolution that shareholders had agreed to.
Lifestyle has already requested the ZSE to suspend trading in its shares on the basis that the company now has one shareholder against 30 percent free float of shares required for listed companies.
The commission has said it has reservations over Lifestyle’s change of its financial year end to March from December, and views the decision as motivated by the need to ensure delisting occurs before the financials are out, which SECZ wanted out earlier, according to the statutory requirement.
It had also wanted Lifestyle to employ independent financial advisers, rather than TN Asset Management, owned by the founding directors, to clear any doubts about the firm’s financial position.
SECZ opposed the use of TN Asset Management, as advisors, over possible conflict of interest.
The commission had also earlier demanded that major shareholders pushing the delisting agenda should recuse themselves from voting on the scheme arrangement as they were the ones who had initiated the proposal. Furthermore, the commission wanted Lifestyle to immediately pay minorities their shares’ equivalent worth, as opposed to making payment over 12 months, yet investors can sell their shares any time if a stock is listed.
SECZ has also expressed reservations over the delisting of Lifestyle and its former sister company, TN Bank, which also delisted after its takeover by Econet Wireless, only three years after listing.
Online Reporter