Nqobile Bhebhe
Zimpapers Business Hub
The growing submission of incomplete and inaccurate transaction documents to the Zimbabwe Stock Exchange during listing processes is raising concern at the bourse, a senior executive has said.
The practice is delaying listing processes, prejudicing issuers, and undermining the quality of professional services supporting the country’s capital markets.
ZSE’s head of compliance and issuer regulation, Mr Lyndon Nkomo, said inadequate disclosures, repeated errors and failure by sponsors to comply with listing requirements were forcing the ZSE to return documents for corrections, resulting in conditional approvals and unnecessary delays.
He warned that the practice was placing an unnecessary burden on listing committees, whose time and resources were being consumed by submissions that should have been properly scrutinised before reaching the exchange.
Mr Nkomo said this while presenting a paper titled “Bridging the Gap: The Sponsor’s Role in Delivering Successful Transactions on the Exchange”, during the inaugural Financial Markets Stakeholder Summit in Bulawayo yesterday, where he presented
Mr Nkomo challenged sponsors to exercise greater diligence and take responsibility for the quality of documents submitted on behalf of companies seeking to raise capital.
“What we have also been witnessing is a very discouraging trend where people bring incomplete documents. It is expensive to get the listing committee to sit and consider a document, and these people are non-executive with their own assignments to do,” he said.
“The trend over the last few years has been that, if you look at the decisions of the listing committees, there have been conditional approvals because of incomplete documents.”
Mr Nkomo said incomplete submissions were contributing to repeated exchanges between sponsors and the bourse, prolonging transaction timelines and potentially disrupting issuers’ capital-raising plans.
He said sponsors had a duty of care to issuers to ensure that all documentation was complete, accurate and compliant with the exchange’s requirements before submission.
“That is unacceptable. Sponsors, you owe a duty of care to our clients to ensure that when you submit documents, they are complete and meet the full requirements,” he said.
“We have been experiencing repeat submissions between ourselves and sponsors because of errors in prospectuses, errors in previous documents and errors in the documents that we are reviewing,” he said.
The delays are particularly costly for issuers pursuing time-sensitive transactions, where regulatory requirements and documentation shortcomings can hold up the finalisation of deals.
“Because sponsors are not being meticulous in terms of the preparation of documents, ensuring that they contain all the appropriate disclosures required in terms of the listing rules, transactions are delayed to the prejudice of the issuer,” he said.
“These transactions are usually time-sensitive. But if we keep on issuing comments and you don’t address them, that becomes a problem for the issuer.”
Mr Nkomo said only a few sponsors consistently submitted accurate documents containing full disclosures and meeting the requirements of the relevant circulars.
“So I think there are probably only a few that bring documents that are accurate, documents that contain full disclosures, documents that meet the requirements of the circular,” he said.
He also pointed out other compliance shortcomings that were holding up transactions, including failure to obtain Competition and Tariff Commission (CTC) approval where required, inappropriate valuations and outstanding fees.
“Some transactions require CTC approval. If it is not obtained ahead of time, finalisation is delayed, often on time-sensitive deals and to the prejudice of the Issuer,” he said.
On valuations, he warned that improper assessments could stall transactions, urging sponsors to understand the prescribed requirements and engage appropriately qualified professionals.
“Improper valuations have stalled transactions. Know what the Listings Requirements prescribe, the type of valuation required and who is qualified to perform it.”
He also reminded sponsors that outstanding fees could affect regulatory processes, particularly for companies seeking to migrate from the ZSE to the Victoria Falls Stock Exchange (VFEX).
“All fees must be cleared. The ZSE letter of good standing, which is key for VFEX migrations, depends on it and authorisation to publish circulars or pre-listing statements may be withheld until payment.”
Mr Nkomo urged sponsoring firms to strengthen their internal review procedures and ensure that professionals responsible for preparing transaction documents understood the applicable listing rules.
“I think it’s something that we need to reflect on. When you are submitting a document, reflect on whether you have done what is required,” he said.
He also raised concerns over skills development within sponsoring firms, calling on senior professionals to invest in mentoring younger practitioners to safeguard service standards and maintain client confidence.
“This is a very important issue as to whether the principals in various firms are also giving time to train the young ones that are coming up. Because if you do not train them, the output is going down and you may lose clients,” he said.
Sponsors play a critical role in guiding companies through listing requirements and ensuring that information presented to investors is accurate, complete and transparent.
Their diligence is therefore essential to improving transaction efficiency, protecting issuers from unnecessary costs and delays, and strengthening confidence in Zimbabwe’s capital markets as the country seeks to deepen market activity and attract more companies to raise capital through the exchange.
