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Harare Bureau
FEARS abound in the equities market that plans by the Zimbabwe Stock Exchange to introduce quarterly reporting for listed firms could blow up company costs further precipitating the delisting of cash-strapped public listed entities.
With a number of financially weak companies recently deciding to relinquish their public listings stockbrokers fear they will also be affected if the situation persisted.
Public listed companies are already buckling under the pressure of costs ranging from operating expenses to administrative costs associated with being a public listed entity.
In response, a number of companies have decided to exit the bourse to operate as private entities to ensure flexibility and lower costs as they battle to avoid collapse.
Generally, companies in Zimbabwe are struggling just to stay afloat due to a myriad of economic challenges chief among them capital and liquidity challenges.
“We have told them that quarterly reporting will add costs for companies and many financially troubled companies might actually decide to delist,” said a source.
With a total of 74 listed companies, of which five are currently suspended from trading, stockbrokers would feel the greatest pinch of further reduction in listed entities.
Stockbroking companies derive most of their income from brokerage fees charged on investors buying or selling shares mostly of companies that are listed on ZSE.
The ZSE is planning to introduce quarterly reporting for listed companies as opposed to every six months reporting of financial accounts to ensure investors keep informed.
Together with the Securities and Exchanges Commission of Zimbabwe the ZSE is working on amending listing rules, which will enhance financial disclosure to protect investors.
“That is coming from the ZSE. This is done in other countries. The thinking is that six months is a lot of time, a lot can happen especially in these turbulent times,” a source said.
According to market intelligence, the quarterly reporting requirements could be incorporated in the new listing rules that the stock exchange is in the process of drafting.
ZSE’s chief executive Mr Alban Chirume, said the bourse was planning the shorter reporting periods as done in other jurisdictions and in line with global best practice.
“It is no longer enough that investors only know about the performance of the company once every six months. Despite this being an additional cost to the concerned company, it is of immense benefit to other stakeholders,” the ZSE CEO said.
He said they were also considering a review of interim results by auditors as there was inconsistency in the market.
This would imply that financial results used in any circular will have been reviewed by the auditors, providing comfort to investors.
“We have generally noted that certain sectors such as banking had results reviewed whilst this was not the case in other sectors. We therefore have proposed that the half-year (financial) results be reviewed by auditors,” Mr Chirume said.
Online Reporter