HARARE - The Zimbabwe Stock Exchange (ZSE) says the Companies Act must be revamped because it has loopholes and is out of sync with global standards.
Its chief executive Alban Chirume said the bourse has engaged the Law Development Commission, which is spearheading the project, to provide input.
“The Companies Act is outdated and may have loopholes that will result in exploitation of minorities in its current form,” he said.
Zimbabwe’s current Companies Act is derived from the 1948 UK Companies Act.
Its overhaul has been on the cards for years.
Chirume said among the issues to be addressed in the revised Act is that of High Court schemes of arrangement that are prejudicing minorities.
“We are also lobbying for reduction of compliance costs to protect shareholder value,” he added.
As part of efforts to protect investors, he said the bourse would be enhancing the role of the financial reporting monitoring panel.
“There is need to restore confidence in financial markets through disclosures to protect investors. Company insiders must be accountable through the production of credible financials,” said Chirume.
This comes as the ZSE also plans to tighten regulation of listed companies by imposing laws demanding improved financial disclosure and curbing insider trading among other measures.
Chirume said the second draft of the listing rules had already been done and final consultations were being conducted before approvals, through the ZSE board and Securities Commission of Zimbabwe (SecZim).
“The listing rules include the introduction of quarterly reporting, mandatory analysts’ briefings for all companies to complement low shareholder activism efforts,” he said.
He added they were pursuing the registration of professional advisors to make them accountable and also limit periods for suspension and judicial management of companies.
“We will ensure that companies adhere to the issuance of detailed cautionary statements and that directors’ trading be disclosed to promote disclosure and curb insider trading,” said Chirume, adding that they will also expand the bracket of individuals prohibited from trading during a closed period.
This comes as the current disclosure requirements for listed companies have exposed several shortcomings and allowed abuse of minority shareholders, who often do not have an insight into key details regarding the management of their companies.
Also included in the revised listing rules will be ZSE’s enforcement of rules through penalties and fines.