ZSE boss under fire . . . as Meikles suspension is lifted before court ruling

via ZSE boss under fire . . . as Meikles suspension is lifted before court ruling | The Herald February 24, 2015 by Happiness Zengeni

Meikles Limited has filed a complaint to the Securities and Exchange Commission of Zimbabwe against what it calls the unprofessional and unethical conduct of the Zimbabwe Stock Exchange following procedural flaws in the manner it handled the suspension of the hospitality group last week.

The complaint was made to SecZim in its capacity as regulator of the capital markets. In a letter written by Tendai Biti Law Firm on behalf of Meikles and seen by The Herald Business, attention is brought to SecZim chairperson Mrs Willia Bonyongwe over the conduct of the ZSE and the illegality of the suspension.

On February 16, the ZSE announced Meikles suspension after noting discrepancies in the Reserve Bank of Zimbabwe and Meikles debt balances as held by the central bank. Pursuant to Section 23 of the Securities and Exchange Act (Cap24:25), suspension of trading in the company’s shares was granted said the ZSE in a statement.

Meikles says it was not notified as is required by the Listings Rules while the formal letter suspending its stock from trading only came after 7pm last Monday.

After the suspension Meikles sought approval from the exchange to notify its shareholders on the status of the move.

However, in correspondence addressed to Meikles company secretary Mr Thabani Mpofu, CEO Mr Albert Chirume said the exchange would need more time to respond to the request as it was conflicted. Mr Chirume promised to respond within 24 hours.

However, Mr Biti in the letter of complaint says that the ZSE did not write back or respond to Meikles.

“Instead, they proceeded to publish their own notice in The Herald of Thursday February 19. Clearly, the above conduct of the ZSE is unprofessional and unethical. The ZSE had a duty to publish its own notice immediately after the suspension on Monday February 16. It did not do so.

“Having been advised of our clients’ own notice it then used that insider knowledge to publish its own notice,” says Mr Biti.

After the 24 hours had lapsed Mr Chirume through ZSE’s Business Development office wrote to Mr Mpofu saying that it was unable to approve the proposed notice to shareholders as it disagreed with Meikles on the matter.

“The conduct is clearly unbecoming of an independent professional stock market,” reads the letter of complaint.

If ZSE is found to have acted unprocedurally in the manner it handled the suspension of trade in Meikles shares, SecZim is empowered by the Securities Act to take disciplinary measures against the bourse.

The ZSE lifted the suspension on Meikles shares yesterday before the ruling on the High Court urgent chamber application where the hospitality group was challenging the move.

The suspension was lifted after the ZSE Listings Committee met in the morning yesterday and resolved that Meikles should be allowed to trade after acknowledging the ZSE chief executive did not follow proper procedure.

Meikles put up a notice of withdrawal on the urgent chamber application after ZSE lawyer Mr Edward Manikai addressed the court and formally announced the reinstatement to Justice Lavender Makoni.

Analysts say Meikles can sue for damages and inconveniences resulting from the “illegal” suspension. However, if proper procedure is followed and investigations are carried out, Meikles could be formally suspended over various corporate governance deficiencies.