Home » Legal and Judicial Affairs » Meikles Files $U.S 50 Million Lawsuit Against ZSE

Meikles Limited has filed a record $50 million lawsuit against the Zimbabwe Stock Exchange for delictual damages over the manner its suspension from trading on February 16 was handled.

Meikles has also written to the exchange complaining about the contents of the notice issued to the public last week aising of the removal from temporary suspension.

In the application filed by Mutangamira and Associates, the ZSE is listed as the first defendant and chief executive Alban Chirume as the second defendant. The company is claiming for a declaratory order declaring the suspension of the trading of its securities by ZSE null and void, payment of delictual damages for patrimonial loss

of $50 million plus interest and costs of the suit.

Meikles says ZSE defied all known precepts of fair administrative conduct in the manner it acted on the issue, which has been dominating business headlines in the past two weeks.

ZSE has come out the worst in the way it handled Meikles’ suspension after it failed to follow the proper procedure even though it had concerns over the balances owed by the Reserve Bank of Zimbabwe.

The suspension was done without prior notice saying that since the matter was deemed urgent, it had not sought Meikles’ prior submissions on the issue. Instead the ZSE’s delegated powers from the objectives of SecZim detailed in Section 4 a) c) d) and e) of the Securities and Exchange Act Cap 24: 25 took precedence over the Listings Requirements.

The exchange alleged that there were material discrepancies between the amount confirmed as owing by the RBZ being $76,1 million and the amount presented in the March 31 financials as $90,8 million.

However, Meikles in the court papers says that ZSE acted unreasonably “because the financial statements containing the information which led to the suspension were published with the first defendant’s permission after due scrutiny and verification. The first defendant could punish an act previously sanctioned by it”.

The company says at the time the financials were published the debt clearly stood in the region of $90 million but they were still locked in negotiations with the RBZ.

“It is therefore unreasonable to say that the plaintiff deliberately attempted to mislead investors or intended to mislead investors at all.”

“In the circumstances, plaintiff seeks a declaratory order to the effect that the ZSE’s conduct in suspending the trading of its shares on February 16 is null and void.”

On the issue of the $50 million damages claim, Meikles says the suspension of the trading of its securities is a grave matter whose consequences are far reaching and have a definite negative impact on the value of the counter.

“The confidence of investors and the perception of the plaintiff by the public in general was negatively affected.”

Meikles says because of the issue there is panic and great unease among its creditors, bankers, members and other stakeholders.

“The suspension threatens the very existence of the plaintiff as a publicly traded entity and is a permanent dent to its reputation. As we speak, the price of the shares, which is its very lifeblood, have fallen and continue to fall. The suspension caused a global buzz and jolted the confidence of its shareholders and business partners.”

In the letter to the ZSE, addressed to Mr Chirume, Meikles says it was not in the bourse’s space to aise caution on the trading of its shares.

Meikles says it is trite that cautionary statements relating to securities are issued by the issuer of the securities, ordinarily with the approval of the ZSE and not the other way around.

Mr Chirume’s woes continue to mount over the Meikles saga with the ZSE board last week opening investigations into the CEO’s conduct through its audit and risk committee while the Securities and Exchange Commission is also instituting its own proceedings over the same issue.

Source : The Herald

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