Home » Business » ZSE Takes Meikles to Task

The Zimbabwe Stock Exchange has requested Meikles Limited to submit a copy of the agreement on the amount owed by the Reserve Bank of Zimbabwe.

The exchange have also asked the hospitality group to respond to the submissions made by the RBZ on the amount owed and to issue a statement on the financial effects and any litigation issues on the debt which could have a material impact on the 2014 financial results.

ZSE has given Meikles until Monday March 2 to respond.

The new requests come after the exchange acknowledged that it had not followed proper procedure when it suspended the stock from trading last week Monday.

In a notice, ZSE chief executive Alban Chirume said the decision to reverse the temporary suspension had been necessitated by the fact that Meikles was not given an opportunity to make representations in terms of Section 111 of the Securities and Exchange Act (Cap 24.25) and paragraph 1.5 of the ZSE Listings Requirements.

Initially, ZSE had said 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.

According to the ZSE, the Securities and Exchange Commission of Zimbabwe approved the temporary suspension and lifting of the suspension.

The RBZ debt schedule gazetted last August shows that Meikles was owed $40,64 million as at September 30 2013. This was after accounting for 4,68 percent interest on the original amount owed of $24,88 million.

In 2011 after the October 2010 demerger with Kingdom Financial Holdings the group recorded balances held by the RBZ as $36,82 million from the unaudited restated 2009 January 1 amount of $35 million. In 2012 the amount was at $38,62 million and then rose to $40,51 million in 2013.

However, last year, the group recorded the balance as $90,8 million, a 124,14 percent increase from the prior year’s amount. Meikles said the increase in the amount was as a result of interest negotiations, which are based on lending rates.

In a statement, chairman John Moxon said the sum due to Meikles had indeed increased to $90 million after accruing interest over the years.

“The sum due to Meikles was to be calculated by accruing interest to the capital sum outstanding from time to time at a rate of 8 percent per annum compounded backdated to January 1998 when the deposit was made,” he said.

He added that this arrangement although accepted by Meikles, in fact, accrues interest to Meikles at a lower rate than the cost of borrowing to the company.

Mr Moxon said to clarify the current position, the RBZ has committed $76 million of Treasury bills and other payments in writing, but they had not yet been received in full by the company.

Analysts say the requests to have a copy of the “I-owe-you” agreement and for Meikles to respond to the RBZ letter are debatable as ZSE might not have enough legal standing to enforce this.

However, according to Respect Gwenzi, a market analyst, what ZSE has got power over is to push Meikles for full disclosure.

“Meikles should disclose fully the status of that debt and any impact it has on its financial results. But ZSE should have handled this last year when they signed off the September interims which showed the amount had shot up to $90,8 million.

“Instead of just giving a seal of approval, ZSE should have questioned why there had been a jump to that amount from $40 million. That is its job in the first place. Why wait for parliamentarians to raise this issue?”

ZSE has come under fire over how it handled the issue which has been in the public domain since last year. A comment from The Herald website yesterday questioned what will happen to Mr Chirume in light of the glaring incompetence that he wantonly displayed over the issue.

“It is a fact that the ZSE CEO did not follow procedures. So what is going to happen to him? Is he a competent person to hold the office of CEO of such an organisation?

“In my opinion, Meikles should proceed with a court case to claim damages they have suffered because of the incompetency of the CEO of the ZSE,” reads part of the comment.

Source : The Herald

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