THE process of reviewing the Zimbabwe Stock Exchange (ZSE) listing rules has been finalised, with the new rules expected to be gazetted in the third quarter of this year.

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ZSE’s chief executive officer Alban Chirume

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The listing rules currently in use were drafted in 1998 and were in conflict with other laws governing publicly listed companies.

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But the review would make the listing rules more specific, detailed and ensure that they dovetail into other laws such as the Companies Act.

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The local bourse has long been pushing for more disclosures in line with modern trading trends.

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Finance and Economic Development Minister, Patrick Chinamasa, confirmed that government was through with the crafting of the new rules.

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“I am pleased to advise that the review of the listing rules for the Zimbabwe Stock Exchange has been finalised and will be gazetted in the third quarter of 2015,” said Chinamasa.

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He said the rules would, among other things, “improve corporate governance on the local bourse”.

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The new listing requirements would also cover issues such as conditions of listing, pre-listing statements and methods and procedures of bringing securities to listing.

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Quarterly reporting is one of the items suggested in the revised listing requirements for listed companies under sections three and eight.

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This will make it mandatory for listed companies to publish quarterly results in the new set of rules meant to increase transparency.

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Out of 67 counters listed on the ZSE, only 15 counters are currently trading positively and the rest are in the red.

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The ZSE’s chief executive officer, Alban Chirume, told C&M recently that the introduction of quarterly reports would protect investors by availing information that would make it possible for them to make effective investment decisions, which naturally would allow prudent resource deployment in capital markets.

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“To protect investors, we are introducing quarterly reporting. Under our revised listing requirements project, it will soon be mandatory for all listed companies to embrace quarterly reporting as this allows investors to carefully deploy their resources,” said Chirume.

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Others changes expected include making analysts’ briefings mandatory for all listed companies and the issuance of detailed cautionary statements.

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Given the huge impact of information disclosure in Zimbabwe, it is assumed that when it comes to information acquisition and dissemination on the value of a company, investors can never get enough.

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Although transparency is a virtue in financial markets, there is serious lack of meaningful disclosures among listed companies in Zimbabwe.

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Very few listed companies in Zimbabwe, such as beverages maker Delta Corporation, give regular quarterly trading updates to support investors’ decision-making hence the idea that companies should be forced to release financial results every three months.
\nCompulsory quarterly reporting originated in the United States. Ever since the early 1970s, American firms have had to offer investors these regular financial health checks.

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In 2004, the European Commission compelled companies to publish quarterly financial statements while South East Asian nations have also moved in this direction with only less developed emerging markets trailing.

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Half-yearly and annual reports make it difficult for investors to remain well informed on a company’s performance. – FinGaz

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