The latest decision by an “unknown entity”, using the CFI Holdings Limited (CFI) logo, to make an offer to purchase the company’s shares at a 35,68 percent premium to the current trading price is challenging the Zimbabwe Stock Exchange’s resolve to keep the listed entities on check.
On the 12th of February 2018, our sister paper, The Herald, carried a notice using a CFI logo offering to buy CFI shares at a price per share of $1,10 a 35,68 percent premium to the current trading price of $0,7075.
The notice came despite the fact that CFI is currently under suspension for violating certain ZSE listing regulations.
The ZSE suspended trading in shares of CFI for a period of three months with effect from January 2, 2018 after the company had breached listing requirements including complying with Section 4 Paragraph 4.25 (d) of the listing requirements; which stipulates the free float of any listed entity.
While the market was expecting the company to come back to the market reformed and in compliance, the latest notice (offer) puts to question whether the company is ready to deal with its misdemeanours with regards its listing on the ZSE.
While it is not known whether CFI issued the notice, the lady who answers to the numbers on the notice says she is representing the listed entity.
ZSE chief executive officer Martin Matanda said: “The company advised us the notice did not originate from their offices even though the letterhead on the notice appeared authentic.
“We had in the circumstances prescribed certain actions to be taken by CFI Holdings to clarify the matter by close of business tomorrow (Tuesday).”
After the expiry of the ZSE deadline, the company requested an extension of the deadline for their response to the ZSE.
With the notice having been in the public domain for more than a week now, the market is yet to see CFI disassociating itself with the notice given its implications to the company’s listing on the ZSE.
This leaves the whole issue to speculation and questions the company’s sincerity in conforming with the ZSE requirements.
One of the major shareholders in CFI, Nicholas van Hoogstraten, puts the whole blame on the ZSE, which he says has been biased in the way it handled the CFI “saga”.
Van Hoogstraten is on record saying a permanent exit from the ZSE would be a non-event as the company’s assets had been pillaged under the ZSE’s watch.
But the question is where that leaves other minority shareholders who have been invested in the company over the years. Are their rights being protected? Probably the bigger question is whether the ZSE has adequate rules and regulations to protect all shareholders.
An analyst with Trigrams Investments, Walter Mandeya said the ZSE has adequate rules but what was just lacking was information dissemination and education.
“I think the rules are adequate. The regulations should not interfere with the operations, but I think what is lacking is education of the minority shareholders on their rights and simple mechanisms to unite them when issues like the CFI ones arise.”
“Also the directors have a duty to minority shareholders. They should be able to communicate with the shareholders directly so that they protect the company.
“In the case of CFI, I think that the regulators should just push for an offer to minorities and allow an exit for them.”
A local stockbroker who cannot be named for professional reasons said as much as markets have regulations, there can never be perfect.
“There is no perfect regulation. Legislation and regulations are crafted with the expectation that we are all looking for fairness.”
“There is nothing that regulators can do when some shareholders look for all the loopholes possible. How do you deal with that kind of behaviour?” said the stockbroker.
He, however, said given the offers that have been tabled by the squabbling major shareholders, minorities should have sold out a long time ago and there should be no minorities left in CFI.
Another analyst who can also not be named said the ZSE should take blame for what has happened at CFI.
“To be honest I think the ZSE picks sides. What did Van Hoogstraten really do wrong? He was by strict law right in the conflict of interest for the EGM vote for the sale of Langford.
“Now the ZSE suspends the company for governance issues but how many companies do not have 30 percent shareholding in the hands of the public but trading on the ZSE? It’s sad.”
He said the major challenge the equities market is facing is that the regulatory bodies are not consistent with the rules of the market.
“They move the goal post for some influential people against insisting on the rules and regulations of the market and sometimes they turn a blind eye when they are supposed to protect the minority shareholders.”
“I do not believe that any group of shareholders should be given a special treatment. The best thing is to ensure that there is a level playing field for all stakeholders, more transparency, and all parties involved in an issue consulted before decisions are taken.”
He adds that transparency was key for minority shareholders because they are not on the board of companies and all they get are statements from the management, hence the need to ensure that companies are more transparent in their dealings.
“As in the case of Langford, non-disclosure of information to shareholders by the board or management of companies is a big problem that need to be addressed.