THE SECURITIES Commission of Zimbabwe (SECZ) says Lifestyle Holdings minority shareholders were duped into blindly voting in favour of setting up TN Harlequin International Limited, a shelf company that has a capital of $100.
Report by Victoria Mtomba
TN Harlequin will be domiciled in Mauritius. In a wide ranging interview, SECZ chairperson Willia Bonyongwe said the commission was worried about the lack of full disclosure to minority shareholders in the scheme transaction.
“We did not want the scheme to go ahead without offering the shareholders information on the state of the company and that is normally done through audited accounts,” she said.
“The audited accounts are supposed to be out by March 31 2012 and the company should have gone through the delisting procedures which they did not do.
“TN Harlequin international is a shelf company. We are saying do we have the financial accounts or the balance sheet of the company? “ZSE should have insisted that all procedures be done.
“We think people voted blindly and we insist there is need to avail that information to the public before delisting.”
SECZ and Christopher Mutsvanga failed in a bid to halt the scheme meeting after filing a High Court application opposing the meeting after arguing that not enough information had been availed to enable shareholders to make an informed decision.
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Bonyongwe said Lifestyle Holdings did not avail audited accounts to minority shareholders to make an informed decision.
Lifestyle Holdings, according to Bonyongwe, will only pay minority shareholders after 12 months, an indication that the company does not have enough funds.
“It has never happened anywhere in the capital market,” she said. “If minority shareholders are being paid, they get the funds on a once-off payment.
“But in this case there is no guarantee shareholders will get their money because as long as Lifestyle delists the shareholders might lose everything as ZSE and SECZ will no longer be in control,” she said.
The SECZ chairperson said the regulatory body had engaged ZSE in order to ensure that Lifestyle Holdings followed all procedures as it did not get the nod from the local bourse to proceed with its extraordinary general meeting for the annual general meeting to take place.
“There was no formal approval from the ZSE to the broker as far as we are concerned.
“The ZSE has to do so through public censure. We are talking with the ZSE that they follow the right procedure,” Bonyongwe said.
Bonyongwe said the ongoing amendments of the Securities Act will empower the regulator to deal directly with listed companies.
According to documents availed by SECZ, prelisting statements should provide a clear and adequate explanation of its subject matter.
If voting or other action is required, the statements must contain all information necessary to allow the holders of the securities to make an informed decision.
The circulars also require that where new securities are being issued in substitution for existing securities, the fate of existing documents of title must be explained.
Lifestyle Holdings held an annual general meeting a fortnight ago at which minority shareholders voted for the exchange of 235 Lifestyle ordinary shares for one TN Harlequin International Limited share.
Minority shareholders complained about the lack of disclosure at the meeting, but they later voted in favour of the transaction.
