The Zimbabwe Stock Exchange (ZSE) says companies that exit the main bourse will only be allowed to join the soon-to-be launched secondary bourse after three years of delisting.
BY TATIRA ZWINOIRA
ZSE is working on establishing a secondary bourse, the Zimbabwe Emerging Enterprise Market (ZEEM) to allow listing by small-to-medium enterprises (SMEs) that would have failed to meet the requirements of the main bourse.
ZSE chief executive officer Alban Chirume told NewsDay that there will be no lateral transfer from the main board to ZEEM.
“It is proposed that no transfers can be made from the main board to ZEEM. Issuers who exit from the main board will be allowed to apply for listing on the ZEEM board after three calendar years from the date of their delisting. However, there is room for further reflection on this matter once the market has been launched,” Chirume said.
He said the trading and settlement framework for ZEEM was in place and the other condition still to be met was the setting up of a regulatory framework which he wished would be granted in the first half of the year.
ZEEM will require each applicant to have at least $250 000 (but not exceed $9,99 million) in share capital, provide audited financials for at least one financial period prior to listing, must have a minimum of 50 public shareholders, achieve at least 26% public shareholding and appoint a designated advisor.
The establishment of ZEEM comes after the ZSE has been experiencing increased problems due to the low economic activity, stemming from failure to attract investment from both domestic and foreign investors.
As a result, companies have been unable to meet the capital and listing requirements of the main bourse leading to them delisting from ZSE.
However, SME Association of Zimbabwe executive officer Farai Clement Mutambanengwe raised concern over delisted companies being able to come onto the ZEEM.
“The comments seem fair, except of course that part about delisted companies from the main bourse being able to then come onto this secondary bourse. It appears he is leaving leeway for this to be possible,” Mutambanengwe said.
“The big question of course is how this new market intends raising capital, or making itself an attractive investor destination. Just setting up a bourse does not mean investors will just emerge.”
Mutambanengwe said a secondary bourse was critical for raising equity funding required to grow enterprises. Banks are currently not offering long-term capital required by companies to retool and expand operations.
ZSE has since last year accelerated efforts to establish a secondary bourse. Last month Finance minister Patrick Chinamasa tasked the new ZSE board chaired by Caroline Sandura to work on product development such as the introduction of a junior bourse for SMEs.