A listed company needs to communicate effectively with its shareholders and the wider investing public. This helps current and prospective investors to understand the operations of the company and its future. FINSEC listing rules sets forth on-going obligations for listed companies, and these obligations include the need for listed companies to make certain types of public disclosures regarding the financial and operational details of the company. A number of high-level principles sit behind these requirements, including a desire to ensure a level playing field for all investors and equality of information.
Selective disclosures pose a serious problem for investors because insiders can take advantage of information for their own gain, at the expense of the general investing public who often do not have an insight into key details regarding the management of the companies in which they invest. Cautionary statements are crucial in assisting investors to trade carefully whenever there are discussions that could impact on the company’s operations and share price.
Cautionary statements must contain disclosure of all available details regarding that information that is the subject of the announcement and contain a warning to shareholders, that they are advised to exercise caution when dealing their securities until full details regarding such information have been announced.
According to the FINSEC Issuer Admission Rules an Issuer must immediately issue a cautionary statement whenever they are considering matters that may influence the price of their securities on the exchange or where the Issuer acquires knowledge of the leakage of any material price sensitive information.
“Price-sensitive information” is information about the Issuer or its business or affairs that, if publicly known, would likely have a material effect on the price or value of the Issuer’s securities, or influence persons in deciding whether to trade in the Issuer’s securities. Examples of price-sensitive information include a material variance in the financial performance of the Issuer against its budget or the entry into, or termination of a major transaction.
Events that may trigger the issuance of a cautionary statement include where an Issuer seeks to reduce the authorised, issued and listed capital (to the extent so legally permitted), or where the Issuer acquires knowledge of the leakage of any material price sensitive information. The Issuer notices must be placed in the press by the most efficient method that will facilitate the widest dissemination possible. Dissemination of such information can be through the press, printed circulars to shareholders or company website uploads. Social media has also become a very effective way of information dissemination. FINSEC is available on its Website, social media platforms and puts notices and articles in the press to ensure both investors and Issuers are adequately informed.
The publishing of Cautionary Statements is an investor protection mechanism put in place to ensure investors are given adequate protection for their investments, with the objective of providing the public with a transparent investment landscape. Market participants are mandated to make protection of investor rights and interests of paramount importance and a priority.
The Financial Securities Exchange (FINSEC) is a Zimbabwe registered securities exchange and a member of the Escrow Group. The Escrow Group has interests in the financial services and technology sectors. Corpserve Registrars and Escrow Systems are the other members of the group.
For more information contact:
2nd Floor ZB Centre, Cnr Kwame Nkrumah and 1st Street
Tel: +263 242 758193
Email: info@finsec .co.zw