New stock exchange requirements kick-in

LISTED firms on both the Zimbabwe Stock Exchange (ZSE) and Victoria Falls Stock Exchange (VFEX) have effective 1 January been granted a two-year waiver to also submit unaudited half-year results if audited results are not ready within a specified reporting period without the need for review by external auditors.

Listed firms normally file financials for their half and full year periods as well as trading updates based on their quarterly performance.

However, some firms have been struggling to timeously issue audited results and request an extended period.

Last month, ZSE and VFEX chief executive Mr Justin Bgoni issued separate waiver statements indicating new changes citing section 38 (1) (a) of the Securities and Exchange (Zimbabwe stock exchange listings requirements) rules statutory instrument 134/2019: requirement for review by auditors of unaudited half-year interim reports.

In a notice, Mr Bgoni said, “The Zimbabwe Stock Exchange Limited (“ZSE”) hereby informs issuers that, effective 1 January 2024, the requirement for review by the listed company’s external auditors of unaudited half-year interim reports has been waived.

Victoria Falls stock exchange

“Issuers are now required to submit their unaudited half-year interim reports directly to the ZSE without the need for review by external auditors.

“However, if an issuer elects to have their half-year interim reports reviewed by external auditors in accordance with section 38 (1) (a), they must adhere to the requirements prescribed in that section.”

Mr Bgoni noted that the waiver will remain in effect for a period of two years from the effective date.

Other changes that came into effect on 1 January include rebasing of the VFEX All Share Index.

To rebase, all stock prices are reset to a base figure, commonly 100. When the stock price moves, it is rebased relative to 100.

“The new All share index will be rebased to 100 points. We will continue to avail the old All Share index, however it will not be published,” said Mr Bgoni in a notice dated 29 December 2023.

“The rebasing has been necessitated by the migrations which occurred and there were some distortions on price levels hence the need to rebase. We believe that rebasing will allow the investing public to better judge the performance of the bourse. The addition of additional counters on the bourse will not distort the performance of the index given the stability which we have been witnessing.”

In 2023, several firms migrated from ZSE to VFEX.

From its inception in 2020, VFEX has experienced a positive momentum which has seen 14 listings with some migrating from the Zimbabwe Stock Exchange (ZSE).

ZIMBABWE Stock Exchange (ZSE)

Listed entities cut across mining, property, banking and hospitality sectors and they include SeedCo Holdings, Caledonia Mining Corporation, Innscor Africa Limited, First Capital Bank, Zimplow and African Sun Limited among others.

Other new measures expected to be implemented from I January are that listed firms are required to implement and reflect a set of Mandatory Adoption of Sustainability Reporting regulations on their chairman’s statement of the Annual Report.

Other issuers have already made efforts to adopt and report on sustainability.

The stock exchanges have developed core sustainability disclosure metrics for adoption as a minimum starting point.

Since the publication of the VFEX Listing Rules in 2020 and ZSE Listing Rules in 2019, both exchanges allowed for a transitional period for Issuers to adopt a set of requirements and offered area specific training before enforcement of the requirement.

Despite the reprieve, other Issuers have already made efforts to adopt and report on sustainability.

Training sessions on new requirements have been conducted over the years and issuers are now expected on their Chairman’s statement of the Annual Report to include sustainability information and the organisation’s strategy for addressing sustainability issues.

Early last year, Zimbabwe was praised for making early strides towards the adoption of IFRS, sustainability disclosure standards to be issued by the International Sustainability Standards Board (ISSB) by mid-year 2023.

Zimbabwe has become one of the few African countries to pursue the novel global benchmark for financial reporting.

ISSB standards require companies to report emissions from their direct operations, energy purchases, and from their value chains, including suppliers.

Issues around Environmental Social Governance (ESG) and circular economy have lately become a priority for companies in order to enhance their visibility to the investor community, as they have become a determinant factor in investors’ choice of investments.

Market watchers say early adoption will likely unlock and bring capacity building and support to the country as the accounting profession prepares for implementation.-chronicle