NEW listing rules being crafted by the Zimbabwe Stock Exchange will limit the number of boards on which individuals can sit, an industry official has said. Securities Commission of Zimbabwe chief executive Mr Tafadzwa Chinamo, in an interview yesterday, said there was ongoing discussion on the limit to directorships.
According to SECZ, publicly listed companies have been taking advantage of conflicting positions in legislation such as the Companies Act and listing rules.
Mr Chinamo said once finalised the new listing rules will provide guidelines on what listed companies should do.
As such, when the new listing rules have been completed, which is expected by November this year, there will be limits to board directorships of listed companies.
“You cannot have a listed company behaving like an unlisted company; there should be a difference. It is not healthy for an individual to sit on more than 10 boards.
“We may have to say an individual cannot sit on more than seven boards, for example. We may also have to look at the number of positions one holds.
“For instance, one may not be chairman for all the companies on whose boards they sit or chair all audit committees of the boards he sits on,” said Mr Chinamo.
The ZSE is in the process of consulting with stakeholders such as stockbrokers, accounting firms, financial and legal advisers on the new set of listing rules.
Mr Chinamo said the efforts were aimed at enhancing good and strong corporate governance as the country trudges towards its own governance code.
“This is a step in the right direction where we are establishing standards. It is best practice. Can someone really be effective if they sit on more than 10 boards? Most of these boards sit at almost the same time,” said Mr Chinamo.
The SECZ boss said the current framework of listing rules was not clear on how issues such as the number of directorships in listed firms should be handled. To that end, SECZ directed that the ZSE should amend its listing rules using the regulatory authority’s guidelines as the minimum to be improved or refined.
Mr Chinamo said the current set of listing rules has been like a draft to be reviewed, which has taken too long to finish hence the directive to fast track the process. Some of the listing rules are in conflict with the Companies Act. As such, ZSE will rewrite the listing rules. Mr Chinamo said ZSE has done the initial draft for discussion with stock brokers, accounting firms, analysts and other advisors.