Tanzania: Dar es Salaam Stock Exchange suspends NICOL

DAR ES SALAAM Stock Exchange (DSE) has suspended the trading of National Investment Company Ltd (NICOL) for one month after failing to submit its financial results for two consecutive years.

The DSE governing Council also decided to take the measure after NICOL failed to report the intentional selling of 22 million shares which is part of its stake in the National Microfinance Bank (NMB).

However, NICOL's Corporation Secretary and Legal Council, Mr Herbert Nyange, could not see how the Investment Fund could comply with the DSE regulations while their boards of directors and Chief Executive Officer have been suspended by Capital Market and Securities Authority (CMSA).

"... unless and until CMSA releases NICOL's bank account and reinstates its officers and Directors, there is no way for the company to be able to comply with your mandate," Mr Nyange wrote on Tuesday in a letter to the DSE Chief Executive Officer. The letter has been seen by the 'Daily News'.

According to a DSE statement issued on Tuesday, NICOL wanted to use the proceedings to invest on other portfolios but the diversification did not appear on 2009 or 2010 financial statements.

"Making a decision to diversify from its well-performing portfolio (NMB shares) and subsequently submitting related resolution to the shareholders before notifying DSE in writing as per Continuing Listing Obligations is wrong," the DSE statement says, is another reason that led to the suspension of trading.

NICOL failed to submit 2009 and 2010 financial results as required by DSE blueprint. In August 2009, the firm was also suspended on similar grounds.

The Council further directed the firm, which has not issued a dividend since its inception, to submit the two financial reports within the suspension period.

"NICOL's failure to fully comply with the directive shall result in its automatic de-listing from DSE," the statement says.

The decision to partially suspend trade at the bourse was reached by DSE Governing Council that met late last month.

NICOL argued in the letter to DSE Chief Executive Officer Gabriel Kitua that the firm and its auditors produced and the Board approved the 2009 accounts in a timely manner.

"However, these accounts cannot be published or submitted to DSE due to actions by CMSA," Mr Nyange argued.

The renowned advocate said the officer legally permitted to approve the distribution or publication of the audited financial results is the Board of Directors, which CMSA has removed.

"Since there is no board, there is no way for the company to comply with DSE's mandate," NICOL's Corporation Secretary and Legal Council said, adding , "furthermore, CMSA has frozen all NICOL bank accounts."

NICOL went to High Court seeking intervention and get CMSA to remove the restrictions imposed on the company.

On other hand, Zan Securities Chief Executive Officer, Mr Masumbuko Raphael, said the suspension is meant to prompt NICOL to comply with the regulations, but will affect less the trading pattern as the firm's counter was dormant for some time.

"Shares trading are driven by the performance of the company. NICOL was not performing well for a long time," Mr Raphael, the CEO of the brokerage firm, said.

He added that should the regulator de-list the company, this would have a negative impact on shareholders as the exits mechanism door will be closed.

A shareholder of NICOL said the suspension would complicate further effort to sell his share, which he tried to offload at the bourse as there is no buyer.

Prior to the suspension, the firm's shares were trading at 245/- a piece, well under the listing price of 350/- in July 2008.

NICOL has about 28,000 shareholders. Its major shareholders are pension funds, religious organizations, municipal and district councils and savings and credit cooperative societies.