MIK Meikles Limited

 
TIDMMIK 
 
MEIKLES LIMITED CHAIRMAN'S UPDATE 
 
Shareholders and the public have been following with interest the conduct of 
the Zimbabwe Stock Exchange (ZSE) with regards the Meikles Limited (Meikles) 
shares over the past two weeks. Meikles learnt of the suspension of the trading 
of its shares on the morning of Monday the 16th of February 2015. The ZSE at 
that stage informed Meikles that the reasons for the suspension would be 
formally communicated to Meikles before the end of that day. Meikles did not 
receive formal notification of the suspension until Tuesday, the 17th of 
February 2015 at 2.05pm, despite a total of 4 letters being written to the ZSE 
by the Company Secretary requesting the formal notification. 
 
Meikles initially sought an amicable resolution of the issues pertaining to the 
suspension of the trading of its shares as it was immediately clear to Meikles 
that the suspension had been carried out in a manner that flagrantly violated 
both the rules of natural justice and the specific and unambiguous requirements 
of Section 1.5 of the ZSE Listing Requirements, under whose provisions the ZSE 
had purported to have carried out the suspension. To that end Meikles requested 
an audience with the ZSE to discuss this issue but the consequent meeting did 
not produce a resolution. Meikles then approached its Legal Practitioners and 
instructed them to communicate to the ZSE and demonstrate to them the 
illegality of their actions. When there was no response from the ZSE, Meikles 
approached the courts as a last resort. 
 
The matter was set down for hearing on Monday, 23rd of February 2015 at 
10.00am. Meikles' representatives included the Company Secretary Mr Tabani 
Mpofu, accompanied by Advocate Thabani Mpofu and Mr Jacob Mutevedzi of 
Mutamangira and Associates Legal Practitioners to the High Court. Upon arrival 
they were informed that the ZSE had lifted the suspension of the trading of the 
Meikles' shares with immediate effect, a development which led to the 
curtailment of the legal proceedings without argument. The ZSE never at any 
stage before the court date proffered any response to the arguments raised by 
Meikles in the court application. 
 
The ZSE has since publicly acknowledged the illegality of its actions in 
suspending the trading of the Meikles' shares on the 16th of February 2015. 
 
When Meikles' initial efforts to resolve the issue with ZSE failed to produce 
an amicable settlement, Meikles wrote to the Securities and Exchange Commission 
(SEC) pointing out the illegality of the ZSE's action and seeking its 
intervention. In total Meikles, through its Legal Practitioners, wrote three 
letters to the SEC before the court date of Monday, 23rd of February 2015, all 
relating to the conduct of the ZSE. In response to Meikles' complaint on the 
illegal nature of the suspension of the trading of Meikles' shares, the SEC 
informed Meikles that it had requested an explanation from the ZSE which it 
expected to receive within a period of 7 days. 
 
On Thursday, 26th of February 2015, two events of considerable concern to 
Meikles occurred. The first was that the ZSE posted an advertisement in The 
Herald in which it admitted to having acted illegally in its suspension of the 
trading of the Meikles' shares. In addition the Chief Executive Officer of the 
ZSE, Mr. Alban Chirume, who is the author of the advert, revealed that the 
illegal suspension of the trading of the shares of Meikles was done with the 
approval (and therefore prior knowledge) of the SEC. The second event was that 
Meikles received, just before mid-day, a long letter from the SEC in which many 
questions and allegations were posed to Meikles, some of which relate to events 
that occurred almost a decade ago. The SEC letter, authored by its Chief 
Executive Officer Mr Tafadzwa Chinamo, also stated that the letter would be 
published in the media notwithstanding the fact that Meikles, had not yet had 
the opportunity to respond to the questions. 
 
After the revelation by the ZSE that the SEC had approved the illegal 
suspension of the trading of the Meikles' shares, Meikles established that a 
representative of the SEC was part of the panel that implemented and effected 
the illegal suspension of Meikles. 
 
Meikles wishes to draw the attention of the public to the provisions of the 
Securities and Exchange Act which created the SEC and which therefore guides 
the operations. Section 111 of the Securities and Exchange Act enjoins the SEC 
to observe the rules of natural justice in the carrying out of its functions. 
The Act states that the SEC shall take all reasonable steps to ensure that 
every person whose interests are likely to be affected by the exercise of its 
functions is given adequate opportunity to make representations in the matter. 
 
Information in the public domain which has been presented in unambiguous terms 
by the ZSE suggest that the SEC was in violation of the dictates of the 
Securities and Exchange Act when it approved the illegal suspension of Meikles 
well knowing that Meikles had not been given a chance or opportunity to make 
submissions on the matter. This information suggests that, contrary to the 
clear provisions of Section 111, the SEC failed to take all reasonable steps to 
ensure that Meikles was given a fair opportunity to make representations before 
the suspension was effected. The implications of this are very serious. 
 
As indicated above, Meikles' Legal Practitioners wrote to the SEC complaining 
about the failure of the ZSE to adhere to the dictates of the ZSE Listing 
Requirements. The SEC`s response as mentioned above was to indicate that it 
would institute investigations into the matter. In light of the information 
that has since surfaced to the effect that the SEC approved the illegal 
suspension, the response by the SEC to Meikles' Legal Practitioners is of 
concern as it gave the impression that the SEC was uninvolved in the illegal 
process that saw the suspension of the trading of the Meikles' shares. In 
addition Mr. T. Chinamo of the SEC indicated, in his letter to Meikles of 26th 
of February 2015, that the SEC was in the process of engaging the ZSE to 
establish how it handled Meikles' suspension amongst other issues. It is 
difficult to fathom how the SEC proposes to investigate or seek an explanation 
from the ZSE for a decision that it approved. The unavoidable questions that 
arise are, was the SEC entirely sincere in its handling of the complaint lodged 
by Meikles? Should the SEC not have disclosed to Meikles that it had 
participated in the process that led to the unlawful suspension of the trading 
of the Meikles shares? Was the SEC not misleading Meikles when it purported to 
be instituting an investigation on the ZSE's conduct, when it had full 
knowledge of the events and circumstances surrounding the suspension of the 
trading of Meikles' shares and when it had actually approved the suspension 
that Meikles were complaining of? These questions unavoidably raise integrity 
issues on the SEC's part. 
 
The SEC has taken a full page advertisement in The Herald edition of 26th of 
February 2015 to publish its letter to Meikles. This was done before Meikles 
had been accorded the opportunity to respond to the numerous questions that 
were raised therein. This is of major concern to Meikles. This is so because 
the letter from the SEC makes sweeping allegations which it seeks to convey as 
fact to the public even before it has received a response from Meikles on the 
allegations. The letter, for instance referred to the lack of transparency on 
Meikles' part in the investment with Mentor Limited and reference is made to 
promises and commitments to shareholders not being honoured by Meikles. The 
very tone of the letter is one that suggests that the SEC have reached the 
conclusion that indeed Meikles committed offences whose extent the SEC now only 
seeks to establish. Meikles is of the view that the conveying of the 
allegations referred to above in the manner that suggests that these 
allegations are indeed fact, amounts to a violation of Section 111 of the 
Securities and Exchange Act as the SEC has reached a conclusion and published 
it, without having had the benefit of submissions from Meikles. The public is 
left wondering why the SEC has posed these questions when it has reached a 
conclusion on the matters concerned. 
 
Meikles questions the propriety of trial by public media that the SEC has 
instituted. Meikles submits that the decision to publish the questions runs the 
real risk of being interpreted by the public as a publicity stunt by SEC to 
publicly smear Meikles even before Meikles has presented its side of the story. 
The public trial that the SEC has set in motion can only have a detrimental 
effect on the integrity of the process itself. 
 
The issues raised in this statement do not only affect Meikles but all the 
entities listed on the stock exchange who expect impartiality, integrity and 
professionalism from the institutions that have the mandate to regulate their 
activities. In addition, the manner in which the statutory regulators conduct 
their issues in the business sphere directly affects Zimbabwe's ability to 
attract investors. It is therefore imperative that these institutions and 
regulators retain at all times the highest standards of integrity in the 
exercises of the decisions that they are empowered to take in order to bolster 
investor confidence in the country. To that end Meikles will be seeking the 
Government's intervention as it is of the view that the illegal suspension of 
the trading of Meikles' shares by the ZSE with the approval of the SEC and the 
manner in which the SEC has dealt with Meikles' issues, as referred to above, 
have a detrimental effect on Zimbabwe's ability to attract the much needed 
investment into the country. 
 
Meikles has noted all the questions that have been publicly raised by the SEC 
and would like to assure the public that these will all be addressed fully and 
that Meikles will be able to demonstrate that the allegations made by the SEC 
are without basis. Meikles has referred this matter to its Legal Practitioners 
who will communicate with the SEC in response to all the issues raised. The 
public is assured that Meikles declines the invitation to respond to the 
questions raised by the SEC through the newspapers. 
 
JRT MOXON 
 
CHAIRMAN 
 
 
 
END 
 

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