Economy - AFRE Corporation risks suspension from the Zimbabwe Stock Exchange if it proceeds with its shareholder meetings scheduled for Friday 23 September following a directive by the regulatory authorities to defer them. The annual general meeting and the extraordinary general meeting are scheduled to endorse the company's proposed US$15 million rights issue. In a combined statement, the Insurance and Pensions Commission, the Zimbabwe Stock Exchange and the Securities Commission of Zimbabwe said Afre chairman Mr Tawanda Nyambirai had insisted that the meeting will go ahead as scheduled.

"The regulators, in the exercise of their statutory duties, have resolved that the annual general meeting and the extraordinary general meeting should be deferred pending completion of the investigations into the affairs of Afre and its subsidiaries.

"The regulators reserve the right to take appropriate action if the proposed AGM and EGM are proceeded with," read part of the statement.

Regulators are saying Afre should wait for the completion of full-scale investigations being carried out by KPMG, which are still in progress.

"The ongoing investigations follow a preliminary one at Afre and its IPEC-regulated subsidiaries which indicated serious irregularities including potential prejudice to pension members and policyholders," said the authorities.

A forensic audit commissioned by Afre revealed glaring corporate governance shortcomings including misconduct on the part of certain directors and executives.

There are also allegations that some vital information was being concealed from certain board members while others are being accused of clandestinely seeking re-election.

Regulators have also raised issues relative to recommended corporate governance approach to instances where possible conflict of interest may exist.

They claimed Afre was being run in the interest of ReNaissance Financial Holdings and Econet in view of the written agreement between the two parties and this could compromise the interests of other stakeholders.

TN Bank, a banking arm of TN Holdings Limited where Mr Nyambirai is a shareholder and chief executive, was set to underwrite the rights offer. Mr Nyambirai is also chairman for Econet and Afre.

Regulators directed postponement of the meetings pending "a decision on the propriety of the current Afre chairman continuing in that position in light of allegations that he is in a conflict of interest situation".

Analysts say the rights issue is meant to dilute existing shareholders, but it has argued that it gives the company more value as the rights issue share price would be higher than the current trading price.

If shareholders fail to follow their rights it means Econet will increase its shareholding from the current 19 percent.

The Herald/23/09/2011