THE Lusaka Stock Exchange (LUSE) has commenced investigations against Zambia Sugar Plc with its major shareholder, Illovo Group for allegedly reducing profit margins in a scheme meant to lower dividends of minority shareholders.
There are allegations that Illovo Group could also be breaching listing regulations on the stock market and LUSE is scrutinizing the assertions.
LUSE chief executive officer Brian Tembo confirmed from Johannesburg, South Africa that the complaint handling process against Zambia Sugar with its major shareholder Illovo Group was still at play as per procedure.
Zambia Sugar PLC with its major shareholder Illovo Group along with their subsidiary companies have been accused of working at reducing profit margins in a scheme that is meant to reduce the dividends of minority shareholders.
A minority shareholder in the Zambia Sugar plc Lewis Mosho had written to the Security and Exchange Commission (SEC) and the Lusaka Stock Exchange (LUSE) demanding that the Sugar company should explain the nine percent drop in profits when the revenues had increased to 16 percent among other demands.
And SEC chief executive officer Wala Chabala said the case of Zambia Sugar and Illovo Group had been taken up by LUSE who are investigating the allegations and concerns Mr Mosho had raised in his complaint letters.
Dr Chabala said he was aware that LUSE had written to all parties (Mr Mosho, Zambia Sugar Plc and Illovo) and that a committee of LUSE would soon be meeting to look at the matter.
He said LUSE had the mandate to investigate if Illovo had committed any breaches and to what extent the non-compliance by the Sugar company with the listing regulations that governed compliance on the stock market.
Dr Chabala told the Daily Nation that the investigations were meant to establish if Zambia Sugar and Illovo had committed an offence and advised that the matter was expected to be concluded by the 15th of September, 2014.
“The complaint by one of the minority shareholders at the Zambia Sugar on allegations of reducing profit margins has been picked up by LUSE and they have written to all concerned parties. In fact LUSE wrote Illovo and a committee of LUSE would be meeting to see whether there was a breach of listing regulations on the stock market. They will be checking whether there was a primaface case against Illovo. But come back on the 16th of September, 2014 and we shall give you the outcome,” Dr Chabala said.
Mr Mosho has revealed that Illovo group through its subsidiaries was using Zambia Sugar to disadvantage the minority shareholders who are now demanding that the sugar company should explain how there was a 16 percent increase in revenue but had an ironical decrease in profit margins of nine percent.
About 400 minority shareholders who attended the Zambia Sugar 52nd annual general meeting held at Pamodzi Hotel last month walked out after they realised that the annual report that was being presented was not speaking to them but the majority shareholders.
Mr Mosho in his analysis of the 2014 Zambia Sugar PLC annual report Mr Mosho warned that Zambia Sugar risked landing itself in problems at competition law and called on the minority shareholders to thoroughly investigate the matter.