” When first appointed members had been of the view that the dismissed Board members were familiar with their fiduciary duties in terms of the law and in terms of the articles of the company (NOTE: no mention of the Zimbabwe Code on Corporate Governance), regrettably it has turned out that they were not fully conversant with the above resulting in uninformed decisions for the detriment of all shareholders”

Where is the Institute of Directors when you need it? Where’s oversight from the shareholders about the capabilities of their board. In the 21st century there is actually no excuse for this sort of failure. It seems that the authors of this notice, “the members”, have shot themselves in the foot. Members are responsible for appointing directors (or ratifying the appointment) so they should put in place measures to ensure that educated and honest members are appointed to the Board. Its always someone else’s fault isn’t it. It’s just like dealing with teenage kids.

“Comply” or “explain” Mervyn King recommends in his approach to applying corporate governance vs the alternative of legislating compliance. Corporate governance is not about “checklists” he says. Its about the integrity of directors. Well, what should one do when there is little shareholder oversight (or activism) of their Board? When legislation is not prescriptive enough? Well this is where African corporate governance is not understood. Generally the absence of critical mass in investor numbers, in regulation, in shareholder education, in all stakeholders being informed about shareholder rights etc. is a recipe for ensuring that something different needs to be done.

The difference needed is to “create lists”. Lists of clear corporate governance deliverables making it mandatory for listed company executives and the Board to sign them off in public in front of shareholders. Every year at the AGM. Hold all directors accountable for the performance of all directors, not come up with excuses like “they did not know what their fiduciary duties were”.

The wishy washy corporate governance codes language is NOT appropriate for governance in African markets. It’s not that Africans are more dishonest than others. Its just that the environment we find ourselves in is more conducive to no-one paying attention to corporate governance – the levels of oversight on all levels are not as high so abuse can slip in. And it does.

The solution is so simple. Create a list, tell the directors to swear on their mothers death that they carried out an appraisal of the things in the list and disclose the results. Ticking off things on a list will create the basis upon which directors can become more aware of what integrity means because they will be reminded of it. What is this “list” you may ask?  Well, one form is the Institute of Directors South Africa’s Governance Assessment Instrument – this is what their website says….

As part of our efforts the Centre for Corporate Governance has established the Governance Assessment Instrument (GAI), a web-based tool with modules catering for all business sectors, including listed companies, SMEs, state-owned entities, medical funds, pension funds, NPOs, etc.

The GAI facilitates the implementation of good governance structures and practices. It also serves as a rating mechanism of governance.

To login or to view the GAI click here

You probably find that there are not more than 12 statements that need to be read out to directors at an AGM that cover everything that shareholders need to know about how their board is responsible for their own behaviour. Jointly. If the Board fails in part, the whole Board should go. Mix “lists” with the “comply or explain” mantra and we will be one step ahead of where we are now.

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This listing process “enhances brand”, gives “a higher profile”, provides a “better rating” with the banks. The key thing for the founding shareholders is that they don’t have to give away control. They raise money from retail shareholders who participate to make a “quick buck”, irrespective of the IPO price. The expectation of a “quick buck” breeds the expectation of a “quick buck” and so stagging inevitably occurs to the ultimate detriment of the retail shareholder. Count how many IPO share prices in African markets are actually higher now, after the event.

After the IPO the egotistical founding shareholder then slips back into his old ways.  Illiquidity in the share slowly results in its share price being undervalued compared to the company’s asset value and peers. Dealing with retail shareholders and their rights, is a hassle at the best of times but more so when there are few shareholders accounting for a relatively small percentage of the issued share capital. This in turn results in low trading values, both as a percentage of issued shares and in nominal terms. Its easy to lose interest, for all of us.

Generally speaking there are no efforts by egotistical shareholders to engage their company’s shareholder base as potential customers of the business post IPO. Except, of course, when the annual report is delivered – or “if” the annual report is delivered to the minority shareholder. Some markets such as Kenya have dropped the requirement to deliver annual reports to shareholders.

Over time, as the share price declines as a result of illiquidity, and in order “grow shareholder” value, the company then embarks on a share buy back scheme whereby the company buys-out the same shareholders it sold shares to. Take this to the logical conclusion a listed company then systematically reverses the IPO process to the point where the company has to, or it “makes sense” to de-list.

The moral of the story is that directives of listed companies and potential listed companies and indeed regulators, do not provide enough strategic thought about why their companies should list and what the benefits are. “Building brand”, “better reputation” and all those cliches stand for nought unless the listing is used actively post IPO and this is where African listed company directors have their head in the sand (this is the polite version).

African capital market players need to look at what small listed companies or indeed companies that have small free floats are actually achieving by listing. A review of most African stock exchange listed companies’ websites show that the answer is “not a lot”.

Its so exciting looking at African markets’ potential until you actually see how many companies are actually “investable” – very few. This illiquidity paradox is serious.

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In order to survive companies had to break the law and not communicate this to the market. This was to “protect shareholder value”. Many executives could not handle it and left. Post-dollarisation (post the chaos of hyperinflation) the Zimbabwean economy is now strewn with under-capitalised businesses that now have to deal with the Government’s objective to “empower the people”.

It’s complex, its political. It is again challenging executives. Get it out of the way and opportunity awaits you.

One company that has overcome this threshold before others is Meikles – check out an extract of their latest interim statement below.

Access full information on this dual-listed company on www.meiklesinvestor.com and their latest statement here.

MEIKLES releases 2011 interim results

The Meikles Limited Board of Directors is pleased to announce the release of the 2011 interim results for the six months ended 30 September 2011. Below are a few extracts from the Chairman’s review.

Group review

Indigenisation
After meeting the various requirements set by the Ministry of Youth Development, Indigenisation and Empowerment, the Company was accorded its indigenous status and is now in compliance with the Empowerment Act…

Pick n Pay investment into TM Supermarkets
Save for the Competition and Tariff Commission, the regulatory authorities have now approved the Pick n Pay investment into TM Supermarkets…

Disposal of the Cape Grace
The disposal of the Cape Grace Group is expected to be completed in the second half of our financial year.

Employee Share Trust (“Trust”)
As stakeholders will remember, on 18 August 2011 the shareholders approved the allocation of 24 million Meikles shares into the Meikles Limited Employee Share Trust…

Executive share scheme
The Group executives together with an indigenous consortium have set up a special purpose vehicle to acquire shares in the Company through the Zimbabwe Stock Exchange…

Ex-Cotton Printers equipment
Following the conclusion of the liquidation of Cotton Printers, the spinning and weaving equipment remained unsold. The Company subsequently entered into an agreement to dispose of this equipment to the former workers of Cotton Printers…

Funds held at the Reserve Bank of Zimbabwe
Negotiations with the RBZ for the repayment of our deposit of US$37 million are still continuing. We remain confident that the deposit, that is accruing interest, will be repaid. Shareholders are advised that there are no further outstanding issues with the RBZ.

Group results
The Group has continued to make progress under very difficult conditions, with high borrowing costs and inadequate capitalisation. Revenues from continuing operations increased by 39% compared to the same period in 2010…

TM Supermarkets (“TM”)
Revenues increased by 36.4% to $136.6 million (2010: $100.2 million). The EBIDTA for the 6 months ended 30 September 2011 was $3.5 million (2010: $2.1 million)…

Thomas Meikle Stores
The revenues increased by 114.9% to $12.2 million (2010: $5.7 million). The gross margin was 32% (2010: 33%). The EBIDTA for the 6 months ended 30 September 2011 was $234,000 (2010: loss of $579,000)…

Tanganda Tea Company
The peak season for tea remains November to March in any given year and is heavily influenced by the rainy season. Therefore, in the 6 months ended 30 September 2011, the company’s main focus was plantation development and diversification into other crops…

Meikles Hospitality
The tourism sector in Zimbabwe continues to recover due to the relative political and economic stability. The tourist arrivals have increased by around 16% this year according to the Zimbabwe Tourism Authority…

Directorships
The Company announced the resignation of the then Group CEO Mr. B Beaumont with effect from 30 September 2011. The Group has reorganised its management structures to cover the gap left by Mr. Beaumont who will not be replaced in the short to medium term. The Meikles Limited board which is made up of 4 indigenous and 2 non indigenous members is in compliance with the empowerment laws of the country.

Outlook
The success achieved in obtaining most of the requisite approvals for the PnP investment into TM Supermarkets and of the company being accorded its indigenous recognition all augur well for the future. These recently acquired approvals have had no impact on the results for the first half of the financial year…

For and on behalf of the Board

J R T Moxon
Executive Chairman
24 November 2011

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African website vendors are probably unable to replicate the quality of the Q4 products (perhaps they (we) can!) but for most African listed companies the 80: 20 rule applies. 80% of the benefits of going online are enjoyed from 20% of the effort. Examples? Timely info. Comprehensive info, push technology, alerts – get the basics sorted and then sit back and watch the benefits. Q4 is at the forefront of world class communications solutions and their best practice is there for us to learn from and to aspire to.

So the message to listed companies and regulators of African capital markets is: LOOK and see and digest what is happening elsewhere in the World! Lets take those best practices, apply them in our markets and actually put into place tools for enabling efficient and informed investor relationships and decisions instead of harping on with rhetorical cliches about Africa being the “last frontier” and full of potential. We’ve heard this for the past 25 years and to be honest its boring.

Lets hear about the African awards for best online websites! Not awards that are self serving but awards that are independently determined. Perhaps the African Stock Exchanges Association can pick this up……..

I suspect not.

This article below was released by Q4, a leading provider of online investor relations solutions including newsrooms, corporate and investor websites and strategic consulting. I have no financial interest in Q4, but what they highlight in their Q4blog triggers an awareness to investors and listed companies across the globe of the power of the Internet.

We’re pleased to announce that our long-term client, Agnico-Eagle Mines, has been awarded first prize in the electronic disclosure category of the 2011 Canadian Institute of Chartered Accountants (CICA) Corporate Reporting Awards (CRA) for their investor website: agnico-eagle.com.

This is the second year in a row, that Agnico-Eagle has been recognized at the CRA for their best practice IR website, securing an Honorable Mention in the electronic disclosure category in 2010 – with first place awarded to Potash Corp., a winner in the electronic disclosure category multiple times.

Companies eligible for the electronic disclosure award were judged on specific content relevant to investors, navigation and usability, innovation, overall effectiveness and IR website best practices. This year, companies were also evaluated on how well they integrated social media into their sites.

Agnico’s long-standing commitment to continually improve the investor experience on their IR website is focused on achieving a global standard in best practices. An additional goal is to limit the effort required to update site content.

The strategy for the site evolved from a comprehensive IR website best practice audit of the Agnico site conducted by Q4 and provided to both the client and their design firm, The Works. This document detailed key recommendations, which were adapted in the redesign. A strong collaboration between Q4, The Works and Agnico-Eagle throughout the design and development of the site helped ensure that all key communications objectives were met.

What follows are some of the features that make Agnico’s site exemplar of best practices:

The Design

The talented team at The Works created a clean, progressive design that provides numerous ways for investors to easily navigate the site to not only find the information they are looking for, but to also ensure that they encounter the information Agnico wants them to see. For example, right from the home page the rotating images in the masthead highlight key content and events, and the drop-down main navigation prominently singles out one specific piece of content in addition to providing links to all sub-section information. The navigation also makes it easy for users to see where they are, where they want to go and how to make their way back. The site also brings key content forward by prominently displaying frequently sought information such as news releases and presentations, as well as providing lots of quick links:

Integrated Social Media Galleries

Agnico was interested in making their information more interactive and easily accessible – not just on their site, but in alternate channels as well. The multimedia galleries offer an extensive collection of Vimeo videos and Flickr photos, which Q4’s platform automatically pulls in from the social channels and integrates into their site. Some of these assets are also displayed elsewhere on the site in context with specific information:

Follow Us Page

The ‘Follow Us’ page on the site provides a number of ways to stay connected to the company such as email alerts, RSS feeds, Facebook, Twitter and Vimeo. In today’s multi-channel world, public companies must ’be where their investors are’ to stay connected. Prominently featuring ‘Follow Us’ as a universal link in the site header makes it easy for investors to find this information:

Quarterly Report Summary Page

Agnico’s quarterly summary page provides an aggregate view of all quarterly related materials in a single page. It includes the press release, conference call, webcast, report and financials. Agnico also provides a brief video of their CEO, Sean Boyd who provides commentary on the quarter. (Much of the information in this video is scripted in advance of the earnings call and Agnico’s video production company Silverpoint is able to shoot and produce the video to ensure that this information is on the site on the day of their earnings call.) The right rail in this section is entirely driven by tags. So each time the company reports their quarterly results, the tag on this page (for example Q22011) is updated to the next quarter i.e. Q32011. To address Agnico’s goal of minimizing manual updates, Agnico touches the content once and the information automatically aggregates on the quarterly page (and other pages, such as the Investor Briefcase, Presentations etc.).

Interactive Financial Data

The interactive financial data also called the ‘operational database’ on the Agnico site, is an innovative investor service that gives analysts a full set of interactive quarterly financials and fundamentals. Provided by our partner, Virtua Research the financial database permits customized charts, excel downloads and the ability to share content from the model through email and social networks:

This award underscores the commitment and effort Agnico puts into continually making their IR website an integral part of communicating their story to investors. Congratulations from the team at Q4 to everyone involved!

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With regulators, directors and investors in Africa lagging their first world peers, but with listed companies seeking capital and investment in the “last frontier”, the prospect of enabling African listed companies to empower themselves (rather than relying on brokers and regulators) in reaching out to investors is very compelling. For me at least – because the absence of progressive capital markets regulators (in the adoption of the internet as a communications and investment promotion tool) means that listed companies should be given the reins to determine their own future. The reasons are : there’s an absence of information, its good corporate governance, it builds brand and corporate reputation and the upside is great.

Anyway I take the liberty of replicating Q4′s blog below because I want to send their message to listed companies in Africa. Bizarrely, what Q4 is saying in first world markets has even more relevance in African markets. For me at least.

A few notes about IR in African markets:-

- newswires are not used (with a few exceptions)

- conference calls are not used (with a few exceptions)

- podcasts are not used (with a few exceptions)

Here goes the message from Q4

“Late last week the SEC issued guidance on how companies can use corporate web sites and blogs for the release of material information under regulation Fair Disclosure. This timely announcement has the potential to dramatically impact the corporate disclosure industry.

Rather than outlining the content of the guidance I thought I would provide some initial thoughts on what I see as being the key messages of the interpretive release. If you are not familar with the guidance please see the following links for more information.

SEC Docs

• The full SEC interpretive release (47 page PDF)
• SEC Press Release

Some Initial Blog Posts

• SEC OKs websites and blogs for Reg. FD
• SEC To Recognize Corporate Blogs as Public Disclosure, What This Means for Wires and Press Releases
• SEC To Recognize Corporate Blogs as Public Disclosure. Can We Now Kill the Press Release?
• The emerging self-distribution news model

Here are a few initial take aways from the announcement:

The playing field of disclosure has been leveled. Newswires no longer have the built in demand for their services that they did before. (NYSE still mandates the use of wires but the assumption is that they will follow suit). This does not mean that the Newswire’s are going out of business, but it certainly means they are going to have to compete with more than just each other moving forward. Newswires will need to look closely at their business model and determine how they are going to compete in a world where the distribution of information is free (welcome to the Internet).

The press release is not dead. There is nothing in any of the SEC announcement that speaks to companies not using a press release. The press release is a document type, not a distribution method. It can be posted to a corporate web site, company blog or sent out over a newswire. IROs and public companies have well defined controls and procedures around the creation of press releases and other disclosure documents. This recent announcement does not impact the importance of using a press release to disclose information to the market, just how the press release gets from the company to the investor.

In order for information to be “Public” (and applicable to RegFD) the corporate web site needs to meet 3 criteria.

1. a company web site is a recognized channel of distribution
2. posting of information on a company web site disseminates the information in a manner making it available to the securities marketplace in general, and
3. there has been a reasonable waiting period for investors and the market to react to the posted information.

As you can see, these are quite general and not prescriptive, this means that companies will need to be committed to meeting these guidelines and likely it also means that new vendors will step up to help. This criteria warrants a post on its own, so I won’t go into detail on each aspect here.

The guidance is principle based and future proof. If the SEC had come out and said “you must use RSS and email alerts” it would be creating the same problem it is now getting out of. By using a principle based approach it allows the market to determine what is acceptable and ensures that certain technologies and/or companies are not able to create protected industries (like the newswires did). Having said that, a principle based approach also creates a grey zone that lawyers do not like, which means that the mass market of issuers will likely not change anything, until the market adopts a new standard. This will require forward-thinking issuers and vendors to innovate and create this new standard.

The corporate web site is the podium for all disclosure. We’ve been saying this for some time (as have many others) but it is now official. The corporate web site is the hub of corporate disclosure. With this new guidance and the combined innovated efforts of issuers and vendors, we will continue to see the corporate site dominate the world of disclosure for the foreseeable future.

I would certainly advise all those in the corporate disclosure space to read the full 47 page report. It’s long but there are some great comments in there.”

NOTE: This blog entry is sourced from the company blog for Q4 Web Systems a leading provider of on-demand software for corporate and investor websites. The text above is a direct extract from Q4 Web Systems Blog, an excellent resource for IR best practices.

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There are a few grey haired individuals in the Imara Group that have been trudging around African markets for many many years. So many years in fact that they have been responsible for the establishment of many of them. It’s no wonder then that Imara excels on a number of fronts not least of which is their asset management.

Imara’s asset management side, headed by John Legat, excelled recently at the inaugural asset managers awards. To celebrate their success, which is long overdue I replicate their press release below:-

Imara, the pan-Africa financial services group, has taken two of the top investment accolades in the first annual Africa Fund Manager Performance Awards.

Its Imara African Opportunities Fund won recognition as the year’s best Africa equity fund with a fund size of more than USD50 million while the Imara African Resources Fund claimed honours as the top Africa Equity Fund with a fund value of less than USD50 million. The Imara Zimbabwe Fund was also nominated for the same award.

The awards were presented at a gala dinner on October 11 in Cape Town.

Imara Group CEO Mark Tunmer commented: “It is an honour to feature so prominently in this inaugural awards programme for Africa fund managers.

“We’re delighted a well-established favourite like our African Opportunities Fund, with positions across numerous sub-Saharan jurisdictions, and a more focused specialist Resources Fund, a relative newcomer to our range, have done so well. We were also delighted that our popular Zimbabwe Fund made the short list for an award.

“Awards recognition has a wider significance for our continent and industry. By spotlighting superior investment returns out of Africa, awards such as this contribute to the global re-rating of sub-Saharan Africa as an investment destination.

“Strong performance by managers and markets will accelerate capital market development and help drive sustained progress by our continent.”

Harare-based John Legat, head of Imara’s asset management division, is manager of the Imara African Opportunities Fund while Bruce Williamson manages the Imara Africa Resources Fund.

John Legat noted: “We view awards recognition such as this as an endorsement of the Imara approach to equity investment in sub-Saharan markets. We have extensive on-the-ground representation across Africa and conduct in-depth research and face-to-face interviews to ensure portfolio construction is backed by thorough understanding of challenges and opportunities in all jurisdictions.”

• Imara is an independent, Botswana-listed investment banking group that prides itself on objective decision making in the service of its clients. The company is mid-sized and has offices in Angola, Botswana, South Africa and the UK and associate offices in Malawi, Mauritius, Zambia and Zimbabwe. Imara has also partnered with Chapel Hill Denham in Nigeria, NIC Capital in Kenya, Namibia Equity Brokers and Mac Capital in Dubai.The Group is an active participant in Africa’s financial markets and maintains an extensive research coverage of regional equities. Funds under management exceed US$450m and assets under administration exceed US$1.77 billion.Imara provides a range of specialised financial products and services that can be broadly categorised as:
  • Asset management (institutional and private client)
  • Corporate finance and advisory services
  • Securities
  • Trust and administration services

  Imara Group subsidiaries are regulated by: NBFIRA in Botswana, the FSA (UK), the FSB, JSE, SAFEX (South Africa), SEC, ZSE and Reserve Bank of Zimbabwe, the FSC (Mauritius) and the Reserve Bank of Malawi.

Africa Equity Fund of the Year over $50m – Imara African Opportunities Fund Limited – “The Imara fund’s strong 12 month return of 25.87% with average volatility versus its peers made it the clear winner in this category, with the next best fund returning 12.23%”

Africa Equity Fund of the Year under $50m – Imara African Resources Fund – “Imara’s African Resources Fund achieved a 41.94% return to make it the stand-out pan-African strategy in this category”

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“Internet” “Website” “Investor relations”

“Internet” comes up in reference to their internet banking services. “Website” and “investor relations” do not appear at all. I visited the corporate website and was pleased to discover an “investor relations” section which consists of some downloads. No email alerts.

There’s something special about an IPO. And that’s the ability to identify all the investors interested in the company at IPO (investor interest is at its highest) and to strike a secure two way relationship with them. Forever, thereafter. Each new investor that comes onto the shareholder register thereafter is known – through the company secretaries or share registrars.

So on the one hand you have listed companies paying thousands of dollars in generic advertising (billboards etc) to try to identify prospective customers and on the other hand, you have thousands of pre-qualified customers (they have invested in your company – they must be educated, have savings and are middle class) being ignored. The funny thing is you have their contacts details, in full. The only effort that is put into engaging these shareholders as prospective customers is through a few pictures in the annual report every year.

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The company is under-capitalised and has significant operational challenges, but their investment story is positive in the short-term, and exciting in the long-term given the profile of agriculture and food globally. Seed Co, also listed, is the Group largest asset and is also applying progressive investor outreach initiatives through their website and communication practices.

Some key stats from AICO’s presentation:-

1. Revenues up by 117% to US$m
2. PAT growth in Cotton up by 183% – recorded profit of US$4.6 m
3. Growth in Group sales volumes up by 19%

So does the investment story of a company determine whether the management adopts progressive online communications practices? Clearly not. Management, or the Board does. This quote from Standard Boardroom Practice, prepared by the Institute of Directors, London, revised 1971 is still appropriate (or perhaps more appropriate) in modern times:

“Although the process of encouraging shareholders to take an interest in the affairs of the company may be a rather slow one, directors should not be discouraged. It is their duty to make the maximum use of the methods open to them of keeping the shareholders informed.”

The “methods open to them”: a website, Twitter, Facebook, RSS feeds, Linkedin, SMS, emails, podcasts, conference calls, webcasts…….none of these applied in 1971, but they do now and they provide companies the opportunity to build brand and corporate reputation by forming and retaining relationships with stakeholders individually. At low cost. How? Technology.

With the slackening off of global markets and the withdrawal of foreign demand for securities in emerging African markets companies feel that they need to go “the extra mile” to seek and retain investors’ attention. There are two aspects of this “extra mile” that are disturbing. The first is that the “extra mile” should be the “norm” in these markets, as they are elsewhere and secondly, the number of companies not adopting the basic tenets of online disclosure (timely and comprehensive info) is high. My favourite quote above has been lost in time. Lost to the regulators and lost to directors because they are stuck in their past ways. But times have changed.

My experience with our clients is that the core decision makers know that “it is the right thing to do” but do not necessarily understand how or why – which is fair game. I make the mistake trying to promote these practices by  jumping up and down and waving my hands because I’m so excited. But life is not like that. Learning happens slowly. Confidence building takes time, as does seeing the benefits of how online communications benefits companies in areas other than investor relations.

The fact is that in the absence of prescriptive regulation, proactive adoption of good corporate governance it is only the commercial imperative that remains as a key motivator to promote progressive online investors. This message is not lost on AICO and Seed Co and they are building now for the future. Others are following too.

Ironically, when the world is embracing technology because of the opportunity to link directly with people at zero or almost zero cost, Africa is going in the opposite direction. Regulator’s dropping of the requirement to send annual reports (and proxy voting material) to shareholders (Kenya is one example of where this has been entrenched in law) is evidence of this. As is the absence of technology being adopted by Africa’s regulators.

Dominic Jones , a world leader in online investor relations, has this opinion about the trends in African markets regarding de-linking the direct communications channel with shareholders:

“Scrapping requirements for companies to mail printed disclosure documents to investors is a global trend, but it has exacerbated shareholder apathy in every jurisdiction where it has been implemented. This is largely because regulators have failed to replace printed disclosures with suitable standards of online disclosures. Apathy and an uniformed investing public is, to my mind, the single worst thing that can happen in any market. It ultimately will lead to market abuses.”

Brokers are realising the opportunity to link with investors too and the recent launch of the Lynton-Edwards website ( a Zimbabwe Stock Exchange registered stockbroking firm) shows how investment data can be used to reach out, identify investors and create a secure two way communications channel with them.

Sounds so airy-fairy doesn’t it? Consultant’s or marketing speak. But its not.

• Listen to the AICO business overview podcast here
• Listen to the AICO financial overview podcast here
• Listen to the AICO “Q & A section” podcast here
• View the latest AICO investor presentation here
• Sign up to AICO investor alerts here
• Sign up to Seed Co investor alerts here
• Visit the Seed Co investor relations website here

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Why is this relevant to me? Kenyan corporate governance lags its international peers and the dropping of the core tenet of investor protection, that of ensuring the delivery of hardcopy annual report and proxy voting material, will, over time, reduce listed companies’ accountability to the broader investment community.

Dominic Jones , a world leader in online investor relations, has this opinion about the trends in African markets regarding de-linking the direct communications channel with shareholders:

“Scrapping requirements for companies to mail printed disclosure documents to investors is a global trend, but it has exacerbated shareholder apathy in every jurisdiction where it has been implemented. This is largely because regulators have failed to replace printed disclosures with suitable standards of online disclosures. Apathy and an uniformed investing public is, to my mind, the single worst thing that can happen in any market. It ultimately will lead to market abuses.”

The Kenyan Index Series will hopefully accentuate the need for globally acceptable governance standards in Kenya (albeit slowly and indirectly) and spur regulators and listed companies to treat all shareholders equally and transparently. The advent of social media and general internet access means that now more than ever, investing can be (or will be whether listed companies like it or not) brought into the mainstream. What is required is an educated and informed investment community that is well protected by legislation and good corporate governance practices.

The Kenya Index Series is good for Kenyan capital markets on a number of fronts.

Here is the speech of the CEO of the NSE

REMARKS BY THE CHIEF EXECUTIVE OF THE NAIROBI SECURITIES EXCHANGE
MR. PETER MWANGI
DURING THE LAUNCH OF FTSE NSE KENYA INDEX SERIES
HELD ON 8^th NOVEMBER 2011
AT THE NSE TRADING FLOOR

Mr. Donald Keith, Deputy Chief Executive Officer, FTSE Group
Mr. Jonathan Cooper, Managing Director, Middle East & Africa, FTSE Group
Mrs Stella Kilonzo, Chief Executive,CMA
Mr. Carilus Ademba, Chief Executive Officer, the Sacco Societies Regulatory Authority (SASRA)
Mrs. Rose Mambo, Chief Executive,CDSC
Board Members of theNairobiSecurities Exchange
Member Firms of theNairobiSecurities Exchange
Members of the Media
Invited Guests, Ladies and Gentlemen

On behalf of the Board of Directors and Management of the Nairobi Securities Exchange, I warmly welcome you all to the official launch of our partnership with FTSE International – the preeminent provider of global indices and index products. Ladies and Gentlemen, we commence our partnership with the launch of the FTSE NSE Kenya Index Series. The index series consists of:

• The FTSE NSE Kenya 25 Index

This tradable index reflects the performance of the 25 most liquid stocks trading on the Nairobi Securities Exchange.

• The FTSE NSE Kenya 15 Index

This tradable index reflects the performance of the largest 15 stocks, ranked by full market capitalisation trading on the Nairobi Securities Exchange.

These equity indices have been developed in partnership with FTSE International and in consultation with local asset owners and fund managers. The FTSE NSE Kenya Index Series is built to FTSE’s renowned standards of index design, which emphasize transparency, tradability and strong governance, with index data available across a range of global vendor platforms. They reflect the growing interest in new domestic investment and diversification opportunities inKenya. The new indices will run concurrently with the NSE 20 Share and NSE All Share Indices. They will act as a gauge by which our investors can measure the performance of their portfolios. They also act as a foundation for the development of index related products such as Exchange Traded Funds (ETFs). The launch of these new indices is a milestone for the NSE.

It is the first such initiative of its kind in East andCentral Africa, and the third inAfricaafter JSE Ltd. (South Africa) and Casablanca Stock Exchange (Morocco).

In line with our vision “To be a leading securities exchange in Africa, with a global reach.”, the NSE endeavors to build on its existing suite of products and services in order to meet the evolving needs of our domestic and international investors. Our partnership with FTSE International, illustrates our commitment to meeting this need. I am convinced that the indices shall attract additional capital flows into the domestic market and enhance liquidity and market capitalization. It is a crucial part of the efforts of the Nairobi Securities Exchange to evolve into a full service securities exchange which supports trading, clearing and settlement of equities, debt, derivatives and other associated instruments. In this regard, we intend to expand the family of FTSE NSE Kenya Index Series by offering a treasury bond index, very shortly. With these few remarks, allow me to welcome Mr. Donald Keith, Deputy CEO, FTSE International, to address us.

PETER MWANGI
CHIEF EXECUTIVE

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Improvements are planned for the portal whose objective remains to provide free access to online annual reports for investors, stakeholders and listed companies in Africa. Africanfinancials.com believes that Africa’s capital markets’ information dissemination practices are inefficient and generally fail to recognise that “information is the life blood of markets”.

Africa cannot afford to have its regulators rent seek (charge for) basic investment data in African markets and there is a significant need for investor education initiatives. Why? Because the internet is enabling a vast community of investors and ordinary people to access information online.

This (internet) is an opportunity for Africa’s capital markets to be more liquid and more efficient. It’s also a commercial opportunity for listed companies to showcase brand. Vital pre-requisites to ensure that Africa is able to raise the capital it needs and promote internal investment in order to compete in the global market place. Africanfinancials.com has launched a brief survey to its users to find out more about their information needs. Access the survey here. It’s quick – less than 10 minutes.

To further accentuate the importance of annual reports in African markets from a disclosure, design, print and many other perspectives, a Africanfinancials.com, LinkedIn Group, has been launched. Join the group here to participate in a community that’s dedicated to anything involving African annual reports. Anything annual report AND anything African. Start discussions, post jobs, read the latest annual report releases

Africanfinancials.com also has a Twitter account that tweets the release of every annual report online. Join the Twitter account here or access the data from the Africanfinancials.com Linkedin Group here.

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