TSE Enforces Corporate Transparency

EghtesadOnline: Things seem to be changing for the better at Tehran Stock Exchange, as market regulators have started to take a tougher stance on enforcing corporate transparency.

News ID: ۷۸۰۹۱۵

31 December 2017

“If an issuer does not honor [Securities and Exchange Organization’s] listing requirements, refuses to publish financial data within pre-defined periods, or post constant losses for the last two fiscal years, TSE will both inform the public of the company’s status and suspend the firm’s trading,” Hassan Qalibaf-Asl, TSE’s managing director, was quoted by the exchange’s public relations as saying.

The above-mentioned measures were implemented as of Saturday and the list of companies in line for suspension, as well as those already suspended, was added in a new tab at the exchange's website Tse.ir.

The list is rather comprehensive, as it names the companies' ticker symbol and the cause of suspension, as well as the names of the board of directors and company manager, Financial Tribune reported.

Qalibaf-Asl noted that the measure is meant to inform investors of the risks associated with trading shares of companies that refuse to release information and go by the rules.

As of Saturday, the website listed 104 companies for suspension. The most prominent cause cited seems to be the companies’ lack of audited H1 financial data followed by posting losses for two consecutive years.

And only three on the list are those facing imminent bankruptcy, or, legally speaking, companies drafted for trade law’s Article 141, which mandates firms that have lost more than half of their nominal capital to hold an extraordinary general meeting to decide on ways out of bankruptcy or vote for dissolution.

Interestingly, the list not only includes opaque companies, such as SAIPA, it also includes the names of market leaders such as Mobarakeh Steel Company and Golgohar Mining and Industrial Complex. The three firms have been put on notice for failure to present H1’s audited financial data.

Qalibaf-Asl stopped short of saying how long the issuers have to present their data before they are moved to the permanent suspension list.

Significant price fluctuations will also be subject to market regulators’ scrutiny.

According to Qalibaf-Asl, if a company’s share price drops or grows more than 20% in five consecutive trading days, its ticker will be frozen as soon as possible and its issuer will be asked to clarify the situation.

The ticker will reopen the next day with fluctuations capped at a certain limit. If the fluctuation exceeds 50% in 15 days, TSE will freeze trade and mandate the company to hold a press conference to explain the causes.

If satisfactory, the ticker will reopen in two days with limited fluctuation.