Chairman's Update

MEIKLES LIMITED CHAIRMAN'S UPDATE Shareholders and the public have been following with interest the conduct ofthe Zimbabwe Stock Exchange (ZSE) with regards the Meikles Limited (Meikles)shares over the past two weeks. Meikles learnt of the suspension of the tradingof its shares on the morning of Monday the 16th of February 2015. The ZSE atthat stage informed Meikles that the reasons for the suspension would beformally communicated to Meikles before the end of that day. Meikles did notreceive formal notification of the suspension until Tuesday, the 17th ofFebruary 2015 at 2.05pm, despite a total of 4 letters being written to the ZSEby the Company Secretary requesting the formal notification. Meikles initially sought an amicable resolution of the issues pertaining to thesuspension of the trading of its shares as it was immediately clear to Meiklesthat the suspension had been carried out in a manner that flagrantly violatedboth the rules of natural justice and the specific and unambiguous requirementsof Section 1.5 of the ZSE Listing Requirements, under whose provisions the ZSEhad purported to have carried out the suspension. To that end Meikles requestedan audience with the ZSE to discuss this issue but the consequent meeting didnot produce a resolution. Meikles then approached its Legal Practitioners andinstructed them to communicate to the ZSE and demonstrate to them theillegality of their actions. When there was no response from the ZSE, Meiklesapproached the courts as a last resort. The matter was set down for hearing on Monday, 23rd of February 2015 at10.00am. Meikles' representatives included the Company Secretary Mr TabaniMpofu, accompanied by Advocate Thabani Mpofu and Mr Jacob Mutevedzi ofMutamangira and Associates Legal Practitioners to the High Court. Upon arrivalthey were informed that the ZSE had lifted the suspension of the trading of theMeikles' shares with immediate effect, a development which led to thecurtailment of the legal proceedings without argument. The ZSE never at anystage before the court date proffered any response to the arguments raised byMeikles in the court application. The ZSE has since publicly acknowledged the illegality of its actions insuspending the trading of the Meikles' shares on the 16th of February 2015. When Meikles' initial efforts to resolve the issue with ZSE failed to producean amicable settlement, Meikles wrote to the Securities and Exchange Commission(SEC) pointing out the illegality of the ZSE's action and seeking itsintervention. In total Meikles, through its Legal Practitioners, wrote threeletters to the SEC before the court date of Monday, 23rd of February 2015, allrelating to the conduct of the ZSE. In response to Meikles' complaint on theillegal nature of the suspension of the trading of Meikles' shares, the SECinformed Meikles that it had requested an explanation from the ZSE which itexpected to receive within a period of 7 days. On Thursday, 26th of February 2015, two events of considerable concern toMeikles occurred. The first was that the ZSE posted an advertisement in TheHerald in which it admitted to having acted illegally in its suspension of thetrading of the Meikles' shares. In addition the Chief Executive Officer of theZSE, Mr. Alban Chirume, who is the author of the advert, revealed that theillegal suspension of the trading of the shares of Meikles was done with theapproval (and therefore prior knowledge) of the SEC. The second event was thatMeikles received, just before mid-day, a long letter from the SEC in which manyquestions and allegations were posed to Meikles, some of which relate to eventsthat occurred almost a decade ago. The SEC letter, authored by its ChiefExecutive Officer Mr Tafadzwa Chinamo, also stated that the letter would bepublished in the media notwithstanding the fact that Meikles, had not yet hadthe opportunity to respond to the questions. After the revelation by the ZSE that the SEC had approved the illegalsuspension of the trading of the Meikles' shares, Meikles established that arepresentative of the SEC was part of the panel that implemented and effectedthe illegal suspension of Meikles. Meikles wishes to draw the attention of the public to the provisions of theSecurities and Exchange Act which created the SEC and which therefore guidesthe operations. Section 111 of the Securities and Exchange Act enjoins the SECto 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 thatevery person whose interests are likely to be affected by the exercise of itsfunctions is given adequate opportunity to make representations in the matter. Information in the public domain which has been presented in unambiguous termsby the ZSE suggest that the SEC was in violation of the dictates of theSecurities and Exchange Act when it approved the illegal suspension of Meikleswell knowing that Meikles had not been given a chance or opportunity to makesubmissions on the matter. This information suggests that, contrary to theclear provisions of Section 111, the SEC failed to take all reasonable steps toensure that Meikles was given a fair opportunity to make representations beforethe suspension was effected. The implications of this are very serious. As indicated above, Meikles' Legal Practitioners wrote to the SEC complainingabout the failure of the ZSE to adhere to the dictates of the ZSE ListingRequirements. The SEC`s response as mentioned above was to indicate that itwould institute investigations into the matter. In light of the informationthat has since surfaced to the effect that the SEC approved the illegalsuspension, the response by the SEC to Meikles' Legal Practitioners is ofconcern as it gave the impression that the SEC was uninvolved in the illegalprocess that saw the suspension of the trading of the Meikles' shares. Inaddition Mr. T. Chinamo of the SEC indicated, in his letter to Meikles of 26thof February 2015, that the SEC was in the process of engaging the ZSE toestablish how it handled Meikles' suspension amongst other issues. It isdifficult to fathom how the SEC proposes to investigate or seek an explanationfrom the ZSE for a decision that it approved. The unavoidable questions thatarise are, was the SEC entirely sincere in its handling of the complaint lodgedby Meikles? Should the SEC not have disclosed to Meikles that it hadparticipated in the process that led to the unlawful suspension of the tradingof the Meikles shares? Was the SEC not misleading Meikles when it purported tobe instituting an investigation on the ZSE's conduct, when it had fullknowledge of the events and circumstances surrounding the suspension of thetrading of Meikles' shares and when it had actually approved the suspensionthat Meikles were complaining of? These questions unavoidably raise integrityissues on the SEC's part. The SEC has taken a full page advertisement in The Herald edition of 26th ofFebruary 2015 to publish its letter to Meikles. This was done before Meikleshad been accorded the opportunity to respond to the numerous questions thatwere raised therein. This is of major concern to Meikles. This is so becausethe letter from the SEC makes sweeping allegations which it seeks to convey asfact to the public even before it has received a response from Meikles on theallegations. The letter, for instance referred to the lack of transparency onMeikles' part in the investment with Mentor Limited and reference is made topromises and commitments to shareholders not being honoured by Meikles. Thevery tone of the letter is one that suggests that the SEC have reached theconclusion that indeed Meikles committed offences whose extent the SEC now onlyseeks to establish. Meikles is of the view that the conveying of theallegations referred to above in the manner that suggests that theseallegations are indeed fact, amounts to a violation of Section 111 of theSecurities and Exchange Act as the SEC has reached a conclusion and publishedit, without having had the benefit of submissions from Meikles. The public isleft wondering why the SEC has posed these questions when it has reached aconclusion on the matters concerned. Meikles questions the propriety of trial by public media that the SEC hasinstituted. Meikles submits that the decision to publish the questions runs thereal risk of being interpreted by the public as a publicity stunt by SEC topublicly 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 detrimentaleffect on the integrity of the process itself. The issues raised in this statement do not only affect Meikles but all theentities listed on the stock exchange who expect impartiality, integrity andprofessionalism from the institutions that have the mandate to regulate theiractivities. In addition, the manner in which the statutory regulators conducttheir issues in the business sphere directly affects Zimbabwe's ability toattract investors. It is therefore imperative that these institutions andregulators retain at all times the highest standards of integrity in theexercises of the decisions that they are empowered to take in order to bolsterinvestor confidence in the country. To that end Meikles will be seeking theGovernment's intervention as it is of the view that the illegal suspension ofthe trading of Meikles' shares by the ZSE with the approval of the SEC and themanner 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 neededinvestment into the country. Meikles has noted all the questions that have been publicly raised by the SECand would like to assure the public that these will all be addressed fully andthat Meikles will be able to demonstrate that the allegations made by the SECare without basis. Meikles has referred this matter to its Legal Practitionerswho will communicate with the SEC in response to all the issues raised. Thepublic is assured that Meikles declines the invitation to respond to thequestions raised by the SEC through the newspapers. JRT MOXON

CHAIRMAN