ZSE grants CBZ 90 day extension on FML offer

Nyashadzashe Ndoro

Chief Reporter

CBZ Holdings Limited has announced an update on its mandatory offer to minority shareholders in First Mutual Holdings Limited,extending the offer period by 90 days as it seeks regulatory approvals.

However, the negotiations are being complicated by the ongoing controversy surrounding First Mutual Holdings Limited's subsidiary, First Mutual Life Assurance Company, which is facing allegations of regulatory non-compliance and potential financial harm to policyholders.

Having acquired a controlling stake in FMHL from the National Social Security Authority in September 2023, CBZ Holdings Limited is now required to extend an offer to purchase shares from the remaining FMHL shareholders, as stipulated by the Zimbabwe Stock Exchange regulations.

The offer, which was initially announced on April 19, 2024, has been extended by a further 90 days, starting from July 10, 2024.

The extension has been granted by ZSE to allow CBZHL to secure approval from the Competition and Tariff Commission. The CTC is currently reviewing the transaction in terms of the Competition Act (Chapter 14:28).

Once the CTC approval has been secured, the ZSE will proceed to review the offer. CBZHL has engaged the ZSE for the extension and has notified the CTC of the Mandatory Offer.

The Mandatory Offer is in accordance with the Zimbabwe Stock Exchange Listing Requirements and the Companies and Other Business Entities Act (Chapter 24:31). CBZHL is required to make the offer to the remaining shareholders of FMHL.

The extension provides CBZHL with additional time to ensure compliance with regulatory requirements. The company has assured stakeholders that it is working diligently to secure the necessary approvals.

Rumbidzayi Angeline Jakanani, Group Chief Governance Officer, confirmed the update in a statement.

"We are committed to ensuring that all regulatory requirements are met, and we are working closely with the ZSE and CTC to secure the necessary approvals," she said.

This publication understands that the negotiations are also being affected by the fact that First Mutual Life Assurance Company, a subsidiary of First Mutual Holdings Limited, is facing controversy.

A recent forensic audit found that FML may have harmed policyholders by not following regulations. As a result, the Insurance and Pensions Commission ordered FML to pay back US$53 million and ZWL209 million to policyholders.

The audit identified several concerning practices at FML. These include mixing client premiums with shareholder funds, delaying investment sales, and using policyholder funds for other purposes. These actions may have caused financial losses to policyholders.

FML disagrees with the audit's findings and is challenging them in court. The company believes it acted in the best interests of policyholders. The matter is ongoing in the court of law, and the outcome is uncertain.

This controversy is adding to the uncertainty surrounding FMHL's minority shareholders, who are waiting for CBZHL's mandatory offer.