The Capital Markets Authority (CMA) has defended its decision to give distressed firms more time to disclose financial performance than is legally allowed.
At least six listed firms have breached the deadline for releasing financial statements after getting approval from CMA.
Mr Wycliffe Shamiah, the director of operations at CMA, said the extensions have largely been granted to allow firms to conclude negotiations with prospective strategic investors and sort out differences with auditors.
“When these companies are audited and their financial positions are released in that form, you are likely to see a very distorted financial picture of the real financial position because auditors will want to see evidence. And if you are still in discussion you will not have anything to show,” Mr Shamiah said.
Uchumi Supermarkets #ticker:UCHM, Mumias Sugar #ticker:MSC, Kenya Power #ticker:KPLC, East African Portland Cement #ticker:EABL, Crown Paints #ticker:BERG and Home Afrika #ticker:HAFR are yet to release results.
The CMA gives listed firms four months after the end of a financial year to publish results, timelines which are aimed at helping shareholders and potential investors make informed decisions.
“As a regulator we are for full and timely disclosure. If you see these extensions, we would have had a lot of engagement on these issues which are being addressed by a few listed companies who find themselves in this position,” Mr Shamiah said.
Home Afrika has cited restructuring processes in releasing results, while Crown Paints blamed “unexpected delays” in finalising the auditing process as it consolidates the results of its subsidiaries in Tanzania, Uganda and Rwanda.
Uchumi has cited negotiations with strategic investors in delaying release of results for the year ended June 2018.
Mumias Sugar also delayed results for over four months before announcing a loss in March.