November 2, 2016
Muscat: Oman’s market watchdog Capital Market Authority (CMA) on Wednesday suspended share trading of three listed companies on the Muscat Securities Market (MSM) for not disclosing financial results within the stipulated time.
The three companies are Al Hassan Engineering, Al Oula Company and Oman International Marketing, according to a statement posted on the MSM website. This measure is aimed at protecting the rights and interests of shareholders.
The suspension, which is part of an exercise to avoid insider trading and create a level-playing field for all investors, will be lifted once the companies disclose their financial results.
Of late, CMA has been taking disclosure violations seriously to curb insider trading. If the market regulator does not insist on timely disclosures of information, insider traders may take advantage, which will be against the interest of small investors.
The market regulator wants the information to be made available to all investors simultaneously so that it does not create a disparity between those on the board or in the management and small investors.
The MSM-listed firms are required to disclose material information, immediately after the board takes a decision.In any case, the information has to be disseminated before the market opens for trading the following day. In the case of quarterly or annual financial results, companies are required to submit a financial statement within the statutory period of 30 days from the last day of each quarter. In the case of holding companies, this period is 45 days.
However, the listed firms are required to disclose their initial results (namely, revenue, cost of sales and net profit) within 15 days in line with a recent amendment.
This is one of the rare occasions wherein CMA has suspended three companies on a single day. Early this year, trading of shares of Galfar Engineering and Contracting and Renaissance Services were briefly suspended.
Share trading forGalfar Engineering and Contracting Company, Oman’s biggest contracting firm, was suspended in June for three days, pending clarification regarding the company’s settlement/compensation offer from the Muscat Municipality for the Muscat Expressway and Central Corridor projects.
Also, share trading of Renaissance Services was suspended in June for a day, after the market regulator called for more information about a contract the company won from BP.
MSM is considered as one of the best bourses in the Gulf region for its stringent disclosure norms and transparency policies, which help eliminate malpractices like related party transactions and insider trading.
The Muscat bourse has around 135 listed entities. In recent years, there has also been a substantial fall in delay or failure on the part of MSM-listed companies to disclose information, thanks to the measures adopted by the market regulator.
© Times of Oman 2016