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Capital Markets Committee issues disclosure regulations

Lebanese Central Bank. (The Daily Star)

BEIRUT: The Lebanese Capital Markets Committee has issued its first two decisions a year after the government appointed its members in July 2012.

The two decisions, which were published in the Official Gazette last Thursday, lay the regulatory foundations of financial disclosures and shareholder rights for joint-stock companies, according to the Central Bank.

Joint-stock companies should provide the committee with a copy of their disclosure policy, three months before it is adopted, the first decision said.

It warned joint-stock companies against any delay in the publication of information that can affect stock prices.

The move compels companies to abide by decisions taken by the committee in accordance with the Lebanese commerce law and other applicable regulations.

The second decision stipulates that companies should disclose to shareholders all information regarding the company’s capital, shares and financial results.

The decision also requires companies to provide shareholders with accurate information about dividends payment, profit and loss forecasts and earnings warnings.

The formation of the capital markets committee and the appointment of its members have been long awaited by many investors who felt over the past years that the Beirut Stock Exchange was no longer playing a key role in the Lebanese economy.

Political bickering has delayed the appointment of the committee’s members until July 2012, almost a year after Parliament endorsed the capital markets and insider trading laws in September 2011.

The committee consists of seven members including the Central Bank governor, alongside the directors of the Finance and Economy ministries, and the head of the Banking Control Commission. The remaining three experts are appointed by the government.

Though Lebanon is a small market compared to other Arab countries, setting a regulatory framework for the capital markets law is expected to encourage foreign companies to list their shares on the Lebanese bourse.

The Beirut Stock Exchange has 12 listed firms, mostly banks, and volume of trading has been on the decline.

Stock market activity went down 30 percent in value to $89 million in first four months of 2013. Figures released by the BSE indicate total trading volume reached 13.6 million shares in the first four months, 21 percent lower in volume from the same period last year.

Last week, Central Bank Governor Riad Salameh told The Daily Star that the bank was keen on kick-starting capital markets in the coming months. He added that it would be one of the ways Public Private Partnerships can be funded.

The governor said that commercial bank lending to PPPs would not be allowed, adding that this would be left to investment banks and brokerage firms.

 
A version of this article appeared in the print edition of The Daily Star on May 30, 2013, on page 5.

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