The Dar es Salaam Stock Exchange (DSE) has suspended National Investments Company Limited (Nicol) for one month for failing to disclose vital information on investments, notably the bankruptcy of its drug subsidiary.

The DSE governing council has also warned Nicol that it risks being delisted if it fails to comply with directives stipulated in the suspension order, including showing the impact of the bankruptcy of Inter-Chem Pharmaceuticals & Beverages Limited (IPBL) on its net assets value.

Nicol has also been suspended for failing to update the public and furnish it with details on the performance of its fish-processing unit, Tanzania Fisheries Development Company Limited (TFDC), in Mwanza.

The DSE, upon learning that IPBL has been placed under receivership, directed Nicol to publish a notice informing the investing public the impact of the receivership, the probable future contingent liability and Nicol's bailout plan.

"Despite several reminders from DSE, Nicol has failed to publish the required notice to date,"the bourse says in a statement issued yesterday.

It says the DSE governing council was concerned by Nicol's continued defiance to comply with its directive hence the suspension that came into effect last Friday.

Nicol owns 51 per cent of IPBL after investing Sh1.731 billion in the Moshi-based firm. Nicol, which has about 28,000 shareholders, has also invested in five other companies a total of Sh13.76 billion and Sh30 million in a 10-year treasury bond.

The company was promoted by prominent indigenous Tanzanians, including Mr Reginald Mengi, Mr Mark Bomani, Mr Ibrahim Kaduma, Mr Iddi Simba, Mr Arnold Kilewo, Mr Hashim Mbita, Ms Tabitha Siwale and the late Salome Mbatia.

Its major shareholders are pension funds, religions organisations, municipal and district councils, religious institutions and savings and credit cooperative societies.

Nicol was established in 2001 to mobilise capital from the Tanzanian general public and invest the same in profit-making commercial enterprises for the wellbeing of its shareholders.

Specifically, the principal business activities involve establishing or acquiring and managing enterprises in various sectors of the economy, namely manufacturing, financial services, telecommunications, agricultural, mining and hospitality.

Nicol chairman Felix Mosha said yesterday that shareholders should not be alarmed by the DSE notice and suspension since the company's financial position was still strong and promising.

"Nicol is doing well and we board members are satisfied with its performance. I have confidence in this company," Mr Mosha told The Citizen in a telephone interview.

He declined to go into details, saying everything would be known during the annual general meeting on August 29.

"People should remain calm we will explain everything at the AGM on Saturday,' he said.

DSE chief executive officer Jonathan Njau confirmed the suspension, saying Nicol shareholders would have to find exit mechanisms outside the stock market if it was delisted.

He said it was imperative that listed companies followed rules and regulations governing the stock market.

"We have to follow the rules there is no other way to go about it," Mr Njau said.

Nicol was listed at the DSE on July 2008 after an undersubscribed initial public offer (IPO) that raised about Sh5.6 billion from 2,986 shareholders. It already had 25,000 shareholders from two previous IPOs.

A Dar es Salaam-based capital markets expert who spoke on condition of anonymity said it was too early to assess the impact of the receivership or bankruptcy on Nicol shares.

"It's clear now that Nicol's investment in IPBL has backfired, but what the company will get after procedures to wind up IPBL are finalised depends on liabilities, that is the debts that the pharmaceutical company owes creditors,"he said.

Apart from IPBL and TFDC, Nicol is also a shareholder in NMB Bank, Bayport Financial Services, East Africa Meat Company Limited, and Dodoma Abattoir.

The DSE has spelt out several conditions for the reinstatement of Nicol.

They include informing the public on the performance of TFDC, resubmission of audited statements that are in line with international financial reporting standards and provision of proof that Nicol's directors who are aged 70 or above have retired in accordance with the Companies Act, 2002.

The firm has also been directed to put in place a management with the requisite expertise and experience in running investment companies.

No Nicol share had been traded at the DSE in the week preceding the company's suspension.

Nicol shares last traded two weeks before the suspension when share price was Sh270 and market capitalisation stood at Sh18.68 billion. This was a significant drop from a share price of Sh400 and a market capitalisation of Sh26.29 billion.

The DSE has 15 active participants, 11 being local companies and four being cross-listed from the Nairobi Stock Exchange.