Once money is ‘taken’ from investors in the capital market, a higher level of transparency must be accepted – says Ivana Gažić, CEO of the Zagreb Stock Exchange, commenting on Elon Musk’s latest move.
The controversial, eccentric, revolutionary entrepreneur Musk has once again shocked the entire world. He announced on his Twitter profile that he is considering delisting Tesla’s shares from the stock exchange. He explains his intention as a way to reduce pressure on the company. In other words, he hopes that this move will protect the company from significant fluctuations in its stock prices and from the pressure to meet quarterly financial targets.
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– The fact is that in the last few quarters, Tesla has not delivered what it promised. And I understand that in such situations, company owners want to avoid the stock exchange. However, those companies that keep their promises have no reason to leave the stock exchange – says Gažić. She emphasizes, of course, that Musk has the right to pull the company from the stock exchange and pay out shareholders, but the question is what he will have to do in return and what the conditions will be for the investors who will follow him, who do not require such a level of transparency but have other conditions.
– This is a bad sign for the company – concludes Gažić.
The fact is that listing on one of the world’s stock exchanges costs both money and time. The fact is that if a company wants investors and easier access to capital, even cheaper capital than traditional banking, if it wants to be recognized and be a transparent company, it must meet numerous conditions. For example, at the Zagreb Stock Exchange, companies that are currently in the highest listing – the Official Market (Leading Market, the most demanding market of all, currently still has no listed shares) must fulfill numerous obligations.
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To even be able to list shares on that listing, the company must, of course, submit an application, but also prepare a Prospectus, copies of all approvals and consents it has received from the relevant authorities regarding the listing process (for example, approval from Hanfa), a statement that the company has organizationally established an appropriate organization, systems, and procedures that ensure timely availability of information in the market (let’s call it the investor relations department) and, of course, proof of payment of the listing fee. In addition to the above, it must also provide the minutes from the general meeting where the decision to list the shares on the stock exchange was made and a resolution from the court register.
After the shares are listed on the stock exchange, specifically the Zagreb Stock Exchange, the company must publish all information that is important for the company’s operations, all prescribed and privileged information, financial reports (quarterly and annual). From the call to the General Meeting and decisions from that meeting to transactions made by the company’s executives to the corporate governance code.
This is the level of transparency that must be met if one wants to obtain money from investors in the capital market.
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It is also worth mentioning that although the U.S. capital market regulator SEC (Securities and Exchange Commission) allows the use of social media for publishing corporate information, this move by Musk does not seem to have met with approval as an SEC investigation has been launched. They want to find out whether Musk’s announcement was truthful and whether there is a basis for it. Otherwise, Musk faces a drastic penalty if the investigation proves that the intention of the statement was to influence and increase the price of Tesla’s shares.
