KATHMANDU, MAY 31, 2012
The capital market regulator has been unable to safeguard the investment of minority investors due to the absence of a provision penalising public companies that sucker in billions from investors then disappear.
Nepal Stock Exchange (Nepse) has de-listed 43 companies so far for their failure to comply with the regulations. These companies are supposed to have raised funds worth about Rs two billion from the public. Companies such as Bansbari Leather Factory and Necon Air were de-listed from Nepse.
At one point in time, the shares of these companies were even considered as blue chip stocks. In theory, their stocks can be traded as Over-The-Counter (OTC) stocks but in practice, none of their shares has seen any trading yet at Nepse’s OTC market as these companies have ceased to exist.
In order to safeguard the investment of minority stakeholders, investors in a series of meetings have requested the Finance Ministry to take action against the directors of such companies so that investors can recover some of the invested capital. “In Nepal, when companies get de-listed, shareholders who have purchased shares during the heydays of the companies are left with almost nothing which is not fair,” said general secretary of Nepal Stock Investors Association Prakash Rajaure.
“The Finance Ministry will look into whether the current regulations allow penalising the directors for running the companies into bankruptcy,” said joint secretary at finance ministry Baikuntha Aryal. If the regulations lack such provision, then regulation has to be introduced, he added.
Nepse had de-listed five companies in July 2008. Then Nepal Byapar Bikash Company (Koshi), National Pro and Eco Dev Centre, Himgiri Textile and Industries, Biratnagar Jute Mills, and Morang Sugar Mills were de-listed by the stock exchange.
In foreign countries, any company in the process of getting de-listed is obliged to pay back the amount the company owes to minority shareholders. “The prerogative for listing and de-listing companies lies with the stock exchange, and listing regulation does not have any strong provision for penalising the people responsible for a company’s demise,” pointed out director of Securities Board of Nepal (Nepal) Niraj Giri.
In the amended Securities Act-2067, Sebon has mentioned that the listing of a company whose promoter was involved as a promoter in a public limited company that has gone bankrupt and liquidated in not permitted to get listed. “Monetary fine can also be slapped on directors only if they are proven to be involved in financial irregularities and prohibited to be the director of another company for the next 10 years,” pointed out Giri.
There are about two dozen companies at Nepse that are waiting to get de-listed. Hotel Yak and Yeti and about 14 companies belonging to the manufacturing subgroup, and two of the trading subgroup, who are waiting for the de-listing, have stopped paying the listing fee, and are not holding their AGMs.
Source: THT
The capital market regulator has been unable to safeguard the investment of minority investors due to the absence of a provision penalising public companies that sucker in billions from investors then disappear.
Nepal Stock Exchange (Nepse) has de-listed 43 companies so far for their failure to comply with the regulations. These companies are supposed to have raised funds worth about Rs two billion from the public. Companies such as Bansbari Leather Factory and Necon Air were de-listed from Nepse.
At one point in time, the shares of these companies were even considered as blue chip stocks. In theory, their stocks can be traded as Over-The-Counter (OTC) stocks but in practice, none of their shares has seen any trading yet at Nepse’s OTC market as these companies have ceased to exist.
In order to safeguard the investment of minority stakeholders, investors in a series of meetings have requested the Finance Ministry to take action against the directors of such companies so that investors can recover some of the invested capital. “In Nepal, when companies get de-listed, shareholders who have purchased shares during the heydays of the companies are left with almost nothing which is not fair,” said general secretary of Nepal Stock Investors Association Prakash Rajaure.
“The Finance Ministry will look into whether the current regulations allow penalising the directors for running the companies into bankruptcy,” said joint secretary at finance ministry Baikuntha Aryal. If the regulations lack such provision, then regulation has to be introduced, he added.
Nepse had de-listed five companies in July 2008. Then Nepal Byapar Bikash Company (Koshi), National Pro and Eco Dev Centre, Himgiri Textile and Industries, Biratnagar Jute Mills, and Morang Sugar Mills were de-listed by the stock exchange.
In foreign countries, any company in the process of getting de-listed is obliged to pay back the amount the company owes to minority shareholders. “The prerogative for listing and de-listing companies lies with the stock exchange, and listing regulation does not have any strong provision for penalising the people responsible for a company’s demise,” pointed out director of Securities Board of Nepal (Nepal) Niraj Giri.
In the amended Securities Act-2067, Sebon has mentioned that the listing of a company whose promoter was involved as a promoter in a public limited company that has gone bankrupt and liquidated in not permitted to get listed. “Monetary fine can also be slapped on directors only if they are proven to be involved in financial irregularities and prohibited to be the director of another company for the next 10 years,” pointed out Giri.
There are about two dozen companies at Nepse that are waiting to get de-listed. Hotel Yak and Yeti and about 14 companies belonging to the manufacturing subgroup, and two of the trading subgroup, who are waiting for the de-listing, have stopped paying the listing fee, and are not holding their AGMs.
Source: THT
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