KATHMANDU, DEC 16 - 2013
Nepal Stock Exchange (Nepse) has asked listed companies not to take any board decisions that could influence the stock price before 3:00 pm, the closing time of the secondary market.
Amid trend of select individuals influencing stock prices after getting information about such decisions, the secondary market asked the companies to avoid taking such decisions during trading time with an aim of protecting investors’ interest.
A few days ago, Nepse had asked the companies not to communicate any price-sensitive board decision to anybody before the Nepse.
Nepse General Manager Sitaram Thapaliya said if companies take such decisions during trading hours, it would affect share prices immediately. “If they take the decisions after 3:00 pm, Nepse will have enough time to inform investors about the decisions before next day’s trading begins,” he said.
Nepse Spokesperson Sambhu Pant said a letter in this regard has been forwarded to the listed companies. He said the provision could help end direct influence of board members in stocks’ prices. “Some of the board members in the past were found placing demand order with stockbrokers immediately after the board decision,” said Pant.
Usually in Nepal, share prices go up when a company announces bonus shares and the prices slide if cash dividend is announced, he said.
After suspecting a few investors sold their stake in Rural Microfinance Development Centre (RMDC) at large scale after getting first hand information about RMDC’s decision of offering cash dividend, Nepse had asked the companies to inform it about board decisions an hour before the trading begins. Earlier, there were rumors that RMDC would issue bonus shares, which had pushed up its share price, and those who sold the shares at the last hour were able to make hefty profits.
As per the Nepse circular, the listed companies have to give price-sensitive decisions such as issuance of bonus shares, transfer of large number promoters’ shares and change in board members an hour before the trading begins. It has also told the companies to make information about their book closure available at least seven days before.
Nepse has also asked clarification from Small Farmer Development Bank and Kist Bank suspecting information leakage. Kist was asked why its share price was rising even after its merger plan with Vibor Bikas Bank failed.
Meanwhile, Nepse surged 19.33 points on Sunday to close at 733.25 points.
Source: The Kathmandu Post
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