KATHMANDU, FEB 09 - 2013
The Securities Board of Nepal (Sebon) plans to amend the Securities Registration and Issuance Regulation 2007 to address confusion about the manner in which shares of the merged entity should be treated. Officials are also unsure about whether to allow all the promoter shares to be converted into public shares without offer documents.
Currently, Sebon has been registering shares of the merged companies as shares of a single entity. “We have introduced a policy of bringing shares of both the companies under a single entity,” said Sebon spokesperson Niraj Giri. “But there is no legal mechanism to put them under a single entity which we want to address with the planned amendment to the regulation.”
He added that there was confusion about whether to treat the merged entity as a different company or as the old one since there is no legal definition. According to him, another problem that has arisen is whether to return the fee one of the companies had paid for issuing rights shares but later chose to go for a merger.
“Amending the regulation will also address this confusion,” he said. A few such cases have emerged lately, but no decision has been taken due to the absence any legal mechanism, he added. “Discussions are continuing on what to do in such a situation, but they have reached no specific conclusion,” Giri said.
Another issue the amendment to the regulation will address is whether to make it mandatory for all the promoters to go through an offer document to sell their shares to the public. The current regulation requires all the promoters, regardless of the number of shares they hold, to go through offer documents to sell them to the public.
“We are discussing whether to be flexible in the case of promoters who own less than 1 percent of the shares,” Giri said. After Nepal Rastra Bank (NRB) allowed banks and financial institutions (BFIs) to reduce the number of promoters’ shares in a company from 70 percent to 51 percent in 2009, many banks had started selling promoter shares without going through offer documents. Sebon has forbidden such transfers citing the regulation.
Although Sebon had also proposed converting promoter shares into public by selling them on the secondary market in 2009, no concrete decision was taken at that time. Sebon will not permit promoters who own more than 1 percent of the shares in a company to convert them into public shares without offer documents. The company will also have to appoint an issue manager like during an initial public offering (IPO).
“The amendment to the regulation will also have to address whether to require promoters to go through offer documents again if all their shares are not sold the first time,” said Giri.
Another issue the amendment has to address is how to treat the issuance of shares to locals by infrastructure projects. Hydropower projects like Tamakoshi and road projects like Kathmandu-Hetauda Tunnel Highway are offering a certain portion of the shares to the local people. People from other locations cannot subscribe to such shares.
The current regulation treats the issuance of public shares available to everybody as IPO, but is silent with regard to shares set aside for locals.
Source: The Kathmandu Post
The Securities Board of Nepal (Sebon) plans to amend the Securities Registration and Issuance Regulation 2007 to address confusion about the manner in which shares of the merged entity should be treated. Officials are also unsure about whether to allow all the promoter shares to be converted into public shares without offer documents.
Currently, Sebon has been registering shares of the merged companies as shares of a single entity. “We have introduced a policy of bringing shares of both the companies under a single entity,” said Sebon spokesperson Niraj Giri. “But there is no legal mechanism to put them under a single entity which we want to address with the planned amendment to the regulation.”
He added that there was confusion about whether to treat the merged entity as a different company or as the old one since there is no legal definition. According to him, another problem that has arisen is whether to return the fee one of the companies had paid for issuing rights shares but later chose to go for a merger.
“Amending the regulation will also address this confusion,” he said. A few such cases have emerged lately, but no decision has been taken due to the absence any legal mechanism, he added. “Discussions are continuing on what to do in such a situation, but they have reached no specific conclusion,” Giri said.
Another issue the amendment to the regulation will address is whether to make it mandatory for all the promoters to go through an offer document to sell their shares to the public. The current regulation requires all the promoters, regardless of the number of shares they hold, to go through offer documents to sell them to the public.
“We are discussing whether to be flexible in the case of promoters who own less than 1 percent of the shares,” Giri said. After Nepal Rastra Bank (NRB) allowed banks and financial institutions (BFIs) to reduce the number of promoters’ shares in a company from 70 percent to 51 percent in 2009, many banks had started selling promoter shares without going through offer documents. Sebon has forbidden such transfers citing the regulation.
Although Sebon had also proposed converting promoter shares into public by selling them on the secondary market in 2009, no concrete decision was taken at that time. Sebon will not permit promoters who own more than 1 percent of the shares in a company to convert them into public shares without offer documents. The company will also have to appoint an issue manager like during an initial public offering (IPO).
“The amendment to the regulation will also have to address whether to require promoters to go through offer documents again if all their shares are not sold the first time,” said Giri.
Another issue the amendment has to address is how to treat the issuance of shares to locals by infrastructure projects. Hydropower projects like Tamakoshi and road projects like Kathmandu-Hetauda Tunnel Highway are offering a certain portion of the shares to the local people. People from other locations cannot subscribe to such shares.
The current regulation treats the issuance of public shares available to everybody as IPO, but is silent with regard to shares set aside for locals.
Source: The Kathmandu Post
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