Shares of 25 per cent listed companies not traded
KATHMANDU, MAR 1:
Shares of about one-fourth of the listed companies cannot be traded at Nepal Stock Exchange (Nepse) with the number of mergers among financial institutions increasing along with many companies refraining from paying the renewal fee.
Of the 62 companies among the 222 listed, whose share transaction has been suspended by Nepse, share trading of 12 companies has been suspended as these companies have failed to pay the annual registration fee. Likewise, share trading of 40 financial institutions has been suspended because they are in the process of getting merged. Share trading of another 10 companies has been withheld either for being liquidated or for being under regulatory inquiry.
Share trading of companies that are in the process of getting merged is resumed only after they have concluded
the merger. Regulation requires financial institutions that are going through merger, acquisition or upgrading to halt their share trading in order to avoid any manipulation of the share prices.
However, companies that have not been paying annual listing fees are voluntarily avoiding trading of their shares. Almost all these companies fall under the manufacturing or trading subgroups and are eligible for delisting. Nepse can delist the companies if they fail to pay the renewal fee, do not hold annual general meetings, do not submit audited financials, and if the company is not reachable.
“The regulator has the power to allow listing of companies but has no authority to liquidate any company, so many obsolete companies are also still listed at the stock exchange,” pointed out director at Securities Board of Nepal (Sebon) Niraj Giri.
Sebon had been planning to introduce clauses that will give it authority to direct companies to go for liquidation during the amendment of the Securities Act. However, the plans have hit a roadblock due to the absence of a parliament.
“Likewise, if the Company Act bestows Sebon the authority to deal with such companies, Sebon can take action against them,” he added, citing the example of Indian Company Act that has authorised Securities and Exchange Board of India to take determining actions against public limited companies.
Securities Act-2067 forbids listing of a company whose promoter was previously involved as promoter in any public limited company that went bankrupt and was liquidated.
Nepse has delisted 43 companies so far for their failure in complying with regulations. These companies have supposedly raised funds worth about Rs two billion from the public. Companies such as Bansbari Leather Factory and Necon Air were delisted from Nepse. Some of these companies such as Necon Air were once even considered as blue chip stocks.
“The listing and delisting criteria of Nepse which has become outdated needs to be reviewed,” said former general manager of Nepse Rewat Bahadur Karki. During his tenure he had delisted five companies in 2008.
“We had introduced Over-The-Counter (OTC) trading to facilitate trading of shares of delisted companies if any party showed interest, but OTC trading is not active,” Karki added.
Source: THT
