SEBON Orders Special Monitoring of Listed Companies Hit by Recent Floods

The Securities Board of Nepal (SEBON) has directed concerned authorities to step up monitoring of listed companies that may have been affected by the recent devastating floods and natural disasters across Nepal, particularly along the Trishuli and Bhotekoshi river systems.

The regulator said the disasters have caused damage to several hydropower projects, transmission structures and other physical infrastructure that are either under construction or already in operation. Given the potential impact on listed companies, SEBON has emphasized the need for heightened vigilance to ensure transparent securities trading, adequate disclosure and protection of investors’ interests.

The directive has been issued under the authority granted to the Board by Section 84(1) of the Securities Act.

Under the directive, concerned authorities have been instructed to immediately prepare and submit to SEBON a detailed list of listed companies that may have been directly or indirectly affected by the natural disasters.

The measure is intended to help the regulator assess the potential financial and operational impact of the floods and other disasters on companies listed in Nepal’s capital market.

SEBON has also directed that information concerning the impact of the disasters on affected companies be obtained and publicly disclosed through the companies’ official communication channels and the concerned information system.

The disclosures are required to cover a broad range of operational, financial and infrastructure-related information, including:

1. Name and location of the affected project
2. Date and nature of the natural disaster
3. Preliminary assessment of physical damage to the project
4. Status of electricity generation and whether production has been halted or disrupted
5. Estimated reduction in affected generation capacity
6. Details of casualties or losses involving human resources
7. Impact on transmission and distribution infrastructure
8. Whether the affected assets and projects are insured
9. Whether an insurance claim has been filed
10. Preliminary financial impact on the company
11. Estimated timeline for resumption of project operations
12. Potential impact on bank loans and the company’s debt-servicing capacity
13. Immediate measures taken by company management

The disclosure requirement is aimed at ensuring that investors receive timely and material information about the condition of companies whose operations may have been disrupted by the disasters.

SEBON has instructed that special surveillance be maintained over the securities trading of affected companies. Regulators are required to continuously monitor trading activities for signs of unusual or potentially market-distorting behavior.

Particular attention will be given to:
i. Unusual changes in share prices
ii. Abnormal trading volumes
iii. Unusual buying or selling orders
iv. Abnormal trading before the release of material information
v. Any other activities that could undermine market fairness and transparency

The directive comes amid concerns that incomplete or delayed information regarding disaster-related damage could create uncertainty in the market or provide opportunities for trading based on undisclosed information.

SEBON has further directed the development of a clear procedure for information dissemination and the suspension and resumption of securities trading in cases involving natural disasters, accidents, fires, earthquakes and other extraordinary events.

The procedure is expected to take into account both the short-term and long-term effects such events can have on listed companies and their securities.

The move is intended to strengthen the capital market’s preparedness for major disruptions and establish a more systematic approach to handling market-sensitive information during emergencies.

Concerned authorities have also been instructed to provide SEBON with regular updates on progress made in implementing the directive, along with details of any unusual activities observed in the securities market.

Through the directive, the securities regulator has sought to strengthen market oversight while ensuring that investors receive reliable and timely information about companies affected by the recent disasters.

The directive is particularly significant for the hydropower sector, where a number of listed companies operate projects and infrastructure along river corridors that have been impacted by the recent floods.