14 development banks yet to convene AGM; Post proposed M&A, the number to come down to 26 from 32

Globalization and increased sophistication in the business today has made Corporate Governance more crucial and urgent than ever. The most highlighted elements of Corporate Governance are Transparency, Accountability and Fairness.

Thus, to uphold the sanctity of Corporate Governance, all the public limited companies are required to submit their financial reports to the concerned Government department so that the stakeholders can access it.

Similarly, in case of Listed Companies, they are required to publish the financial report every quarter and conduct the Annual General Meeting (AGM) within the second quarter end of next Fiscal Year (FY). There are repercussions if the companies fail to do so but despite that, some companies have failed to meet the requirement set.

Conducting AGM is necessary because it is the avenue that bridges the relationship between the shareholders and the management. This is the opportunity where the Shareholders get the chance to participate in important decisions of their company. Similarly, AGM is also necessary to approve any dividend that has been endorsed by the Board of Directors.

Development Banks, the "Class B" financial institutions of Nepal, are regulated by the Nepal Rastra Bank (NRB). Currently, there are 31 listed development banks in Nepal Stock Exchange (NEPSE), among which 11 are national level and the remaining 20 are regional level development banks. The AGM and Dividend status of each of them for the last fiscal year is listed below:

As you can see in the table above, except Corporate Development Bank (CORBL) all others have conducted their AGM for FY 2073/74. CORBL hasn’t conducted any AGM since FY 2069/70.

Similarly, for the FY 2074/75, fourteen development banks haven't conducted their AGM. Among these 14 banks, 7 banks have endorsed the dividend for shareholders and is subject to approval from AGM. Since all the 14 companies have passed the 6 months deadline for conducting AGM, they'll be facing penalties or fines.

In addition to that, after the minimum paid-up capital requirement was increased many banks are moving for Merger and Acquisition as shown in the table above. Thus, after all the M&A are finalized, there will be 10 National level Development Banks and 16 Regional level development banks.