The banking industry is the most heavily regulated sector of Nepal, and more so in case of the commercial banks. Nepal Rastra Bank (NRB) has been continuously emphasizing on prudent regulation of banks and financial institutions to ensure stability, transparency and sustainable growth.
Similarly, the Company Act 2063 of Nepal specifies the regulations that companies registered under the Company Registrar Office needs to comply with. One of the most important among them is the requirement regarding the Annual General Meeting (AGM). It specifies:
As you can see, the company must hold AGM within six months of the completion of fiscal year. It has been almost 9 months since the completion of FY 2074/75, but 6 commercial banks are yet to conduct their annual general meeting (AGM). Among those 6 banks, 3 have announced the date for AGM while 3 haven't.
The table below illustrates the AGM status of commercial banks and the respective dividends along with the Last Traded Price (LTP) as on April 08, 2019.
There are 27 listed commercial banks in NEPSE and among them 22 have already finished their AGM. However, Civil Bank, Century Commercial Bank, Kumari Bank, Nepal Bank, NCC Bank and Prime commercial bank are yet to convene AGM for 2074/75.
Century commercial bank (CCBL) has declared its AGM for April 25, 2019 and has endorsed dividend of 6.5%.
Civil Bank (CBL) has endorsed a cash dividend of 4.05%, but the AGM hasn’t been summoned yet. It had also endorsed dividend of 10.79% (10.25% bonus and 0.54% cash) for FY 2073/74, but hasn’t called for AGM yet. So CBL is yet to call two AGMs and approve dividend of 14.84% in total.
Similarly, Kumari bank (KBL) has also endorsed bonus shares of 21.25% which needs to be approved from the upcoming AGM, the date for which has been announced for May 9th, 2019.
Prime commercial bank (PCBL) is also yet to convene AGM and has endorsed bonus dividend of 16%.
Next on list, Nepal Bank (NBL) hasn’t endorsed any dividend but the AGM has been announced for May 5, 2019. Similarly, NCC bank (NCCB) has neither declared AGM nor endorsed any dividend for FY 2074/75. NCCB is also yet to convene AGM for FY 2073/74 and hasn’t endorsed dividend for that year too.
CBL, KBL, NCCB and BOKL are yet to meet the minimum paid-up capital requirement of Rs 8 arba, as per the second quarter report of FY 2075/76. However, as shown in table above, BOKL has distributed 14% bonus and 11% cash dividend from the profit of FY 2074/75, after the adjustment of which the paid-up capital has reached Rs 8.05 arba.
Similarly, KBL has also proposed bonus of 8.5% and adding the bonus of 12.75% endorsed for FY 2073/74, the paid-up capital will reach Rs 8.68 arba hitting the minimum requirement mark.
The paid-up capital of NCCB as of second quarter of FY 2075/76 stands at Rs 7.01 arba and in addition it hasn’t endorsed dividend or conducted AGM for the past two years.
In case of CBL too, the company has proposed 10.25% bonus share from the profit it made in 2073/74 FY. Post adjustment of the proposed bonus share CBL paid up too will reach Rs 800 crores.