68% of listed companies yet to demat their shares

KATHMANDU, Aug 23:

Only three companies have registered themselves at the CDS and Clearing Ltd (CDSCL) despite strong ultimatum of Nepal Stock Exchange (Nepse) to all the listed companies to do so within mid-August deadline.

Similarly, 57 other companies are in the pipeline for the admission of their securities after Nepse issued the diktat a month ago to get the membership of the CDSCL which will kick-start the much-touted full-fledged electronic trading of the securities.

•     Only 20 out of 235 listed companies have become members of CDSCL
•     57 companies are in the pipeline
•     Nepse makes time-bound strategy to woo listed companies

CDSCL is a subsidiary of Nepse that provides one-window service for centralized depository, clearing and settlement services in the capital market. It acts as a central depository for various instruments (such as equity, bonds, and warrants) especially to handle securities in dematerialized form without physical movements of securities or execution of transfer.

Most of the listed companies that rushed for obtaining the membership after the deadline are the commercial banks. Global IME Bank, Janata Banak Nepal and Excel Development Bank are the latest companies to register their shares in the CDSCL for the dematerialization. Laxmi Bank, Siddhartha Bank, Nepal SBI Bank, Himalayan Bank, Bank of Kathmandu, Nepal Bangladesh Bank and Sunrise Bank and some development banks, insurance companies, have already received the membership of the CDSCL.

Similarly most of the companies in the pipeline for the membership are the commercial banking and financial institutions (BFIs) and insurance companies.

Though the CDSC was expected to come into full-fledged operation some two years ago, it had been hitting snags time and again due to various reasons including the reluctance of the listed companies to get the membership of the CDSC and register their shares for dematerialization.

“Despite dilly-dallying to get their shares registered for the dematerialization, a large number of companies are coming to the CDSCL for the membership after Nepse issued warning,” Subodh Raj Sigdel, CEO of CDSCL told Republica, adding that they do not understand what exactly are the reasons that most of the listed companies are not coming for the registration.

Of late, Nepse is working actively to bring the listed companies on board the paper-less system of transaction. Nepse spokesperson Shambu Prasad Pant said that many companies except those in the pipeline have also informed them of their interest to obtain the membership of Nepse.

“Now, we have prepared a strategy by targeting the commercial banks and other big companies to bring them under the network of CDSCL,” shared Pant. “In the first phase, 50 plus companies who have the top turnovers in the share market will be made the CDSCL members in the next week, 100 companies in two weeks and remaining other by mid-September.”

A stock broker who wanted to be unnamed told Republica that most of the banks and finance companies have not come to the CDSCL yet out of the ego problem. “It seems they have ego problem as they were not made the shareholders of the CDSCL. I do not see any particular reason that they should not come on board the paper less system,” asserted the broker. “Another reason could be the high charge of being member.”

However, Sitaram Thapaliya, general manager of Nepse which owns the CDSCL, denies that the fee was high. “The CDSCL run through these fees. The charge was fixed calculating the cost of CDSCL operating cost. Our company should also sustain with these fees and charges.

Even if the fees is the issue at all, they should come to us to raise this. We are ready to request the concerned authority to review it if their concern sounds genuine,” he added.

Krishna Raj Lammichhane, chairman of Development Bankers Association, Nepal (DBAN), however told Republica that all the development banks are already in the process to get their shares dematerialiezed.

 “Earlier, there were some confusions either it was really necessary to be the member or not. However, now there is no more confusions in regard to be the members of the CDSCL. Most of the companies are already members while others are in the pipeline,” he said, adding that those who are yet to come will do it soon by completing the internal process of the company like approval from board of directors and other.

Source: Republica