CDSC seeks annual fee waiver for listed firms

KATHMANDU:

CDS and Clearing Ltd (CDSC) is planning to waive the annual listing fee for companies that seek to get their shares dematerialised before the end of the current fiscal year.

“We have requested the Ministry of Finance to allow waiver on this year’s annual fee for those companies that seek to register their shares at CDSC for dematerialisation before the end of the current fiscal year that ends in mid-July,” informed Subodh Sharma Sigdel, CEO of CDSC.

“Many companies are reluctant to get their shares registered before mid-July to avoid paying the annual fee for availing services for less than two months,” he pointed out, adding that more companies might begin the registration process if they are provided concession on annual fee.

At present, among the 236 listed companies, only 16 have got their shares dematerialised to enable electronic clearing and settlement of traded shares. However, the regulation has made electronic share settlement mandatory after October 19 so only demat shares can be traded.

CDSC was able to finally begin its real time operation on April 15, although it was established more than two years ago. According to Central Depository Service Regulation 2010 that governs CDSC, six months after CDSC begins operation, only demat shares can be traded, which sets the deadline for paper scrip trading cut-off as October 19, by default.

Although CDSC started to accept share registration from mid-July, 2012, a large number of listed companies had been waiting for it to commence operation.

“Many companies have communicated to us that they are now ready to get their shares dematerialised and have even included it as an agenda in their regular board meetings as well,” said Sigdel, adding that there are 11 companies in the pipeline that have applied for registration.

Last year also, the finance ministry had allowed CDSC to waive the annual fee for companies that sought to get their stocks dematerialised near the end of the fiscal year.

CDSC, being a subsidiary of state-owned Nepal Stock Exchange, requires approval of the ministry before taking any major decision.

The annual listing fee ranges from Rs 50,000 to Rs 500,000, depending on the company’s paid-up capital.

CDSC coming into operation will not only remove the necessity of holding physical scrips for share trading, but will also make share transfer swifter and punctual. Investors will get their shares traded and settled within four days of trading and will not have to wait for share certificates to be verified and transferred, which takes a long time while trading securities at present.

MoF approves regulation amendment

Ministry of Finance (MoF) has finally approved the amendment in CDS Regulation-2068 to reduce net worth requirement of Depository Participants (DPs) of CDS and Clearing Ltd (CDSC). From now on, a DP needs to have Rs five million net worth to get licence. Earlier, only those firms with net worth higher than Rs 10 million were deemed eligible to work as DPs that hold demat shares on behalf of their clients. The amendment has been brought following pressure from brokers, as most of them could not fulfil the net worth requirement. “We will start applying for the DP’s licence at CDSC starting Sunday,” informed President of Stock Brokers’ Association of Nepal, Narendra Raj Sijapati. Moreover, ineligibility of most of the brokers to work as DPs had posed a threat to the smooth operation of CDSC.

Source: THT