Conversion of NABIL Promoter Shares into Public will take time of around one week! 90 lakhs shares still frozen!

The auctioned Nabil Promoter shares (NABILP) previously held by NIDC Development Bank has been converted into ordinary shares fully. However, these shares are still not converted in Demat account as NABIL. The spokeperson in CDSC said “the transaction was stopped on Sunday only. It will still take time to settle the transactions of recently traded day. The conversion process will take a week. We hope to get it done by Friday.”

On March 19, 2019 Nabil bank published a notice stating that the 10% NABILP shares will be converted into NABIL ordinary shares and any shareholder wishing to remain a promoter shareholder could submit an application to Nabil Bank. Around 90 lakhs of shares of NABILP (to be converted as NABIL public) are frozen.

Unlike the promoter shares of other listed companies, Nabil Bank’s promoter shares were freely tradable and lucrative as well, as was eligible for an equal amount of dividend and other rights as the ordinary shares. Both the ordinary and promoter shares of the company had been trading for the last several years in the market under the symbols NABIL and NABILP. Investors usually hesitated to purchase promoter shares, however, promoter shares have been proved to be beneficial in case of NABIL Bank.

Going back to the root of this, we must consider the initial capital holding structure of Nabil Bank. Of the total paid-up capital, 50% is held by NB International, 10% by Rastriya Beema Company, 30% by ordinary shareholders through the IPO, and the remaining 10% percent NIDC Bank.

However, a few years back, when the Nepal Rastra Bank (NRB) issued a directive forbidding cross-holding of shares i.e. ownership of one bank by another bank, NIDC bank had to offload it’s 10% share via many rounds of share auctions to the general public.

Thus, the 10% share previously held by NIDC entered the market as Nabil promoter shares (NABILP) via auction. This share had similar rights as the ordinary shares and no restrictions that are generally associated with promoter shares. Then NABIL decided to convert its 10% NABIL Promoter Shares into public shares.