Government mulls action against de-listed companies
KATHMANDU, MAY 25 -
The government is discussing the possiblity of initiating action against the companies, de-listed from the Nepal Stock Exchange (Nepse), for not informing the public shareholders, and overlooking the good governance practices.
Amid the complaints from the shareholders at the meeting of the government officials and stock investors on Thursday, the government agreed to find out the actual status of the companies that have disappeared from public notice after de-listing themselves from the secondary market.
“The finance ministry will initiate the process for the necessary measures after consulting with the Company Registrar’s Office,” said Baikuntha Aryal, joint secretary at the Finance Ministry. The government has been positive on most of the investors’ 13 demands, according to Aryal. Some of the companies, goverment officials say, had been de-listed from the Nepse on ground of poor governance including non-payment of listing fee, failing to hold annual general meeting among others.
With the investors seeking share purchase loans from the banks against the guarantee provided by the stockbrokers, the government assured the investors that a positive decision will be taken after consultation with the Nepal Rastra Bank. The central bank had barred the bank and financial institutions (BFIs) from providing share purchase loans or margin loans three years ago when the stock market went beyond 1,100 points.
As per the undertanding reached between the government and the stock investors, Citizens Investment Trust (CIT) will work as the market maker by creating a fund with the resources generated from big government institutions, including-Rastriya Beema Sasthan, Nepal Telecom, CIT itself and Employees Provident Fund.
These major institutions have already agreed to invest in the share market through the CIT, which is currently preparing a working procedure for the purpose. “It has told us that the working procedures will be completed within the next two weeks,” said Aryal. “After the working procedure is endorsed, it can work as market maker.” The investors had sought the government to establish a market rescue fund to bring improvement in the share market.
The government has also agreed to bring the central depository system (CDS) into operation from the new fiscal year. “Before that, all preparatory works will be completed as per the understanding,” said Prakash Rajaure, general secretary of the Nepal Stock Investors’ Association.
The NRB, meanwhile, will be looking into the demand for establishment of an asset management company to look after the non-banking assets of the banks and financial institutions. However, no understanding has been reached on the issues yet, with the investors demanding at least 5 percent of total loans of BFIs into share market. “We were more focused on other issues during the discussion and this issue got less priority,” said Rajaure. He expressed hope that government will take necessary measures soon as per the understanding to give a new lease of life to the stock market, which is taking an upward move in the recent days.
Source: The Kathmandu Post
