HIDCL Auction Postponement Update: Regulatory Board SEBON Consults Central Bank for Directions

Wed, Mar 9, 2022 3:12 PM on Stock Market, Latest,

The regulatory board SEBON has sent a letter to Nepal Rastra Bank regarding the postponed auction of HIDCL. The board sent a letter requesting for the central bank's clarification on whether HIDCL should follow the rules set forth for promoter shares of financial institutions since the bank effectively recognized the investment company as one via a recent notice.

Hydroelectricity Investment and Development Company Limited (HIDCL) recently postponed the auction of its promoter right shares on SEBON's instruction. The company had been auctioning its promoter right shares from Falgun 01. The auction was supposed to conclude on Falgun 15, 2078.

Earlier, the company concluded the 1:1 ratio right shares issue on Bhadra 08, 2078. 11,00,00,000 units right shares were issued from 5th Shrawan. The hydropower company declared the book closure date for its rights offering on Jestha 28, 2078. Thus, investors maintained before that day were eligible to apply for the shares.

3,30,00,000 promoter right shares were unclaimed by eligible promoters. Thus, the same shares were now being auctioned. Note that the other 7,70,00,000 shares have already been listed in NEPSE.

Rs. 100 was the minimum bid rate for 3,30,00,000 promoter shares. The minimum bid quantity was 100 unit shares. Individuals, institutions, and companies were all eligible to bid for the auction. Global IME Capital had been appointed the auction manager.

It was confusing as to whether the shares will trade as promoter shares or ordinary shares. Sharesansar covered a detailed report regarding the issue in this article:

HIDCL Promoter Shares Auction: Will They Trade At Ordinary Share Price?

HIDCL'S Company Secretary Jiban Basnet informed Sharesansar that the company sent its clarification to SEBON on Sunday (Feb 27). The letter highlighted Basnet's previous statement that HIDCL's existing promoter shares have been listed under the HIDCL tag from the beginning. Thus, the reply has revealed the company's intention to follow the rules that will be set forth.

SEBON's letter to HIDCL had asked the company to clarify whether the company is expecting to have it listed as ordinary shares or promoter shares. Because of the prevailing confusion among investors and bidders, the regulator sent the postponement order so the company can submit its clarification for all stakeholders.

On-call with Sharesansar, a representative from SEBON's Regulations Department had previously confirmed that the board has received the company's reply. The representative also informed that the board will have a discussion and unveil its decision soon. He also pointed out that Nepal Rastra Bank recognizing HIDCL as equivalent to a financial institution has also created confusion in this regard. Sharesansar asked him why SEBON sent a letter requesting the company to submit clarification, as if to ask for its recommendation, when in fact it is the regulator's task to clarify the rules regarding this. The representative replied that it was important that the company present its justification.

It has now already been two weeks since the auction was postponed. Bidders who submitted bids for the auction have had their deposits frozen. SEBON's Regulations Department informed Sharesansar that they are expecting NRB's reply tomorrow. The board will then conduct a meeting and decide on the matter, the representative said.