Listed firms fail to hold AGM
KATHMANDU, MAR 14:
Nearly half the listed companies have not held their annual general meetings (AGM) on time as industry regulations clash with the ones spelt out by the capital market regulator.
Among the 224 listed companies at Nepal Stock Exchange, only 132 have conducted their AGMs within six months of the end of the fiscal year, as required by the capital market regulator — Securities Board of Nepal (Sebon).
Financial institutions that usually follow the rules strictly have also been unable to conduct their annual meetings on time. Only 111 financial institutions held their AGMs within the stipulated time of mid-January 2013. Among these, 23 were commercial banks, 52 were development banks and 36 were finance companies.
Although Sebon’s regulation requires listed companies to hold the AGM within six months, rules of industry regulators of the listed companies state different conditions for holding AGMs. Regulations set by Nepal Rastra Bank (NRB) — regulator of financial institutions — require financial institutions to conduct their AGMs within five months of the completion of a fiscal year.
“However, if they request for an extension, the central bank allows them three more months. If financial institutions delay further, the central bank cuts back on facilities given to them as penalty,” said spokesperson for NRB Bhaskar Mani Gyanwali.
Likewise, Insurance Board (IB) — insurance sector regulator — requires insurance companies to submit their audited balance sheets to IB within 10 months of the end of each fiscal year. IB then examines and approves the audited balance sheets and the companies have to hold their AGMs within 60 days from the day the balance sheet is approved.
“IB’s regulation has asked insurers to submit and publish the balance sheet, and profit and loss account of all transactions of each year within six months of the end of a fiscal year, but for an AGM the audited balance sheet is required,” informed a chartered accountant at IB Santosh Prasai.
“Insurance companies take advantage of the 10-month deadline and submit the balance sheet late,” he added.
Among the 21 listed insurance companies, only two — Life Insurance Corporation Nepal and Nepal Insurance Company — have held AGMs within six months. “We have already approved 13 balance sheets, five are about to be approved, while six insurance companies have yet to submit their balance sheets,” informed Prasai.
The companies publish their audited financial reports and detailed balance sheets including long-form audits reflecting their actual health during the AGM and discuss the agenda. Minority stakeholders of public companies get a platform to voice their opinions regarding the company’s decisions and workings.
Moreover, holding an AGM late means shareholders do not get adequate information regarding the companies they have invested in on time.
The stale information and statistics are of no use to investors for investment related decision making.
Source: THT
