Most firms fail to submit financials
KATHMANDU, AUG 23:
Around half of the listed companies at Nepse do not bother to submit their quarterly reports to the regulator — Securities Board of Nepal.
Among the 212 companies that had to submit their fourth quarter financials to Securities Board of Nepal (Sebon), only 72 listed companies submitted their financials on time, while 46 companies submitted their reports after the deadline making it almost half of the listed companies to submit their reports at the capital market regulator.
The listed companies are required to submit their unaudited financial reports to Sebon within 30 days of the end of each quarter, but companies rarely feel obliged to do so.
Likewise, in the fourth quarter of fiscal year 2010-11, only 173 listed companies among 210 companies submitted their financials to the regulator.
In the last quarter of fiscal year 2009-10 also, only 145 companies among the 177 listed submitted their financial reports to the regulator.
“The lack of a financial penalty from the regulator has made companies undisciplined and they disregard even such a simple rule,” said share analyst Rabindra Bhattarai.
According to existing regulations, the regulator can slap a monetary fine on the companies and the promoters will be disqualified to hold the position of director or to be appointed on managerial posts in any of the public limited companies for next ten years by default, which according to the regulator is an extreme punishment.
Earlier, Sebon was planning to introduce a provision to penalise the listed companies with monetary fine for the first offence in such cases, during the amendment of Securities Act 2063, but the amendment has been halted due to the dissolution of the parliament.
“Listed companies at Nepse — especially financial institutions — had requested Sebon to extend the deadline by a few more days, as according to them preparing the final report of the last quarter within the stipulated time is difficult,” said director at Sebon Niraj Giri.
Nepal Rastra Bank requires them to submit their financials within 35 days and Sebon requires them to submit within 30 days from the end of the quarter. Though the companies do not fail to publish their financials on newspapers, they find it difficult to submit the report to the regulator on time.
The central bank levies a monetary penalty of Rs 50,000 on those financial institutions that fail to send their reports on time, keeping them disciplined regarding information dissemination. Sebon only sends a letter inquiring about the delay.
“The negligence by the listed companies in submitting their financial reports but publishing them in various newspapers show their carelessness towards following the proper code of corporate governance set by the regulator,” pointed out Bhattarai, adding, “If not monetary penalty, then Securities Board of Nepal could at least shame the concerned companies by publishing their names on newspapers and warning them of a penalty.”
Source: THT
