Nepse asks listed firms to report price sensitive info

KATHMANDU:

To avoid any sort of insider trading or price manipulation, the stock exchange has asked listed companies to inform it about any sensitive information that might affect share prices.

“Any price sensitive information such as cash dividend, bonus shares, rights shares, and the decision of a company’s board to procure assets worth more than Rs 100 million need to be forwarded to Nepal Stock Exchange before the trading begins,” according to a circular issued by Nepse, to ensure transparency in the stock market.

Likewise, Nepse has ordered the companies to inform the stock exchange about book closure seven days prior to the annual general meeting, so that shareholders can trade shares accordingly.

“If the companies announce their decisions through the stock exchange’s website, investors will be saved from taking regrettable decisions based on rumours,” pointed out spokesperson for Nepse Shambhu Pant.

Nepse has insisted that it will display such information on its website, but its website is frequently marred by technical malfunctions.

Likewise, Nepse has also asked the listed companies to inform the stock exchange by 11am — an hour before the market opens — if their board meetings are having discussions on any price sensitive issue.

Price sensitive information refers to information relating to a company that will have a significant impact on the share price of the company. Such information needs to be released in such a manner that all investors are made aware of it simultaneously. The information regarding dividends, profits, mergers and acquisitions are considered highly sensitive.

“It will also prevent a few select investors with connections at the board from taking undue advantage in share trading,” added Pant.

Moreover, Nepse has asked the companies to be cautious when discussing confidential issues such as prospective mergers.

Rumours of mergers among financial institutions drive up the prices of the shares in a speedy manner. In recent times, share prices of quite a few finance companies and development banks have ascended due to merger rumours with commercial banks.

Nepse, however, suspends the trading once the merger process becomes formal to stop further manipulation.

Anyone who leaks price sensitive information to make a profit during share trading can be charged with insider trading, which is a criminal offence.

Nepali companies notoriously ignore to report financials to the capital market regulator. More than half the listed companies fail to publish financial details within 30 days of the end of each quarter so that investors can make informed decisions.

Source: THT