NEPSE delaying sensitive market information unfair

ShareSansar, Aug 6:

NEPSE itself has been found to be acting irresponsibly when it comes to disseminating sensitive information related to the stock market.

NEPSE has informed the brokers about the conversion of promoter shares of seven companies into public shares -- meaning those shares can now be traded publicly just as the ordinary shares – three months after they were converted.   

NEPSE had granted the permission to convert 19 percent promoter shares of NIC Bank to general shares on Baisakh 19. Likewise, the same quantity of promoter shares of Sanima Bank and Bank of Asia were registered as general shares on Baisakh 29, and of Kumari Bank and Siddhartha Bank on Asar 31.

But brokers were notified about the conversion only on Sunday.

When promoter shares are floated in the market, it affects not only the share price of the companies concerned, but the whole market. Delaying to inform brokers about such sensitive information amounts to depriving common investors of vital information as it is the brokers who are in direct contact of the common investors.

Share brokers and experts said that NEPSE has acted against the interest of common investors by delaying such information again and again. Few big investors who have access to such essential information benefit from such tactics, while other investors are often left in the lurch.

SEBON had amended the Securities Registration and Issue Regulation a few months ago to allow conversion of promoter shares into ordinary shares. As per the new rule, 19% promoter shares can be converted to ordinary shares through the medium of secondary market after getting permission from Nepal Rastra Bank and SEBON.

The amendment relaxed the mandatory provision of going through offer document while selling promoter shares to the general public after transfer of ownership, allowing companies that have changed ownership of the shares through offer document to continue to change the ownership from the secondary market until the promoter shares drop to 51 percent and ordinary shares rise to 49 percent.