Nepse seeks to protect investors

KATHMANDU:

Nepal Stock Exchange (Nepse) is seeking to penalise traders who fail to get the ownership of the traded shares transferred on time, learning from the ongoing row over Nepal Bangladesh Bank share transfer.

The seller responsible for failing to transfer the ownership of the traded shares to the buyers within the stipulated time will have to provide buyers an equivalent number of shares that were traded, according to Nepse’s proposed amendment of its bylaws, which calls such failed transaction as ‘bad transfers’. If trader fails to do so, buyers will have to be reimbursed the amount along with additional penalty sum.

Moreover, the responsibility of getting the shares transferred or providing reimbursement falls on the brokers, according to the draft released by Nepse. “As a stock

exchange, it is our primary responsibility to see that investors are not being ripped off and ensure that the instances of bad transfers as in case of the ongoing NB Bank’s share ownership transfer are not repeated,” pointed out Sitaram Thapaliya, general manager and CEO of Nepse.

Nepse, capital market regulator — Securities Board of Nepal (Sebon), brokers and investors have been unable to find a resolution about the ‘bad transfer’ of some 220,000 unit shares of NB Bank.

Nearly 1,000 buyers of the bank’s shares have not been able to obtain the certificates of the shares bought that are owned by two large investors — Nirmal Pradhan and Shankar Shrestha. The shares could not be transferred due to another row regarding the sellers’ validity.

“We are unable to do anything concrete in the case so far due to the absence of proper laws to spell out the steps to be taken in such situations,” said Thapaliya. So far, Sebon has issued a circular to the stock exchange not to honour any transaction ordered by 10 individuals and three companies that are in the centre of ongoing NBB share transfer troubles, for the time being.

“Sebon is still waiting for the probe team to present the final reports to take action against those responsible in the case,” informed Niraj Giri, Sebon’s spokesperson.

Moreover, Nepse is also seeking to provide clarity regarding blank transfer of the shares, calling it the root for abating bad transfers. “The existing bylaw does not address the issues regarding blank transfer stage, which is creating ambiguities and confusion,” said Thapaliya.

Source: THT