Nepse steps up to compensate NB Bank investors

KATHMANDU:

Investors stuck with untransferrable shares of Nepal Bangladesh (NB) Bank since the past one year will finally get compensated as the stock exchange has asked brokers to begin the share transfer.

Nepal Stock Exchange (Nepse) has asked the brokers to begin transferring from Sunday the bank’s shares from the duo that sold the stocks to the buyers. Since Kathmandu District Court has stayed the ownership transfer of the original shares sold by Nirmal Pradhan and Shankar Kumar Shrestha, the duo will have to supply the equivalent amount of shares to the buyers who bought the bank’s shares a year ago.

“Due to the court order, the same shares cannot be transferred, but the duo will have to provide the buyers the exact amount of shares each bought in its place,” informed Sitaram Thapaliya, managing director of Nepse.

“Buyers will get exactly the same number of shares that they had bought last year,” he added.

Nepse’s decree has come a day after the regulator — Securities Board of Nepal (Sebon) — issued a 10-day ultimatum to Nepse to complete the process of compensating retail stock investors who were not able to own the bank’s shares despite purchasing them through the stock exchange.

The duo is accused of unlawfully selling the shares to some 600 investors. Investors who had bought those shares back in May 2013 are yet to receive the share certificates. Pradhan had sold 12,940 units and Shankar Kumar had sold 82,030 units of the bank’s shares that have stayed in blank transfer state for the past one year.

Now the duo will have to provide the buyers 94,970 units of the bank’s shares in place of the shares that they sold, which cannot be transferred. At yesterday’s closing rate, the shares to be compensated amount to a total of Rs 60.8 million.

“Brokers whose clients are stuck with the shares can coordinate with the duo’s broker Shrihari Securities that will buy the shares from the market to compensate the buyers,” informed Thapaliya.

In the beginning of April, Sebon had given the duo a 30-day ultimatum to settle the matter, but they failed to do so. Sebon had banned the duo and their associated companies and family members from trading in stocks since mid-February after they failed to transfer the share ownership.

The shares sold by Pradhan and Shankar Kumar actually belong to Laxmi Bahadur Shrestha, a promoter of NB Group and a former NBB director, who pledged the shares to obtain a loan. Later Pradhan and Shankar Kumar pledged the same shares at Narayani National Finance to obtain a loan. The finance company then auctioned off the shares when the borrowers defaulted on their payment.

Laxmi Bahadur later filed a case against them at Kathmandu District Court for violating the contract that barred the duo from selling the shares demanding to annul the share transfers. The court also stayed the share transfer in November 2013, which prevented share registrar Global IME Capital, then known as Elite Capital, to transfer shares in the name of the investors who bought the shares in May last year.

Source: THT