New Nepse Listing Bylaws on anvil
KATHMANDU, JUL 24 -
The Nepal Stock Exchange (Nepse) is making major amendment to Listing Bylaws 1996 to bring about reform in the listing process that would make the listed companies fully compatible to the newly operational Central Depositary System and Clearing Limited (CDSCL). The Nepse board has already approved the amendment which now awaits a final approval from the Securities Board of Nepal (Sebon).
According to Nepse officials, the newly amended bylaws have made a provision which requires the companies to keep record of their securities in digital form compatible with CDSCL. “Once the new bylaws is approved, entire listing procedure will be in digital form that significantly reduces the operating cost as well as time of the listed companies,” said a Nepse official. “It will also make corporate governance more stringent within the listed companies.”
According to officials at Sebon, they have completed review of the proposed amendment and discussion is on among the department heads. “We feel that the further reform is necessary and will discuss it with Nepse officials,” said Niraj Giri, director at Sebon. “If everything pans out well, it will get a final approval in two more weeks.”
As per the new bylaws, Nepse needs to intimate the companies with a concrete decision within seven working days from the day they file their applications. “Within seven days we have to decide on whether to list them or ask for addition documents,” said the official. Under the existing bylaws, Nepse need to take such decision within a month. “This amendment will significantly reduce the time of the listing process,” he added.
Similarly, the amended bylaws have scrapped the existing company classification on the Nepse list, making the classification broader. Currently, the companies are classified under two categories—A and B. But under the new bylaws there will be four categories—A, B, C and D, according to the Nepse source.
The category ‘A’ will represent companies that generate a high profit and provide higher rate of return to its shareholders consistently. The category ‘B’ will have companies that are profitable but are not paying dividend to its shareholder. Similarly, the category ‘C’ comprises newly listed companies, while the category ‘D’ will include the companies whose performance is degrading and are struggling to sustain.
“Since the categorisation will be largely based on the financial health of the companies, it will be easier for the investors to select the securities in the capital market,” said the Nepse official. “The proposed classification will also make the monitoring of Nepse more efficient.” As per the existing classification, a company that has a minimum paid up capital of Rs 20 million, over 1,000 shareholders, been in profit since last three consecutive years, has more book value than the market value and has been reporting within the six months from the ending of the fiscal year falls under the category ‘A’.
The upcoming bylaws attempt to be more stringent regarding the corporate governance, explained the Nepse official.
Source: The Kathmandu Post
