NIBL Ace Capital Limited Explains: Why Approach for RTA/RTS Services?

Thu, Aug 11, 2022 10:08 AM on Exclusive,

NIBL Ace Capital Limited explains:

Why Approach for RTA/RTS Services?

Registrar to Shares (RTS) and Registrar and Transfer Agents (RTA) are the terms used synonymously which refer to share registrars. However, there is a slight difference between RTA and RTS. RTS is the share registrar who is responsible for managing and transferring the physical share certificates and dividends to the shareholders whereas, RTA is the share registrar responsible for managing and transferring the dematerialized shares and dividends to the shareholders. Securities Exchange Board of Nepal (SEBON), the regulator of the Nepalese Capital market, issues license to the companies to provide registrar to share services. Merchant Banker Regulation, 2064 allows merchant bankers to act as the share registrar to the client company.

According to CDSC, as on 3rd August 2022, there are 44 registered agents in Nepal. NIBL Ace Capital Limited acts as RTS/RTA for the largest number of securities i.e. 51 followed by NMB Capital Limited i.e. 26. Similarly, Global IME Capital Limited has 23 RTA clients and Nabil Investment Banking Limited and Prabhu Capital Limited have 21 clients each. Among the 294 securities listed in NEPSE, NIBL Ace Capital Limited is the only share registrar managing more than 45 securities.

A company may have a small number or thousands of shareholders and the shareholders’ list keeps on changing due to various transactions. Share registrar assists a company to maintain an updated shareholder’s list at any particular date along with various other functions. Therefore, any company can approach RTA/RTS services. In fact, these services can be as beneficial for companies with a small number of shareholders as for companies with a comparatively large number of shareholders. However, in Nepal, there is a practice of approaching RTA services mostly after the issuance of IPO to the general public. But that should not necessarily be the case. Mandu Hydropower Company Limited, Kathmandu Medical College, etc are some of the companies which have not yet issued IPO but still use RTA/RTS service through NIBL Ace Capital Limited.

The diagram below gives a brief about all the benefits that any company can get from using RTA/RTS services.

Despite of all the benefits that companies can gain from these services, there are only limited companies in Nepal who opt for these services before the issuance of IPO. The reason behind this is still a huge questionable practice.

The essence of the article is that RTA/RTS services help the companies, both public and private regardless of the number of shareholders, to manage and assist in providing better and more reliable services to their shareholders though this service is not much popular amongst unlisted companies in Nepal. Similarly, these services also assist current or potential shareholders to get authentic and complete information about the company. Also, shareholders having shares of a number of companies can get information about the same through a single window from their respective RTA/RTS. Therefore, considering all the benefits that any company can get by opting for RTA/RTS services, they should carefully select and approach for reliable and experienced service providers who will serve their shareholders tirelessly.

(Disclaimer: The information about the number of the clients of the respective RTA/RTS mentioned in the article is taken from the website of the respective companies and news portals. Merged companies are considered as one in this analysis.

Research and Development Department,

NIBL Ace Capital Limited.