Panel for reducing lock-up period of promoter shareholders to seven years
Wed, May 25, 2016 9:45 AM on Latest, Featured, Stock Market,
A sub-committee formed by the Finance Committee of legislature-parliament has proposed to increase the maximum tenure limit for board directors and CEOs of the bank and financial institutions (BFIs) by a year.
In a bid to ensure corporate discipline in BFIs, the government, particularly Nepal Rastra Bank (NRB), has proposed a new measure which would have limited term of board director, board chairman and CEOs to a maximum of two terms of four years each.
The sub-committee has proposed to increase the maximum tenure of a board director or the chairman by one year to five years. It has also proposed increasing the tenure of CEO to five years. The sub-committee, which comprises of seven legislators, was formed on January 18. It had been asked to prepare a report following clause-wise discussions on the bill to amend and unite the Bank and Financial Institution (BAFIA).
The sub-committee's report, however, could not be endorsed in the committee meeting on Tuesday after lawmakers demanded more time to study the report. The committee has now called the meeting for Wednesday to approve the report. Once the report is approved, the Finance Committee plans to table the bill in the full house of parliament on Thursday.
Similarly, the sub-committee has also brought down the lock-in period for the promoter shares of BFIs to seven years against the proposed 10-year period. This means that a promoter might be able to offload his/her shares of the BFIs after seven years of operation.
"The grouping of promoter and public shareholders exists in Nepal only. There was a provision to change such provision after 10 years which is a bit long period. So we have proposed to shorten such lock-up period to seven years," said Dipak Kuinkel, coordinator of the sub-committee, said.
The sub-committee has also proposed to distribute at least 0.5 percent of shares of BFIs to their employees. While a bank or financial institution is required to allocate 30 percent of its shares to the public, the new provision will ensure 0.5 percent stakes of employees in BFIs.
Source: Republica
