Scrip ownership transfer row: NEPSE asks NB Bank to stall its AGM

ShareSansar, February 23:

In a bid to settle the complications related to the ownership transfer of Nepal Bangladesh Bank Limited, Nepal Stock Exchange Limited (NEPSE) has written a formal letter to the bank management to install its Annual General Meeting slated for March 11.

With this the date of the AGM, which was due to endorse 17.89 percent dividend, including 10 percent bonus shares to  the shareholders from the net profit the bank posted in the last fiscal year 2069/70, has become uncertain.

In its letter dated February 21, NEPSE has stated it has invoked Article 48 of the Securities Act-2063, which allows it to issue directive to the listed companies in case of the breach of the agreement with the stock exchange, or to make the trading clean and regulated as well as to safeguard the interest of the investors.

The bank management, which was making a full fledged preparation for the upcoming AGM are now in dilemma, and are holding internal meeting to address the situation in the wake of NEPSE's request.

Apparently, the AGM is likely to be in limbo until the court gives its final verdict in the share ownership transfer row.

The ownership transfer row started after Pradhan and Shrestha obtained 220,000 units of ordinary shares from Laxmi Bahadur Shrestha, a promoter of NB Group and a former NBB director, for a loan.

While transferring the ownership of the shares, Laxmi Bahadur had made them sign another agreement, which barred them from selling those shares.  However, the duo went on to seek marginal lending by placing the same shares as collateral at Narayani National Finance.

Then they failed to repay the loan and the finance company sold the shares in the secondary market.

Laxmi Bahadur then filed a law suit against Pradhan and Shrestha at the Kathmandu District Court against the sale of the shares, and the court ruled in his favor asking the concerned authorities to stop transferring ownership of shares sold by the finance company.

Now Pradhan and company argue that they cannot be held responsible as they had only sought marginal lending from the finance company, and had not sold the shares to anyone else.

Over the past few weeks, key stakeholders, including SEBON, NEPSE officials, brokers and investors had been holding intensive talks to defuse the problem and were expected to defer the AGM of the bank.

Though the book closure for the AGM has already been announced, and adjusted base of Rs 552 announced, the sources privy of the development maintain that it would not practically affect the victimized investors as the brokers have stopped trading the scrip in the first place.

The regulator, SEBON, has is also gathering all documents related to the matter to probe the case so that it can be resolved.

Nirmal Pradhan and company’s move to cash in on 2.2 lakh unit shares of NBB that did not belong to them has resulted in the possible loss worth millions of rupees for more than 1 thousand investors who bought those shares unknowingly.

The investors and brokers have stopped trading any shares held by Pradhan and his family members as well as those held by one Shankar Kumar Shrestha, who apparently worked in collusion with Pradhan, as well scrips of NBB and National Hydropower Company Limited (NHPC) to press the concerned parties to settle the problem in investors’ interest.

They have also been urging the concerned authorities, including the NEPSE and the bank management to at least immediately postpone the AGM.

On the other hand, Pradhan had lodged a written  complaint against the brokers, demanding the stock exchange to terminate their contract for ‘unlawfully’ not trading his scrips.