SEBON asks NEPSE to freeze shares of Nirmal Pradhan and NB Group

ShareSansar, March 4:

The Securities Board of Nepal (SEBON) has directed Nepal Stock Exchange Limited (NEPSE) to stop trading shares held by leading share investor Nirmal Pradhan, his family members as well as those registered in the name of Rajdhani Investment Fund that Pradhan owns.

Sending a circular to the NEPSE, the regulator has also directed it to halt trading in scrips held by Jeet Bahadur Shrestha, Laxmi Bahadur Shrestha, Zen Shrestha, Nabin Shrestha affiliated to the NB Group as well as Bagmati Investment Private Limited and Lotse Investment Private Limited.

Similarly, the SEBON has also ordered to freeze the shares held by Shankar Kumar Shrestha.

The regulator issued the directive after investing the complications stemming from the share ownership transfer row of Nepal Bangladesh Bank and National Hydropower Limited (NHPC) owing to the dispute between the Nirmal Pradhan and NB Groups.

Though the Brokers’ Association had decided to resume the trade in NBB scrips since Wednesday after the bank decided to put off its upcoming Annual General Meeting and revoked the book closure date for the same owing to the ownership transfer row, the trading could not resume owing to “technical snags” with the stock exchange. The trading had resumed from yesterday.

Due to the dispute between the two groups, NB Bank has been forced to put off its Annual General Meeting slated for March 11. Besides announcing the book closure on February 17 for the AGM, the bank had even announced adjusted base of Rs 552.

The AGM was expected to endorse 10 percent bonus shares and 7.79 percent cash dividend from the net profit the commercial bank earned in the last fiscal year 2069/70, besides electing some directors.

The share ownership transfer complication has led to possible loss worth millions of rupees for more than 1 thousand investors who bought some shares of the bank unknowingly.

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.