Sebon directs Nepse to compensate victims

KATHMANDU:

The secondary market regulator has issued a 10-day ultimatum to Nepal Stock Exchange (Nepse) to complete the process of compensating retail stock investors, who have not been able to own Nepal Bangladesh Bank (NBB)’s shares worth millions of rupees despite purchasing them from the stock market.

In a directive issued to Nepse on Tuesday, the Securities Board of Nepal (Sebon) has instructed the stock market operator to compensate investors within May 24.

“We issued the order after Nepse failed to start the compensation process within one month as promised earlier,” Sebon Spokesperson Niraj Giri said.

In the first week of April, Nepse had told Sebon that Nirmal Pradhan and his associate Shankar Kumar Shrestha — two people at the centre of the share transfer scandal — had agreed to settle the row amicably by extending necessary compensation within a month.

Although the decision was expected to provide some respite to over 600 retail investors, who had invested Rs 120.4 million to purchase around 202,000 units of NBB shares sold by Pradhan and Shankar Kumar, not much has happened since then.

“The duo will have to settle the issue by handing over other shares of NBB owned by them to the victims. If not, they will have to purchase NBB shares floating in the market and hand them over to the investors,” Giri said.

The share transfer controversy began after Narayani National Finance auctioned off NBB shares pledged as collateral by Pradhan and Shankar Kumar, as they failed to repay a loan amount.

Although these shares were owned by Pradhan and Shankar Kumar, the two had agreed not to sell them, as they originally belonged to

Laxmi Bahadur Shrestha, who had obtained a loan from the duo by pledging the shares as collateral.

Since an agreement to this regard had been signed, Laxmi Bahadur filed a case against the two at Patan Appellate Court demanding cancellation of share transfer process. The court then stayed the share transfer process in November.

As a result, share registrar Elite Capital could not transfer ownership of stocks to over 600 investors who had invested Rs 120.4 million to purchase the shares.

To create pressure on the duo, Sebon had earlier directed Nepse to halt transaction of NBB shares owned by Pradhan, his wife and two sons and Shankar Kumar.

Sebon had later agreed to lift the ban after Pradhan and Shankar Kumar agreed to provide compensation to the victims.

In a nutshell

• Nepse told to compensate investors by May 24

• In April, Nepse had told Sebon that Nirmal Pradhan and Shankar Kumar Shrestha had agreed to extend necessary compensation within a month

• Sebon’s direction has come as the duo failed to keep their promise

Source: THT