Sebon investigates NB Bank controversy

KATHMANDU, FEB 26 -

Securities Board of Nepal (Sebon) has launched a probe into a controversy related to Nepal Bangladesh Bank’s share ownership transfer and clearance.

Following the controversy as a result of the conflict of interest between the bank’s major shareholders—NB Group and Nirmal Pradhan-led group—the Nepal Stockbrokers Association (NSA) has halted transaction of the bank’s shares on the Nepal Stock Exchange (Nepse).

NSA decided to stop trading NBB shares after transactions could not be cleared and ownership could not be transferred after the Kathmandu District Court barred the transfers on Dec 5. The court has prohibited Pradhan from selling and transferring the shares he obtained as collateral to help the NB Group pay off its bank debts. When Pradhan started selling the shares, the NB Group moved court to stop him.

According to Sebon, it will decide on the action to be taken against the wrongdoers after the three member-probe committee submits its report by early next week.

Sebon Spokesperson Niraj Giri said the committee will find out details about the legal framework on NB Group’s share transaction. “The committee has been asked to probe whether the transaction took place even after the Kathmandu District Court issued the stay order in favour of Laxmi Bahadur Shrestha,” he added.

Out of 220,000 shares sold, ownership transfer of 118,000 units has already been completed, while the rest are yet to be transferred to new purchasers. As a result, around 1,000 investors have been affected.

Those who purchased the shares but failed to get the ownership transfer would not get the 10 percent stock and 7 percent cash dividend that the bank had announced, according to stockbrokers.

Giri said investors who carried out transaction through Blank Transfer (BT) would also not get the dividend. “When the transaction is done through BT, the company could register the actual share owners only during the book close by the company for the AGM,” he said.

Earlier, the Nepal Stock Exchange (Nepse) had also directed the NBB management to postpone its annual general meeting until the problem is resolved.

Source: The Kathmandu Post