Sebon shying from taking strict action
KATHMANDU, May 16:
The penalties that are meant to deter the flouting of regulations are making the capital market regulator hesitant in taking stringent actions against the rule breakers.
“If the regulator slaps monetary fine to the companies then according to the law all of the promoters will be disqualified to hold the position of director or be appointed on managerial posts in any of the public limited company for next ten years which will be extreme punishment to some of the innocent participants,” said Dr Shurbir Paudel, chairman of Securities Board of Nepal.
The action would have made all of the promoters disqualified to hold the position of director or be appointed on managerial posts in any of the public limited company for next ten years.
“That is the reason why we let Rajdhani Investment Fund (RIF) with only warning instead of taking stringent action,” he informed.
“It will be unjust to the promoters that are unaware regarding the matter, thus slapping them with fines means ruining their careers,” he added.
Back in December RIF was found to be illegally collecting money from public in the manner of mutual fund. From the initial probe Sebon found RIF collecting money at the interest rate of 10 per cent from public to invest in shares -calling it mutual funds. Sebon discovered the scheme when RIF applied for Initial Public Offering (IPO) to Sebon. The company has more than 150 promoters involved.
It is illegal to operate mutual funds without obtaining license from the regulator and RIF’s financial clearly indicate that the company will not be eligible to obtain license to operate mutual fund with its paid-up capital of Rs 246.8 million. Though, it was planning to issue shares to public when the regulator discovered the unauthorised collection of funds.
Sebon could have fined as much as Rs 150,000 as a penalty to each promoter for the offense, though it let them get away with written warning not to repeat the offense.
Meanwhile, the regulator is also seeking explanation from Gaurishankar Development Bank (GSDBLP), Nepal Stock Exchange (Nepse) and the brokers in the latest of the series of flouting regulations.
GSDBLP’s 98,729 units of promoters’ shares were traded in Nepse on February against the regulations. As according to the rules, promoter shares of any listed companies can not be traded within the five years of being listed. The financial institution had conducted its IPO on April 2010.
“We find the stock exchange and brokers to be highly responsible in the matter,” said Sebon’s chairman Paudel.
“The trading of the shares is not possible without Nepse giving the share’s code number to the brokers, and it is out of question that Nepse was ignorant regarding the matter,” he informed.
Source: THT
The penalties that are meant to deter the flouting of regulations are making the capital market regulator hesitant in taking stringent actions against the rule breakers.
“If the regulator slaps monetary fine to the companies then according to the law all of the promoters will be disqualified to hold the position of director or be appointed on managerial posts in any of the public limited company for next ten years which will be extreme punishment to some of the innocent participants,” said Dr Shurbir Paudel, chairman of Securities Board of Nepal.
The action would have made all of the promoters disqualified to hold the position of director or be appointed on managerial posts in any of the public limited company for next ten years.
“That is the reason why we let Rajdhani Investment Fund (RIF) with only warning instead of taking stringent action,” he informed.
“It will be unjust to the promoters that are unaware regarding the matter, thus slapping them with fines means ruining their careers,” he added.
Back in December RIF was found to be illegally collecting money from public in the manner of mutual fund. From the initial probe Sebon found RIF collecting money at the interest rate of 10 per cent from public to invest in shares -calling it mutual funds. Sebon discovered the scheme when RIF applied for Initial Public Offering (IPO) to Sebon. The company has more than 150 promoters involved.
It is illegal to operate mutual funds without obtaining license from the regulator and RIF’s financial clearly indicate that the company will not be eligible to obtain license to operate mutual fund with its paid-up capital of Rs 246.8 million. Though, it was planning to issue shares to public when the regulator discovered the unauthorised collection of funds.
Sebon could have fined as much as Rs 150,000 as a penalty to each promoter for the offense, though it let them get away with written warning not to repeat the offense.
Meanwhile, the regulator is also seeking explanation from Gaurishankar Development Bank (GSDBLP), Nepal Stock Exchange (Nepse) and the brokers in the latest of the series of flouting regulations.
GSDBLP’s 98,729 units of promoters’ shares were traded in Nepse on February against the regulations. As according to the rules, promoter shares of any listed companies can not be traded within the five years of being listed. The financial institution had conducted its IPO on April 2010.
“We find the stock exchange and brokers to be highly responsible in the matter,” said Sebon’s chairman Paudel.
“The trading of the shares is not possible without Nepse giving the share’s code number to the brokers, and it is out of question that Nepse was ignorant regarding the matter,” he informed.
Source: THT
