Sebon to bring rule for non-existent firms
KATHMANDU:
The capital market regulator is mulling over new regulation to protect the interest of share holders of the listed companies that are virtually non existent.
There are quite a few companies listed in the stock market that are virtually non-existent though still listed. The shareholders of these companies are stuck with the equities of such companies and could not retrieve even a penny as the companies are not yet liquidated.
“Securities Board of Nepal (sebon) is in discussion with Company Registrar Office (CRO) to figure out a way to recover the shareholders’ investment in the companies that are not active,” said director at the Sebon Niraj Giri.
“As of now, Sebon does not have right to direct the listed companies to get liquidated but CRO is the concerned body that has the authority to scrap the companies and liquidate them,” he explained. Whatever assets remains after paying for the companies’ liabilities can be distributed to the minority shareholders through liquidation, or the regulator can threaten the companies to payback share value to the share holders with liquidation.
Some ten listed companies falling in the manufacturing and processing subgroup’s shares have not been traded in the last five years. These companies do not even bother to renew their listing in the stock exchange. In the absence of renewal of listing the share holders are unable to trade the shares even if they find a buyer.
However, the informed investors rarely want to involve the shares of the companies that even do not properly recognise the role of the shareholders and have forsaken them completely after raising required funds.
“To avoid the cases of shareholders being taken for the rise by the companies and later be abandoned, Sebon already has introduced provision that does not allow the listing of the company whose promoter was involved as promoter in the public limited company that was bankrupt and liquidated,” Giri said, adding that a regulation has to be introduced to prevent such cases in the future.
There is a lack of proper protection of the minority shareholders in case the companies abscond few years after issuing shares to the public. This fear of loosing money not from the movement of the stock market but due to bad intention of the promoters is one of the reasons that general public are not interested in shares lately.
Moreover, the real sector companies do not have a strong regulatory presence as that of financial entities making manufacturing companies less attractive.
Capital market regulator has to strengthen the regulations and implement them in punishing the wrongdoers to boost the confidence of the public. Likewise the public have also lost money by investing in the companies that got de-listed — the biggest example Nepal Bank Ltd (NBL). The share holders who had purchased shares during the heydays of NBL are left with almost nothing. In theory their stocks can be traded as Over-The-Counter (OTC) stocks but in practice, it has not seen any trading.
New brokers
The additional 16 new brokers at the Nepal Stock Exchange (Nepse) have contributed 15 per cent more business. The new brokers have started operation from September 1 this year. On the first day of operation new brokers did the business amounting to Rs 3.46 million, according to Nepse.
Source: THT
The capital market regulator is mulling over new regulation to protect the interest of share holders of the listed companies that are virtually non existent.
There are quite a few companies listed in the stock market that are virtually non-existent though still listed. The shareholders of these companies are stuck with the equities of such companies and could not retrieve even a penny as the companies are not yet liquidated.
“Securities Board of Nepal (sebon) is in discussion with Company Registrar Office (CRO) to figure out a way to recover the shareholders’ investment in the companies that are not active,” said director at the Sebon Niraj Giri.
“As of now, Sebon does not have right to direct the listed companies to get liquidated but CRO is the concerned body that has the authority to scrap the companies and liquidate them,” he explained. Whatever assets remains after paying for the companies’ liabilities can be distributed to the minority shareholders through liquidation, or the regulator can threaten the companies to payback share value to the share holders with liquidation.
Some ten listed companies falling in the manufacturing and processing subgroup’s shares have not been traded in the last five years. These companies do not even bother to renew their listing in the stock exchange. In the absence of renewal of listing the share holders are unable to trade the shares even if they find a buyer.
However, the informed investors rarely want to involve the shares of the companies that even do not properly recognise the role of the shareholders and have forsaken them completely after raising required funds.
“To avoid the cases of shareholders being taken for the rise by the companies and later be abandoned, Sebon already has introduced provision that does not allow the listing of the company whose promoter was involved as promoter in the public limited company that was bankrupt and liquidated,” Giri said, adding that a regulation has to be introduced to prevent such cases in the future.
There is a lack of proper protection of the minority shareholders in case the companies abscond few years after issuing shares to the public. This fear of loosing money not from the movement of the stock market but due to bad intention of the promoters is one of the reasons that general public are not interested in shares lately.
Moreover, the real sector companies do not have a strong regulatory presence as that of financial entities making manufacturing companies less attractive.
Capital market regulator has to strengthen the regulations and implement them in punishing the wrongdoers to boost the confidence of the public. Likewise the public have also lost money by investing in the companies that got de-listed — the biggest example Nepal Bank Ltd (NBL). The share holders who had purchased shares during the heydays of NBL are left with almost nothing. In theory their stocks can be traded as Over-The-Counter (OTC) stocks but in practice, it has not seen any trading.
New brokers
The additional 16 new brokers at the Nepal Stock Exchange (Nepse) have contributed 15 per cent more business. The new brokers have started operation from September 1 this year. On the first day of operation new brokers did the business amounting to Rs 3.46 million, according to Nepse.
Source: THT
