Stock exchange lenient with listed companies not paying dues
KATHMANDU, OCT 19 -
Once a company is listed on the Nepal Stock Exchange (Nepse), it would be a rare occurrence for it to be removed. The sole stock exchange in the country doesn’t delist companies even if they do not pay the annual renewal fee. Recently, it published a list of companies that have not paid their dues. Included in it are companies which are not in operation and even a few that have been liquidated.
Nepse can remove a company from its list if it does not pay the renewal fee for three consecutive years, but usually it just sends a reminder. “We do not want to discourage companies as far as possible,” said Shanker Man Singh, general manager of Nepse. “We remove liquidated and defunct companies from the list only if they inform us formally.”
Nepse on Wednesday published the names of 30 companies which include Nepal Development Bank and Samjhana Finance which were liquidated by Nepal Rastra Bank (NRB) stating that it has suspended trading of their shares.
The liability of the liquidated company is handled by the liquidator. But the liquidators of these two companies have not paid the renewal fee nor asked Nepse to remove them from the list.
Similarly, the stock exchange has written to a few other companies which are defunct. “If companies fail to pay the annual renewal fee, we inform them verbally as well as in writing,” said a Nepse official. “The government has informally asked us not to remove these companies from the list.” Since the government is encouraging other companies to get listed on the exchange, removing listed companies can send a wrong message, he added. “Therefore, the exchange has not removed non-paying companies even though it can do so,” said the official. The government has been encouraging companies in the manufacturing sector to get listed on the exchange. However, a majority of the companies who have not paid their renewal fees are from this sector. Out of the 18 companies from the manufacturing sector, 10 haven’t paid the annual renewal fee. Jyoti Spinning Mill, Harisiddhi Brick and Tile Factory, Gorakhkali Rubber Factory, Bhrikuti Pulp and Paper, Butwal Spinning Mill, Arun Vegetable Ghee, Birat Shoe, Fleur Himalayan and Nepal Bitumen and Barrel are the manufacturing companies on the list. Similarly, there are 11 financial institutions, a hydropower company and a hotel.
Nepse has suspended trading of the shares of these companies. However, their shares were rarely traded even before the suspension. When trading is suspended, general shareholders cannot buy or sell their stock and their investment is frozen.
Source: The Kathmandu Post
