Variance in 37 companies actual and projected reports
KATHMANDU, JUL 30 -
More than three dozen companies that issued Initial Public Offering (IPO) in 2009-10 and were subsequently listed in the Nepal Stock Exchange (Nepse) have been found to have variance in their projected and actual financial reports by over 20 percent.
A majority of the 37 companies that witnessed variance in their financial details saw difference in their deposits which resulted in variance in other factors, including loans and advances, income, and finally ratios too.
However, in case of some companies, variance were seen in particulars such as paid-up capital and fixed assets. For an instance, paid-up capital of Arun Finance is 40 percent less than it had projected.
Companies seeking to get their stocks listed in NEPSE are required to publish their prospectus containing projected financial details for three years before going for IPO as per the Securities Board of Nepal (Sebon)’s Securities Issue Guideline.
According to Securities Issue Guideline, if variance between the projected details and actual details is 20 percent or more, then the company must inform Sebon about the reasons behind such variance and publish it in their upcoming annual report.
According to Sebon, only three companies—Manakamana Development Bank, Zenith Finance and Shubhalaxmi Finance—that witnessed variance of over 20 percent complied with the guidelines by disclosing it to the board as well as publishing it in their annual reports. However, in case of remaining 34 companies, either they failed to disclose it to Sebon or include it in their annual reports or failed to do both.
All the 37 companies are financial intermediaries—23 development banks, nine finance companies, three life insurance companies and two commercial banks.
“If unattainable and false projection wawere made only for luring investors to subscribe shares, it is a serious offence,” said Mekh Bahadur Thapa, head of financial information analysis department at Sebon.
According to the stock market regulator, listed companies are not showing seriousness in the disclosure issue, which is a matter of serious concern for it because investors have the right to know. “It seems listed companies are considering the stock market a place to generate capital and are showing carelessness in disclosing information,” said Thapa.
Thapa added that Sebon was still encouraging companies to comply with the regulation by allowing them to report although late. “If they continue to turn deaf ears to our direction, we will be forced to initiate action against them,” said Thapa.
According to him, Sebon may ask these institutions to clarify the reason and go to the extent of blacklisting them.
“Blacklisting means board members of the company concerned cannot get involved in any activities of listed company for 10 years,” said Thapa, adding that Sebon was holding discussions about the action to be taken against such companies.
Source: Kantipur
More than three dozen companies that issued Initial Public Offering (IPO) in 2009-10 and were subsequently listed in the Nepal Stock Exchange (Nepse) have been found to have variance in their projected and actual financial reports by over 20 percent.
A majority of the 37 companies that witnessed variance in their financial details saw difference in their deposits which resulted in variance in other factors, including loans and advances, income, and finally ratios too.
However, in case of some companies, variance were seen in particulars such as paid-up capital and fixed assets. For an instance, paid-up capital of Arun Finance is 40 percent less than it had projected.
Companies seeking to get their stocks listed in NEPSE are required to publish their prospectus containing projected financial details for three years before going for IPO as per the Securities Board of Nepal (Sebon)’s Securities Issue Guideline.
According to Securities Issue Guideline, if variance between the projected details and actual details is 20 percent or more, then the company must inform Sebon about the reasons behind such variance and publish it in their upcoming annual report.
According to Sebon, only three companies—Manakamana Development Bank, Zenith Finance and Shubhalaxmi Finance—that witnessed variance of over 20 percent complied with the guidelines by disclosing it to the board as well as publishing it in their annual reports. However, in case of remaining 34 companies, either they failed to disclose it to Sebon or include it in their annual reports or failed to do both.
All the 37 companies are financial intermediaries—23 development banks, nine finance companies, three life insurance companies and two commercial banks.
“If unattainable and false projection wawere made only for luring investors to subscribe shares, it is a serious offence,” said Mekh Bahadur Thapa, head of financial information analysis department at Sebon.
According to the stock market regulator, listed companies are not showing seriousness in the disclosure issue, which is a matter of serious concern for it because investors have the right to know. “It seems listed companies are considering the stock market a place to generate capital and are showing carelessness in disclosing information,” said Thapa.
Thapa added that Sebon was still encouraging companies to comply with the regulation by allowing them to report although late. “If they continue to turn deaf ears to our direction, we will be forced to initiate action against them,” said Thapa.
According to him, Sebon may ask these institutions to clarify the reason and go to the extent of blacklisting them.
“Blacklisting means board members of the company concerned cannot get involved in any activities of listed company for 10 years,” said Thapa, adding that Sebon was holding discussions about the action to be taken against such companies.
Source: Kantipur
