Kathmandu. The Accounts Committee of the Parliament has sent a letter to the Securities Board to provide the details within three days. A letter has been sent seeking details of the progress of implementation of the directives given by the 19th meeting of the committee.
The letter states, “For the implementation of the decision taken by the 19th meeting of this committee on 09/09/2080 on the present issue, the dated 2080/09/13. According to 66 letters, the status of implementation of the instructions sent by the Board is no. 10/18 of 2081. After receiving the letter of 2002, he was aware of the implementation of the decision till the date of the letter. As the committee needs to be informed about the status of implementation of the decision even during the subsequent period, it is requested to provide information to the committee secretariat about the status of implementation of the decision within three (three) days. ’
A meeting of the committee held on December 17, 2018 had given various directives to the Securities Board for market reforms. The committee has asked for the progress reports of these directives.
Such was the direction to the board of the committee
Although the Securities Board of Nepal has been taking into account the securities act, 2063 and the following regulations regarding the issuance of shares of companies and other rules, bye-laws, guidelines and directives issued by the board for the implementation of the said act and the consent/approval/prior approval provided by the direct regulatory body of the company, the concerned institution issuing the shares is based on the following rights delegated under the powers delegated in the Securities Act, 2063. Rules:
Securities Board of Nepal Regulations, 2064 Securities Market Operation Rules, 2064
Securities Traders (Securities Brokers and Securities Traders Regulations, 2064
Securities Entrepreneurs (Merchant Bankers Rules, 2064
Collective Investment Fund Regulations, 2067 Securities Central Deposit Service Rules, 2067 Credit Rating Rules, 2068
Securities Registration and Issue Rules, 2073
The Commodity Exchange Market Regulations, 2074 Securities Listing and Transaction Rules, 2075 Specialized Investment Fund Rules, 2074, etc. have not been published in the Nepal Gazette.
Similarly, the Office of the Registrar of Companies is not even aware of why, when and how the Securities Board of Nepal Rules and Procedures have been changed (P.No. 080/81 F.No. 908 of the Office of the Registrar of Companies). 07. It appears according to the letter of 22.
In such a situation, it is not possible for other general investors to say that they are aware of the amendments made in the mentioned laws. Since such laws governing the entire stock transaction are not legally communicated to the general public, there is room for doubt on transparency. It is natural to question the functioning of regulatory bodies due to practices such as reducing the time period for issuing shares at a premium price from three years to two years, and not having detailed discussions with stakeholders while amending the provisions of the regulations.
The securities board, which aims to protect the interests of investors, create a clean and transparent market and reduce systemic risk, should ensure that it is not affected by the influence and pressure of certain interest groups. The Ministry of Finance should also be cautious in this regard. For the work of expanding nepal’s capital market and commodity exchange market in a timely manner, making it transparent: –
To publish the above-mentioned regulations made in accordance with the delegated management in the Nepal Gazette as soon as possible,
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In order to ensure that the general investors cannot be affected by the influence and pressure of certain interest groups to reach a conclusion only after a detailed study and discussion with all the stakeholders while amending the provisions of the regulations, it is necessary to expand nepal’s capital market and commodity exchange market in a timely manner, make it transparent and reform the securities laws in a timely manner to adapt the securities laws to international practice. To register a bill in the federal parliament after detailed discussions with the stakeholders,
Similarly, there is a need to identify and control the profit taking through loopholes in the existing laws related to the stock market, while there is a lack of trustee laws. There is also a lack of laws related to transactions and rafsaf, membership, insider trading, investor education and security, rules of disclosure, and banning illegal and criminal trading practices in the securities market. This meeting of the committee directs the Government of Nepal, The Ministry of Finance and the Securities Board of Nepal to register the bill in the federal parliament keeping the formulation of such essential laws in priority.
Most companies seem to have preferred the process of issuing primary shares (IPO) at premium prices in recent times. Which also seems to have an impact on the secondary stock market. While the issuance of primary shares (IPO) at a premium seems to have been used, in recent times, the process of book building, which is priced through investor competition in the market, seems to be an international practice.
Similarly, now that the Securities Board has amended the rules to allow the company to be counted in net worth for the purpose of issuing primary shares (IPO) by increasing the price of the company by revaluation, it is also seen that the company going to Liquidation has also started issuing primary shares (IPO) by increasing the valuation on its own. Therefore, this meeting of the Committee directs the Securities Board of Nepal to follow the book building process of determining the price through the competition of investors and to issue primary shares (IPO) only to companies with more than 90 Real Net Worth without revaluation (otherwise the loss-making companies will sell the shares by increasing the volume by revaluation) and the general investors may be at great risk. Sub-section (5) of Section 45 of the Insurance Act, 2079 states that “notwithstanding anything contained in the prevailing law, the insurer shall demand 100 per cent of the share face value at the time of inviting applications for the purchase of shares from the general public” and the insurance companies have reserved 30 per cent of the shares for the general public at the time of establishment of the company. It is applicable to banks and financial institutions. This meeting of the committee directs the Nepal Insurance Authority (INSURANCE AUTHORITY) to immediately correct the approval of the Insurance Authority to sell shares at a premium to the insurance companies as it is against the Insurance Act and against the interests of the general investors.
Since the office of the Registrar of Companies only works to register the company and keep its records, in the case of banks, Nepal Rastra Bank, Nepal Electricity Regulatory Commission in the case of hydropower companies and in the case of insurance companies, it is necessary to give it to the Office of the Registrar of Companies or form any other body to regulate other companies like Nepal Insurance Authority. ।
Although a lock-in period of three years has been kept for the basic investors investing in the establishment of hydropower projects, the meeting directs the Securities Board of Nepal to manage at least one-third shares of the basic investors till the loan taken at the time of the establishment of the project is cleared. ।
This meeting of the Committee directs the Ministry of Finance, Securities Board of Nepal to make legal arrangements in order to expand the scope of the securities market, including other instruments of securities (including loans, bonds and green bonds) and to allow non-resident Nepalis to invest in the securities market.
The meeting directs the Ministry of Finance, the Office of the Registrar of Companies and the Securities Board of Nepal to implement the decision within a year as the policy decision of the Government of Nepal to convert large companies or companies with more than Rs 5 billion capital into public companies has not been implemented.
प्रतिक्रिया दिनुहोस्