Sebon halts share trading of Nepal LifeNepal Life Insurance’s plans for a Further Public Offering (FPO) of 3.96 million scripts has landed in controversy after Securities Board of Nepal (Sebon) on Friday directed Nepal Stock Exchange (Nepse) to temporarily halt company’s share trading, effective from June 10.
Nepal Life Insurance’s plans for a Further Public Offering (FPO) of 3.96 million scripts has landed in controversy after Securities Board of Nepal (Sebon) on Friday directed Nepal Stock Exchange (Nepse) to temporarily halt company’s share trading, effective from June 10.
Sebon said the company made public its FPO plans without obtaining its permission. “The company has announced its decision to float additional shares at a premium without Sebon permission. The announcement can create price fluctuations,” the board said in a statement.
The Securities Registration and Issue Regulations of 2008 requires a company to fulfil a resolution related to the new issue (further public issue) passed by the general meeting. The laws further state if the price of the proposed issue is to be fixed higher than the face value, the methodology of fixation of price and basis and justification of the premium must be provided by the issuing company.
“The company took the decision on its own going against the securities regulations,” said Sebon Spokesperson Niraj Giri. “Such acts resemble foul plays intended to create price fluctuations which can put investors at risk.”
According to Giri, transaction of Nepal Life’s shares has been halted until further decision and also to warn other listed companies to refrain from making sensitive announcements on their own. “To prevent such acts, the board is mulling imposing regulations that require companies to take approval from Nepse and the board at the same time,” he said, adding Sebon has sought justification from the company and necessary actions will be taken after an analysis.
The company on Thursday announced its decision to float 3.96 million shares at Rs2,951. The company plans to decrease promoter shareholding to 70 percent from 80 percent through the FPO. A board meeting of the company on Wednesday had decided the FPO, subject to approval from the Sebon. The company’s shares were trading at Rs4,888 on Thursday.