The Securities Board of Nepal (Sebon) has directed listed companies, except for banks and financial institutions (BFIs) and insurance firms, to make transparent funds collected from the issuance of rights shares and Further Public Offerings (FPOs).

The Sebon move is aimed at boosting investor confidence in real sector companies, including hydropower developers. The companies will now have to get approved their plans of utilising the funds raised by their annual general meetings. They will also have to acquire approval for their planned projects from government bodies concerned and obtain the letter of intent on financial closure prior to declaring share issuance, according to the eight-point standards released by Sebon on Wednesday.

Sebon has asked the companies to acquired the approvals at least five days ahead of the announcement of share issuance. The companies should have done initial public offering at least two years earlier to be eligible for issuing rights shares and FPOs.

Also, the companies’ shareholders should have paid cent percent of the issued capital. The firms also need to have obtained credit rating from agencies concerned.

Sebon Chairman Rewat Bahadur Karki said a Sebon board meeting on Tuesday decided to enforce the standards. “The standards are expected boost investor confidence in companies that have no such regulator to look after their financial health and daily operations,” Karki said. 

Sebon said it felt the need for such standards after a number of hydropower companies sought to raise their capital through rights issuance and FPOs. 

“We have up with the standards in order to develop a mechanism so that the actual status of these companies can be known,” Karki said. 

Given BFIs and insurance companies have their regulating agencies, they have been exempted, he added.