The Securities Board of Nepal (Sebon) has begun a probe into eight banks and financial institutions (BFIs) accusing them of delaying issuing rights shares with the expectation that their stocks will rise on the announcement.

One commercial bank, two development banks, four finance companies and a microfinance company are currently under Sebon’s scanner for holding up rights shares despite getting the okay from their annual general meeting (AGM). 

According to Sebon, a number of investors at the stock market have filed complaints with the regulatory body against Kumari Bank, Sajha Bikas Bank, Dev Bikas Bank, Jebils Finance, Pokhara Finance, Synergy Finance, Seti Finance and Nagbeli Laghubitta Bikas Bank. 

Sebon Spokesperson Niraj Giri said they decided to examine the paperwork of these BFIs after receiving the complaints. 

“We will carry out an investigation of their documentation process and the reasons behind the delay in issuing rights shares,” Giri said. 

As per the Securities Issues and Allotment Guidelines 2017, listed companies have to begin the official process of issuing rights shares within two months of receiving the go-ahead from their AGM. Investigators have accused the companies of breaching the guidelines and purposely delaying the issuance process in an attempt to gain undue benefits by manipulating their share prices. 

A special general meeting of Kumari Bank held last November had approved issuing 50 percent rights shares worth Rs1.19 billion to its shareholders. The bank issued the rights shares only last March. 

Jebils Finance conducted its seventh AGM last January 11. It approved issuing 12.50 percent bonus shares and rights shares in the ratio 1:1. However, the finance company issued the rights shares only on September 17, eight months after it was approved by the AGM. 

A company’s stock usually rises when it announces issuing rights shares or dividends. 

Company officials have been found to leak its impending plans to profit from rising share prices. 

Thrive Brokerage suspended

KATHMANDU: The Nepal Stock Exchange (Nepse) on Monday suspended Thrive Brokerage House from trading on the stock market for three working days. The brokerage firm has been charged with falling behind on its payments to Nepse. Stockbrokers are required to pay 20 percent of the commission they receive to Nepse. (PR)