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Kathmandu Thursday March 22, 2001 Chaitra 09, 2057.
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Securities
Board issues new guidelines
Post Report
KATHMANDU, March 21 - Securities Board, the
regulatory authority overseeing the Nepal Stock Exchange (Nepse), made public the New
Securities Registration and Issue Approval Guidelines, 2057 today, which will come into
effect from April 14.
The guidelines have been prepared to contain
unwarranted fluctuations in the stock market, in addition to protection of investors’
rights, it was informed at a press conference organized by the Board here today.
Speaking on the occasion, Chairman of the
Board, Damber Dhungel, said that changes were made to update the old guidelines of 2051.
He hoped that the implementation of the new guidelines would bring stability in the stock
market.
Dhungel also hoped that the implementation of
the new guidelines would bring more transparency and accountability in the stock market
and simplify procedures of share issuance.
According to the new guidelines, except for
financial institutions, and domestic and joint venture companies operating at profits for
two consecutive years, all other companies must have a history of one-year management and
audited accounts before issuing public shares.
In addition, the guidelines stipulates that
companies can issue shares at premium, but only after justifying their need to the board.
Also the new provisions require capital gearing ratio to be 7:3 before the maturity of
debentures.
Recognising the difficulty faced by small
investors, who normally invest without any appraisal of the securities, the guidelines
mentions that securities analysts or firms involved in profit forecasts must inform the
investors of the risk involved in securities they invest in. Similarly, the guidelines has
made it imperative for institutions to issue shares within two months of obtaining
permission from the board. Also companies must provide investors with a financial
statement during share issue and should also mention the possible changes that may take in
the statement in the future.
The minimum number of shares for which
applications would be received has been increased to 50 from the previous ten, with a view
to reducing the number of share applications. Finally, among others, the guidelines
require share distribution to take place within a maximum of 90 days after the closure of
the date of application.
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