Talks held between officials of Nepal Stock Exchange (Nepse), stock brokers and Nirmal Pradhan on resuming trading of shares belonging to Pradhan, Nepal Bangladesh Bank (NBB) and Shanker Kumar Shrestha, a stock investor, ended inconclusively today, after
stockbrokers insisted that Nepse make arrangements for ownership transfer of NBB shares sold by Pradhan or find a middle path so that the interest of investors, who stand to lose over Rs 130 million, is protected.
The meeting was held as stockbrokers stopped trading shares of Pradhan, a major stock market player, NBB and Shrestha from today blaming Pradhan for acting irresponsibly and causing investors to lose interest in the stock market.
“Since we could not act immediately on the matter, we postponed today’s meeting. We will call another meeting soon,” Nepse spokesperson Shambhu Pant said.
The problem surfaced after Laxmi Bahadur Shrestha, a promoter of NB Group and a former NBB director, transferred ownership of 220,000 units of public shares of NBB to obtain a loan from Pradhan and Shanker Kumar. At the time when ownership of the shares were transferred, Laxmi Bahadur had, however, made both of them sign a supplemental agreement, which barred them from selling those shares.
But Pradhan and Shanker Kumar later pledged those shares as collateral at Narayani National Finance to obtain a loan. And as they failed to repay the loan amount, the finance company sold the shares in the secondary market.
After the shares were sold, Laxmi Bahadur moved the Kathmandu District Court, which issued a verdict saying the concerned authorities should stop transferring ownership of shares sold by the finance company.
“Because the ownership of shares cannot be transferred, at least 1,000 investors who bought them are left in the lurch. Such an act has only caused investors to lose confidence in the share market,” president of Stock Brokers’ Association of Nepal Narendra Raj Sijapati said, adding, “We want Nepse to either make arrangements so that the ownership of those shares could be transferred or find a middle path so that the interest of investors is not infringed upon.”
Pradhan, on the other hand, has said he is not responsible for the sale of those shares as it was not him but the finance company that sold those stocks. But Sijapati said: “If he had respected the conditions of the supplemental agreement signed with Laxmi Bahadur then this situation wouldn’t have arisen.”
In this regard, stockbrokers have also asked NBB to extend its book closure deadline and postpone the annual general meeting scheduled for March 11, which is expected to approve 17.89 percent dividend, including 10 per cent bonus shares and 7.89 per cent cash returns.
This is because the stock market regulation makes it mandatory for stockbrokers to transfer ownership of all shares that have been sold but are yet to be transferred to those who bought them prior to the book closure date or at the end of the fiscal year. Otherwise, dividend will be extended to those whose names appear on the share certificate and not to those who bought them.
“We hope extension of book closure deadline will prevent Pradhan and Shanker Kumar from laying claim to the dividend and protect the interest of investors to some extent,” Sijapati said.
source: the himalayan times,16 feb 2014
LINK
stockbrokers insisted that Nepse make arrangements for ownership transfer of NBB shares sold by Pradhan or find a middle path so that the interest of investors, who stand to lose over Rs 130 million, is protected.
The meeting was held as stockbrokers stopped trading shares of Pradhan, a major stock market player, NBB and Shrestha from today blaming Pradhan for acting irresponsibly and causing investors to lose interest in the stock market.
“Since we could not act immediately on the matter, we postponed today’s meeting. We will call another meeting soon,” Nepse spokesperson Shambhu Pant said.
The problem surfaced after Laxmi Bahadur Shrestha, a promoter of NB Group and a former NBB director, transferred ownership of 220,000 units of public shares of NBB to obtain a loan from Pradhan and Shanker Kumar. At the time when ownership of the shares were transferred, Laxmi Bahadur had, however, made both of them sign a supplemental agreement, which barred them from selling those shares.
But Pradhan and Shanker Kumar later pledged those shares as collateral at Narayani National Finance to obtain a loan. And as they failed to repay the loan amount, the finance company sold the shares in the secondary market.
After the shares were sold, Laxmi Bahadur moved the Kathmandu District Court, which issued a verdict saying the concerned authorities should stop transferring ownership of shares sold by the finance company.
“Because the ownership of shares cannot be transferred, at least 1,000 investors who bought them are left in the lurch. Such an act has only caused investors to lose confidence in the share market,” president of Stock Brokers’ Association of Nepal Narendra Raj Sijapati said, adding, “We want Nepse to either make arrangements so that the ownership of those shares could be transferred or find a middle path so that the interest of investors is not infringed upon.”
Pradhan, on the other hand, has said he is not responsible for the sale of those shares as it was not him but the finance company that sold those stocks. But Sijapati said: “If he had respected the conditions of the supplemental agreement signed with Laxmi Bahadur then this situation wouldn’t have arisen.”
In this regard, stockbrokers have also asked NBB to extend its book closure deadline and postpone the annual general meeting scheduled for March 11, which is expected to approve 17.89 percent dividend, including 10 per cent bonus shares and 7.89 per cent cash returns.
This is because the stock market regulation makes it mandatory for stockbrokers to transfer ownership of all shares that have been sold but are yet to be transferred to those who bought them prior to the book closure date or at the end of the fiscal year. Otherwise, dividend will be extended to those whose names appear on the share certificate and not to those who bought them.
“We hope extension of book closure deadline will prevent Pradhan and Shanker Kumar from laying claim to the dividend and protect the interest of investors to some extent,” Sijapati said.
source: the himalayan times,16 feb 2014
LINK
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