With the series of merger rumours recently pushing up the share prices of a few listed companies, the stock exchange has cautioned listed firms to maintain secrecy while holding talks regarding possible mergers.
Less than two weeks ago, the share prices of International Leasing and Finance Company (ILFC) and Shree Investment Finance had undergone substantial appreciation following rumours of a merger of the two finance companies with a commercial bank — Bank of Kathmandu. However, on January 27 — five days after the rumours circulated — ILFC issued a public notice stating that the finance company’s merger with any other institution is not final, thereby dismissing the hearsay.
Meanwhile, share prices of ILFC had appreciated by 18 per cent and Shree Investment Finance’s price also went up by about 10 per cent since the rumours started doing the rounds. However, share price of Bank of Kathmandu had suffered during the said period.
“To avoid any instance of insider trading or price manipulation based on disruptions in information flow, directors will have to be exceptionally careful about information leak,” cautioned a circular issued by Nepal Stock Exchange (Nepse) to ensure transparency in the stock market.
This is the second time in less than three months that Nepse has asked listed companies to be careful while disseminating sensitive information that might affect share prices. Back in late November also, the stock exchange had issued a similar circular.
Moreover, Nepse has also asked the listed companies to refrain from taking any price sensitive decision during the trading hours — that is between 12:00am to 3:00pm from Sunday to Thursday. Likewise, Nepse has also asked the listed companies to inform the stock exchange by 11:00am — an hour before the market opens — if the companies’ board meeting is discussing any price sensitive issues.
Price sensitive information refers to information regarding a company that will have significant impact on the price of company’s shares. The information regarding dividend, profit, merger and acquisitions are considered highly sensitive.
“It is commendable that the stock exchange is trying to make the information flow transparent, as we have observed that in many cases a few clever traders take advantage of the rumours and gullible ones are left with overvalued shares,” said CEO of Siddhartha Capital — fund manager of Siddhartha Investment Growth Fund I — Dhurba Timilsina.
“Moreover, the regulator needs to better prepare the guidelines for the companies regarding information dissemination so that companies will be forced to follow proper rules,” he added.
Likewise, Nepse has directed the listed companies to transfer the share ownership in the name of buyers within 15 days of the application. Although share trading settlement and clearing is undertaken within three days of the transaction, physical certificate transfer takes more than three weeks in the present scenario.
source: the himalayan times,6 feb 2014
LINK
Less than two weeks ago, the share prices of International Leasing and Finance Company (ILFC) and Shree Investment Finance had undergone substantial appreciation following rumours of a merger of the two finance companies with a commercial bank — Bank of Kathmandu. However, on January 27 — five days after the rumours circulated — ILFC issued a public notice stating that the finance company’s merger with any other institution is not final, thereby dismissing the hearsay.
Meanwhile, share prices of ILFC had appreciated by 18 per cent and Shree Investment Finance’s price also went up by about 10 per cent since the rumours started doing the rounds. However, share price of Bank of Kathmandu had suffered during the said period.
“To avoid any instance of insider trading or price manipulation based on disruptions in information flow, directors will have to be exceptionally careful about information leak,” cautioned a circular issued by Nepal Stock Exchange (Nepse) to ensure transparency in the stock market.
This is the second time in less than three months that Nepse has asked listed companies to be careful while disseminating sensitive information that might affect share prices. Back in late November also, the stock exchange had issued a similar circular.
Moreover, Nepse has also asked the listed companies to refrain from taking any price sensitive decision during the trading hours — that is between 12:00am to 3:00pm from Sunday to Thursday. Likewise, Nepse has also asked the listed companies to inform the stock exchange by 11:00am — an hour before the market opens — if the companies’ board meeting is discussing any price sensitive issues.
Price sensitive information refers to information regarding a company that will have significant impact on the price of company’s shares. The information regarding dividend, profit, merger and acquisitions are considered highly sensitive.
“It is commendable that the stock exchange is trying to make the information flow transparent, as we have observed that in many cases a few clever traders take advantage of the rumours and gullible ones are left with overvalued shares,” said CEO of Siddhartha Capital — fund manager of Siddhartha Investment Growth Fund I — Dhurba Timilsina.
“Moreover, the regulator needs to better prepare the guidelines for the companies regarding information dissemination so that companies will be forced to follow proper rules,” he added.
Likewise, Nepse has directed the listed companies to transfer the share ownership in the name of buyers within 15 days of the application. Although share trading settlement and clearing is undertaken within three days of the transaction, physical certificate transfer takes more than three weeks in the present scenario.
source: the himalayan times,6 feb 2014
LINK
Comments
Post a Comment