The Nepal Rastra Bank (NRB) has allowed banks and financial institutions (BFIs) with institutional and foreign investment to fix the number of their board members in proportion to their holdings. Earlier in September, NRB had instructed BFIs to end classification of promoter shareholders of BFIs, requiring them to end the provision under which a shareholder gets elected to the BoD from the same group.
Bankers were worried with the central regulatory bank´s diktat to lump all promoter shareholders into a single category could make it difficult for their institutional and foreign investors to get represented in the board of directors.
"It seemed that the provision could discourage foreign investors so the central regulatory bank decided to exempt the foreign and institutional investors from such requirement.
Though there will be no separate groups, BFIs with foreign and institutional investors can ensure proportional representation in their respective boards," Nepal Rastra Bank spokesperson Manmohan Kumar Shrestha told Republica. According to NRB, BFIs will have to scrap provisions related to classification of shareholders amending their Memorandum of Association or Article of Association through their upcoming annual general meetings.
NRB spokesperson Shrestha said ending classification of promoter shares was intended to ensure corporate governance in the BFIs. "Some promoters remain in the bank´s board of directors for a long period of time by getting elected from his/her class of shareholders where shareholders of other classes are not allowed to cast their vote," Shrestha told Republica. "By scrapping the provision of classification of promoter shareholders, the central bank wants to ensure good governance."
source: republica,1 nov 2014
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Bankers were worried with the central regulatory bank´s diktat to lump all promoter shareholders into a single category could make it difficult for their institutional and foreign investors to get represented in the board of directors.
"It seemed that the provision could discourage foreign investors so the central regulatory bank decided to exempt the foreign and institutional investors from such requirement.
Though there will be no separate groups, BFIs with foreign and institutional investors can ensure proportional representation in their respective boards," Nepal Rastra Bank spokesperson Manmohan Kumar Shrestha told Republica. According to NRB, BFIs will have to scrap provisions related to classification of shareholders amending their Memorandum of Association or Article of Association through their upcoming annual general meetings.
NRB spokesperson Shrestha said ending classification of promoter shares was intended to ensure corporate governance in the BFIs. "Some promoters remain in the bank´s board of directors for a long period of time by getting elected from his/her class of shareholders where shareholders of other classes are not allowed to cast their vote," Shrestha told Republica. "By scrapping the provision of classification of promoter shareholders, the central bank wants to ensure good governance."
source: republica,1 nov 2014
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