Security Board of Nepal (Sebon) has halted Nepal Life Insurance’s plans Further Public Offering (FPO) temporarily. The board has today directed Nepal Stock Exchange (Nepse) to temporarily halt company’s share trading effective from June 10.
The life insurance company was planning to issue 3.96 million units of FPO. But the board said that the company made public its FPO plans without getting its permission from the board to influence the capital market. "The company has announced its decision to float FPO at a premium rate before getting the permission from Sebon," a press release issued by the board here today read. "The announcement can create price fluctuations, which can put investors at risk."
The Securities Registration and Issue Regulations-2008 requires a company to fulfill a resolution related to the further public issue passed by the company's general meeting too.
"If the price of the proposed issue is to be fixed higher than the face value, the methodology of fixation of price and basis and justification of the premium must be provided by the issuing company," the law also states.
“The company decided on its own, which is against the securities regulations,” according to the spokesperson of the board Niraj Giri.
Transaction of Nepal Life’s shares has been halted until further decision and also to warn other listed companies to refrain from making sensitive announcements on their own, he said, adding that the board is mulling to impose regulations that require companies to take approval from Nepse and the board at the same time to prevent such acts in future. "The board has also sought clarification from the company and the necessary actions will be taken after its gets clarification."
Nepal Life yesterday announced its decision to float 3.96 million units of share at Rs 2,951 per unit. The company plans to decrease promoter shareholding to 70 per cent from current 80 per cent through the Further Public Offering.
A board meeting of the company on Wednesday had decided to float the FPO, subject to approval from the Sebon. Due to the news, the company’s shares were trading at Rs
4,888 – Rs 240.50 more than a day ago – yesterday.
The life insurance company was planning to issue 3.96 million units of FPO. But the board said that the company made public its FPO plans without getting its permission from the board to influence the capital market. "The company has announced its decision to float FPO at a premium rate before getting the permission from Sebon," a press release issued by the board here today read. "The announcement can create price fluctuations, which can put investors at risk."
The Securities Registration and Issue Regulations-2008 requires a company to fulfill a resolution related to the further public issue passed by the company's general meeting too.
"If the price of the proposed issue is to be fixed higher than the face value, the methodology of fixation of price and basis and justification of the premium must be provided by the issuing company," the law also states.
“The company decided on its own, which is against the securities regulations,” according to the spokesperson of the board Niraj Giri.
Transaction of Nepal Life’s shares has been halted until further decision and also to warn other listed companies to refrain from making sensitive announcements on their own, he said, adding that the board is mulling to impose regulations that require companies to take approval from Nepse and the board at the same time to prevent such acts in future. "The board has also sought clarification from the company and the necessary actions will be taken after its gets clarification."
Nepal Life yesterday announced its decision to float 3.96 million units of share at Rs 2,951 per unit. The company plans to decrease promoter shareholding to 70 per cent from current 80 per cent through the Further Public Offering.
A board meeting of the company on Wednesday had decided to float the FPO, subject to approval from the Sebon. Due to the news, the company’s shares were trading at Rs
4,888 – Rs 240.50 more than a day ago – yesterday.
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