Monday, October 17, 2016

Sebon directs Reliable to launch rights issue before getting acquired

Securities Board of Nepal (Sebon) – the capital market regulator – has asked Reliable Development Bank to launch rights issue before it is acquired by the Global IME Bank.
Reliable's 10th Annual General Meeting (AGM) held on July 1 had approved 1:1 rights shares and 10 per cent bonus share from the net profit earned in the last fiscal year.
Instead of launching rights issue, the development bank, however, had signed a Memorandum of Understanding (MoU) for its acquisition by the Global IME Bank.
"The beginning of acquisition process without distributing rights shares would hurt investors," Sebon said in a statement issued today.
The regulator also directed the national-level development bank registered in Kathmandu to launch rights issue before the acquisition as failure to do so would be against the interest of investors who bought the development bank's shares in anticipation of rights and bonus shares.
"Since the decision was price-sensitive and approved by the AGM, Reliable Development Bank cannot avoid its AGM's decision," the Sebon said in the statement.
Earlier on October 1, Global IME Bank chairman Chandra Dhakal and Reliable chairman Radhe Shyam Agrawal had signed the MoU on behalf of their respective organisations to complete the acquisition process within three months.
The Board is also planning to enforce a regulation that will bar listed companies from taking multiple corporate actions at once to rein in activities that could influence the capital market and hurt the interest of investors.
"If implemented, this regulation will prevent listed companies from reversing some of the crucial decisions made in the past," according to the capital market regulator that is mulling over introducing such a provision after a number of listed companies jumped in to roll out future plans without accomplishing the ongoing task.
According to the Sebon spokesperson Niraj Giri, the move is aimed at safeguarding the investors’ interest. "Sebon is also planning to enforce a code of conduct to discipline companies engaged in insider trading," he added.

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