Share transactions to be suspended only for 15 days

After the investors’ pressure, the regulatory authority of the capital market has decided to shorten the duration of suspension of share transactions of companies in the process of merger and acquisition (M&A) to only 15 days.

The Securities Board of Nepal (Sebon) today issued a directive clearly mentioning that the share transactions will be suspended for a maximum of 15 working days for the completion of the M&A process that include re-registration of securities, dematerialisation and listing of securities.

The directives has formed a unified policy for all companies listed in the secondary market with the new directives, though there was a policy for trading suspension only for banks and financial institutions (BFIs) earlier.

Enforcing the directive from today, Sebon has maintained that the share transaction will be suspended for a maximum of 15 working days after the unified entity starts joint business transaction.

Investors have been suffering as they had to wait for a longer period of time for buying and selling of shares – especially the BFIs shares – that are in M&A process. As the Sebon scrapped the provision to hold share transactions of the companies, which enter the process for M&A, the new rule will give some respite to the investors, who were unable to purchase and sell their stakes for a long time until the unification process completed.

The regulator has given 15 days also for re-registration, reconciliation, dematerialisation and listing of the shares for post unification.

Earlier, the central bank has authorised Sebon to decide on the suspension of share trading of BFIs opting for M&A. Amending the Regulation for Merger and Acquisition of Banks and Financial Institutions 2073 last month – according to the announcement in the Monetary Policy for the current fiscal year – the central bank has given the right to decide on the suspension of share trading to Sebon. 

The central bank has become flexible after increasing complaints that the suspension of share trading in the secondary market for a long time during M&A adversely affected the investors.