Sebon alerts sales, issue managers

Securities Board of Nepal (Sebon) has issued directives to the issue and sales managers to make capital market more transparent.According to the new directives, the regulatory authority of capital market has asked sales and issue managers to submit report of collection centres — the amount and forms collected — everyday or the next day by 12 noon.
Similarly, the board has asked to open a joint account in the name of banker to the issue (commercial bank) and ownself to deposit the collected amount for the IPOs. "Every next day the money thus deposited must be deposited in an account — opened for this purpose in the Nepal Rastra Bank (NRB) — at least for three days.
The applicants will also get the interest, though a nominal, till the date the shares are alloted, states the new directives."The new directives are needed as over Rs 2 billion Initial Public Offerings (IPOs) and bonds are being issued soon," Dr Chiranjivi Nepal, chairman of the regulatory authority of the capital market said, adding that enforcement of rule is more important than bringing the rule itself.
The board is, this time, very cautious about the citizenship certificate also, as its monitoring unit had last time raided and confiscated the Nepal Development and Employment Promotion Bank's (NDEPB) IPO application forms — from different collection centres — with suspicious citizenship certificates.
The NDEPB had received 5,00,000 applications amounting to over eight billion rupees that it claimed to be oversubscribed. The eight billion rupees claimed to be collected was not 'the cash'. The collection of cash did not exceed half-a-billion and the amount was only in the papers.According to the new rule now, the cash must be deposited at a NRB account unlike the earlier practise of showing it on paper only.
To check the 'fake oversubscription' of IPOs, Nepal Rastra Bank (NRB) had also issued directives one month earlier."Public has, recently, lost their appetite for IPOs and the new move by the board is hoped to reinstall their confidence," said Nepal.
Due to the 'fake citizenship issue' of NDEPB, over 3,000,00 applications were dumped. Now, the Sebon thinks that Merchant banks will be more responsible and the problem will not be repeated as the board has strictly asked the investors not to use fake citizenship certificate or face the action.