Hydro firms found issuing IPO without Sebon approval
Apr 12, 2018-
A number of hydropower companies were found to be issuing initial public offerings without taking prior approval from Securities Board of Nepal (Sebon), the sector’s regulator. This is in violation of Securities Act 2007.
Two companies -- a cooperative in Rukum and Dordi Khola Jal Bidyut -- were trying to issue primary shares of Shera Uttar Ganga Micro Hydropower Project. But they had not received any approval from Sebon to do so.
The offending cooperative, Rukumeli Sahid Smriti Grameen Jal Bidyut Sahakari, had planned to sell 500,000 units of primary shares of the micro hydropower priced at Rs500 per unit. The cooperative had even asked interested investors to deposit their money at a bank account.
The cooperative is investing a total of Rs370 million in the hydropower that has the potential to produce 1 MW of electricity. The planned hydropower project will be constructed at Putha Uttar Ganga Rural Minicipality-11.
Kamai Gharti Magar, treasurer of the cooperative, said they were floating the shares for cooperative members and had taken permission from the Rural Municipality. The cooperative however has not notified Sebon regarding its action. Also, the cooperative failed to state that the primary shares were only for its members in their public notice. The Securities Act 2007 empowers Sebon to regulate and systematise the issue, transfer, sale and exchange of registered securities. Similarly, the board has been authorised to grant permission, to regulate and monitor the activities of the stock exchange including the primary shares.
Sebon Spokesperson Niraj Giri said the companies were not authorised to sell primary shares through public call without taking approval of the board. “In this regard, Sebon recently issued a public notice as a caution to the companies and general people,” Giri said.
Giri added that the cooperative can sell the primary shares among its members, but without making the public call. “The hydropower companies seem to be misguided by the board’s rule that has asked such companies to issue at least 10 percent shares to those local people who are directly affected by the project.”
According to Giri, they took explanation from the cooperative and have started looking for legal consultation on what action to take against the companies that defy the law. He added that the board had also sent a letter to Dordi Khola Jal Bidyut to correct its action.
Published: 12-04-2018 08:35