A Parliamentary Committee implements proactive measures to rectify irregularities in IPO premiums, lock-in periods, and enhance transparency in the stock market

In a recent parliamentary committee meeting, concerns were raised about life insurance companies issuing IPO shares at premium prices, potentially above standard values. Allegations of improper premium approvals prompted an investigation into possible misconduct and misuse of authority. Here are the key directives issued by the committee after discussions with relevant authorities:

1. The absence of Mr. Ramesh Kumar Hamal, Chairman of the Securities Board of Nepal, in the meeting raised concerns. The committee instructs the Commission for Investigation of Abuse Of Authority to investigate the financial transactions and practices of the Chairman within 30 days.
2. The committee emphasizes transparency in regulations governing share issuance by companies. Immediate steps include the publication of regulations, amendments in the Nepal Gazette, and measures to prevent undue influence on investors.
3. The committee directs the Securities Board of Nepal (SEBON) to adopt the Book Building process to address concerns about companies issuing IPOs at premium prices.
4. The committee urges the Nepal Insurance Authority to rectify conflicts between the Insurance Act and the Banking and Financial Institutions Act regarding share prices for insurance companies.
5. The committee suggests creating new laws to regulate the Company Registrar effectively and calls for government action.
6. Recognizing challenges with the three-year lock-in period for promoter shareholders in hydropower projects, the committee instructs SEBON to intervene strategically to manage one-third of shares held by promoters.
7. The committee urges the Ministry of Finance, SEBON, and the Nepal Insurance Authority to expand the scope of the Nepalese stock market, including instruments like debentures, bonds, and green bonds.
8. The committee directs the Ministry of Finance, the Company Registrar’s Office, and SEBON to initiate the process for large companies with over Rs. 5 Arba in capital to become public companies within a year.
9. The committee investigates whether companies issuing premium shares in the past three years set reasonable prices and instructs the Commission for Investigation of Abuse Of Authority to take legal action if wrongdoing is found.
10. To address issues with life insurance premiums, the committee suggests imposing a minimal handling fee on surrendered policies and directs the Nepal Insurance Authority to submit information within three months.
11. The committee announces that the next meeting will be scheduled after receiving relevant information on the outlined directives.