KATHMANDU, April 27:
Securities Board of Nepal (Sebon) has decided to allow the Citizens Investment Trust (CIT) to work as the issue manager of the Upper Tamakoshi Pvt Ltd (UTKHPL). The apex regulator of the securities market was in deep confusion over whether to allow the CIT, which owns two percent stake in the UTKHPL, to work as the issue manager due to lack of clarity in laws and regulations.
“The problem is that the laws and regulations do not speak anything whether a company which owns stake in a project should also be allowed to issue shares,” Niraj Giri, spokesperson of Sebon, told Republica, adding that they have given the approval for the CIT to work as the issue manager for UTKHPL as the former has only 2 percent ownership in the project.
“Though we are convinced that there might not be any conflict of interest in this particular case as the issue manager has just 2 percent stake, the case has, however, reinforced the need for clear legal framework. What if another company comes appointing the issue manager that has bigger stake in a project. There could be conflict of interest as the issue manager can conceal the related information. So we need a clear guidelines and regulations in this regard,” Giri added.
Meanwhile, a Sebon source said the regulatory body was likely to give a go-ahead to UTKHPL to issue 36,006,000 units of primary shares next month. “They (UTKHPL) has submitted their prospectus for issuing the primary shares.”
Source inside the SEBON said that the row over the issue has delayed issuance of IPO.
“After receiving suggestions from Sebon we will allow the company to issue it. It depends on how they respond to our suggestions. We will give a nod if they act accordingly If their responses will be clearer, we will approve,” the source at the Sebon told Republica. According to UTKHPL, among a total of 36, 006,000 units of primary shares issued in the first round, it has allocated 10,590,000 units shares to the locals of Dolakha (project affected area, 18,299,520 units to the depositors of Employees Provident Fund (EPF), 1,524,960 units to the staffs of the EPF, 304,992 units to the staff of CIT, 914,976 units to the staff of Nepal Telecom (NT), 304,992 units for Rastriya Beema Sansthan (RBS) and 4,066,560 units to the staff of the UTKHPL and Nepal Electricity Authority.
The authorities of the UTKHPL and its issue manager CIT could not be contacted for the comment. UTKHPL is developing a national pride project– Upper Tamakoshi Hydroelectric Project–which is considered to be the largest hydroelectric plant in Nepal. The project is entirely financed from the domestic financial institutions and companies.
NEA, NT, CIT and RBS have a total of 51 percent shares in the company which includes a 2 percent of CIT. Likewise, it has also allocated 15 percent shares to the general public apart from 10 percent of shares to resident of Dolakha.