Kathmandu: Following the devastating floods and natural disasters that have damaged hydropower projects, transmission infrastructure and other physical assets in various Himalayan and riverbank regions of the country, the Securities Board of Nepal (SEBON) has instructed the Nepal Stock Exchange (NEPSE) to maintain special surveillance over the securities trading of affected listed companies.
The directive has been issued under Section 84(1) of the Securities Act, 2007 (2063 BS), which empowers the board to protect investors’ interests, ensure market transparency and regulate securities trading. The move comes in response to flood-related damage to hydropower projects, transmission facilities and other infrastructure operating or under construction around the Trishuli and Bhotekoshi river systems.
SEBON has directed NEPSE to immediately prepare and submit a list of listed companies that have been, or may be, directly or indirectly affected by the natural disaster. It has also instructed NEPSE to coordinate with affected companies and ensure the disclosure of information regarding the status of projects, damage to assets, impacts on electricity generation and potential financial consequences.
Affected companies will be required to disclose details including the name and location of the project, the date and nature of the disaster, preliminary physical damage, impacts on electricity generation, affected generation capacity and losses related to human resources. They must also provide information on the condition of transmission and distribution infrastructure, insurance coverage of damaged assets, the status of insurance claims and preliminary financial impacts.
The board has further directed that investors be informed about the estimated timeline for the resumption of affected projects and the potential impact on companies’ ability to repay bank loans. Companies must also disclose the immediate measures taken by management in response to the disaster.
Monitoring of Unusual Trading Activity
Citing the possibility of abnormal trading activity in the shares of affected companies due to the floods and natural disasters, SEBON has instructed NEPSE to maintain heightened market surveillance.
NEPSE has been directed to continuously monitor unusual movements in share prices, abnormal trading volumes and suspicious buy-and-sell orders involving affected companies. The board has also called for increased scrutiny of unusual trading before the disclosure of material information, potential insider trading and any other activities that could undermine market fairness and transparency.
Separate Disaster Management Guidelines Ordered
SEBON has also instructed NEPSE to develop a dedicated framework to manage the impact of extraordinary events such as natural disasters, accidents, fires and earthquakes on listed companies in the future.
The framework should clearly define procedures for disclosing information related to disaster impacts, suspending securities trading when necessary and resuming trading once conditions return to normal.
The board has further directed NEPSE to regularly submit progress updates and monitoring reports concerning the securities trading of affected companies.
Urjasanchar