Over 75 pc listed companies ignoring fiscal discipline

Stock market over the last couple of years has fast grown as the major investment avenue for common Nepali investors. However, a large number of companies on which the people bet their money still do not care enough to abide by the basic financial discipline. A report of Securities Board of Nepal (SEBON) states that more than three-fourth of the total 159 companies listed at SEBON and transacted at Nepal Stock Exchange, country´s sole secondary market, do not submit their year-end financial report within the stipulated time.

Going by the existing provision, listed companies need to submit their financial report within three months of the completion of fiscal year. "However, only 37 companies of the 159 listed companies adhered to this provision this year," says the report of SEBON. The report notes that SEBON has so far received financial reports for 2008/09 from a total of 141 companies. "However, reports from 104 companies were received well after the legally stipulated duration," SEBON Chief Surbir Poudel told the press. Eighteen listed companies are yet to submit their reports.

Of the 141 companies that reported their financial position to SEBON, 128 companies have reported of earning profit in the last fiscal year. Fifteen among them have announced cash dividend, 35 have announced bonus shares and 18 companies have offered both cash dividend and bonus shares to their shareholders for 2008/09. "We are preparing a company profile of those companies that have already submitted their financial reports to SEBON," said Nawaraj Adhikari, deputy director of Planning and Development Department of SEBON. He added that eight companies registered promoters´ shares worth Rs 691.74 million and five companies registered bonus shares worth Rs 563.5 million by mid-November 2009.

In the last fiscal year, 12 companies issued ordinary shares worth Rs 1.81 billion, 50 companies issued rights shares worth Rs 14 .26 billion and two companies issued debentures worth Rs 750 million, according to the report. A total of 64 companies had announced public issues during the period.

´MoF encroaching SEBON´s jurisdiction´

Speaking at the press meet, SEBON chairman Poudel blamed the Ministry of Finance (MoF) of infringing the authority of SEBON.

"SEBON is the authorized regulator of capital market of the country, but MoF always imposes its decisions on matters related to the capital market even without consulting with it," said Poudel. He added that this overstepping of jurisdiction by MoF while formulating policy could adversely affect the capital market and prove detrimental for the sound economic development.

Poudel also expressed dissatisfaction over the human and financial resources crunch faced by the SEBON to conduct effective monitoring on the back of widening scope of stock market in the country. "How can we effectively monitor ever increasing financial market with only 42 staffers in SEBON and limited budget?" wondered Poudel.

He also raised concerns over the lack of independent recruitment authority to recruit qualified human resources necessary for strengthening SEBON´s monitoring capacity.
Source:Republica