National Finance barred from selling unsubscribed right shares

KATHMANDU, - Nepal Rastra Bank and the Security Board of Nepal (SEBON) have directed National Finance Limited (NFL) not to sell its unsubscribed shares during the issuance of right shares at a premium price.
National Finance, which is at the final stages of a merger with Narayani Finance Limited, was seeking to sell 18,000 units of its unsubscribed shares at a premium price of Rs. 600 per share.
Earlier, it had issued 6.3 million units of right shares.
As per central bank regulations, such unsubscribed shares should
be auctioned, but the minimum per share price should be fixed at
Rs. 100.
The rules state that companies that make a profit for three consecutive years can sell their shares at a premium price during their initial public offering (IPO).
"We intervened in National Finance's attempt and directed it to act as per the central bank's directives," said SEBON chairman Surbir Poudel. "We have written to Nepal Rastra Bank regarding the matter."
Central bank director Laxmi Prapanna Niraula confirmed that the central bank had directed the finance company not to sell its unsubscribed shares at a premium price.
"They have every right not to sell the shares if they could not get the expected price," he said. "They must follow Nepal Rastra Bank's directives strictly."
The company admitted it had received the central bank's directive not to go ahead with its plan.
"That's why we are cancelling the sale of our shares at the rate Rs. 600 per share and planning to make a fresh call for action by the first week of September," said Umesh Singh Bhandari, chief executive officer of the company.
He said that companies should be allowed to set a premium price
as per their performance given that they have been authorized to not even accept the offered price.
With the subscription of right shares, its
paid-up capital has
already reached Rs. 220 million.
The total paid-up capital of the new company Narayani National Finance which was created after the merger is Rs. 440 million with an equal amount of paid-up capital of Narayani Finance.
After the merger, its reserve capital has too remained at Rs. 180 million.
"We are going to issue right share worth Rs. 220 million in mid-October which
will raise our classification to B class," Bhandari said. - Kantipur Report