Century's capital structure ratio changed to 54:46

The proposed Century Commercial Bank on Sunday changed its capital structure to a ratio of 54:46 for promoters and the general public from the 70:30 ratio proposed earlier through a special general meeting (SGM). The bank had to change its capital structure as 132 of its proposed 568 promoters failed to put up the pledged money. It means the promoters will have to deposit Rs 1.08 billion instead of Rs 1.4 billion as promised earlier. The general public will put up the rest to meet the required paid-up capital of Rs 2 billion when the bank makes an initial public offering.

"We have changed the capital structure as some shareholders could not meet their commitments," said bank chairman Pradip Man Vaidya. "Due to the unfavourable economic conditions of the country, our promoters could not deposit the committed amount." Century officials have said that big promoters involved in real estate trading had failed to fulfil their commitments. As Century had already received a letter of intent (LoI) for establishment on the basis of a capital structure of 70:30, the central bank had told it to hold a special general meeting to change it. The bank was also rushed to get its operating license as it has to be done within a year from the date of receiving the LoI as per the licensing policy of NRB. Century had received its LoI on Jan. 24, 2010.

After the central bank refused to entertain the presence of two persons in the promoters group as their family members were also involved in another bank as key promoters, pressure had mounted on Century to meet the capital requirement. There were some promoters who could not put up the promised money although they had deposited a certain amount. They were allotted shares as per the revised commitment with the surplus shares being forfeited and included in the general public's quota or distributed among other promoters.

The SGM also endorsed the proposal to reduce the number of promoters groups to four from the existing six so that four directors could be elected to the eight-member board. The bank had to reduce the number of promoters groups because their shares in the total capital structure had decreased. As per the revised board structure, there will be representation of three persons from the public. One will sit on the board from the category of impendent professional board members. Earlier, promoters were categorised into six groups so that six directors could be elected to the nine-member board. Only two people could be elected from the general public. Most of the promoters addressing the function were against the categorisation of shareholders. However, the SGM endorsed the proposal of keeping four groups for now and reviewing the categorisation system at the first annual general meeting after it starts operations. Those who were against the categorisation system said that it could promote groupism.

"The main objective of categorization was to collect capital, but it will be better if the bank dissolves it," said Nirmal Pradhan, a promoter. However, chairman Vaidya defended categorization saying that its absence could result in tussles among the promoters on various issues in the future. "It will be tough to bring all the promoters to a compromise." The SGM also endorsed the board's proposal to authorize the bank's board to amend the memorandum and articles of association in case authorized regulatory bodies ordered it to do so.

Source:
ekantipur