SEBON Tightens the Noose on IPO Issuance of Hydropower Companies

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SEBON Tightens the Noose on IPO Issuance of Hydropower Companies

The Securities Board of Nepal (SEBON) is preparing to implement new regulations regarding the share issuance and trading of hydropower companies. After a discussion between SEBON and the officials of Independent Power Producers Association, Nepal (IPPAN), a new arrangement has been decided regarding the securities of hydropower sector companies, SEBON sources informed New Business Age.

According to the information provided by SEBON spokesperson Mukti Shrestha, a new system is going to be implemented regarding the transactions after the lock-in period of the initial public offering (IPO), rights shares and promoter shares of the hydropower company. According to him, the new system will not apply to companies that are currently in the process of IPO and rights share issuance.

Shrestha said that SEBON is going to add some new provisions to make the securities transactions of hydropower companies transparent due to complaints from the general investors regarding the trading of the promoter shares of the listed hydropower company.

After the lock-in period, the hydropower companies can issue promoter shares only after starting commercial production of electricity, as per the new regulations. SEBON said that the hydropower companies must mandatorily publish the information related to the opening of the lock-in period of promoter as well as general shareholders in a national daily newspaper and the company’s website and also provided the information to the SEBON and the stock market.

The company can start the share trading only after 15 business days after publishing the notice. Recently, the number of companies issuing rights shares has increased as the Electricity Regulatory Commission, the regulator of hydropower companies, has allowed the issuance of rights shares to pay the loans taken by hydropower companies for the construction of the projects. Most of them are preparing to issue rights shares for loan repayment purposes. 

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