November 11: The problems in the secondary market related to share transactions of companies opting for merger or acquisition has come finally to an end. The months-long suspension of share transactions of companies opting for merger or acquisition has come to an end after the Securities Board of Nepal started implementing the Guidelines for Merger/Acquisition of Organised Institutions 2079 effective from November 10.

At present, the share transactions of 34 companies have been suspended because they are in the process of merger or acquisition.

Since the implementation of the new guidelines, the transactions of shares other than preference share will be allowed in case if a company decides for merger.

As per the new guidelines, such companies need to submit applications to the Nepal Stock Exchange (NEPSE) and Central Depository and Settlement Corporation Limited (CDSC) seeking approval for transaction of shares other than preference shares. Based on the application, NEPSE and CDSC can make arrangements to immediately lift the suspension on share transactions other than preference shares.

Chairman of the Securities Board of Nepal Ramesh Kumar Hamal said that they succeeded in implementing the new guidelines after relentless efforts. According to Hamal, the new guidelines issued so that the shares of the companies would not have to be suspended for a long time.

As per the new provision, the share transaction of the companies will be suspended for a maximum of 15 after they start integrated transaction following the completion of all the necessary processes of merger or acquisition.

Hamal further said that the companies opting for merger or acquisition have to complete the process within six months of signing the agreement. If they fail to complete the merger process, the board members will be held accountable. However, Hamal clarified that the six month deadline will not be applicable for the companies that were in the merger process before the guidelines were implemented.

At present, the maximum number of companies that have initiated the process of merger or acquisition are insurance companies. A total of 16 insurance companies, 8 commercial banks and 10 microfinance companies have initiated the process of merger or acquisition.