Physical Presence Still Mandatory to Buy Shares through Auction

  2 min 16 sec to read
Physical Presence Still Mandatory to Buy Shares through Auction

KATHMANDU: When Upper Tamakoshi Hydropower Limited auctioned off its rights shares in last December/January, investors had to stay in queue for three days to buy them. The company had placed 17 million shares up for auction from December 29 to January 14 while issuing 100% rights shares.

This process proved cumbersome for investors accustomed to the convenience of buying and selling shares through the My Share App. Many took to social media to express their frustration and suggested that an online system for applying to purchase auction shares would have been much more efficient. "Instead of filling out long documents for auction shares, it would be easier if it was possible to apply online," said Bishnu Parajuli, a stock investor from Pokhara.

Currently, most applications for purchasing auction shares must be submitted in person at the sales manager's office. Parajuli pointed out that the sales managers’ offices are mostly confined within the Kathmandu Valley, making it difficult for investors from outside the valley to participate in the auction.

"Even though some companies have arrangements to apply at branch offices of certain banks, not all companies offer this convenience," she said.

Following Upper Tamakoshi Hydropower Limited, companies like Ghalemdi Hydro, Sinagti Hydro Energy, Arun Valley, and Ridi Power also auctioned their unsold shares, requiring investors to queue at the sales managers’ offices to submit their applications.

Purna Prasad Acharya, Chief Executive Officer of CDS & Clearing Limited, acknowledged that while it is technically feasible to buy and sell auction shares online, the necessary rules and regulations must first be established.

"When applying online, if the bid price is leaked, others could adjust their bids accordingly, which poses a risk," he said.

So far, the Securities Board of Nepal has not implemented any legal provisions regarding online applications for auction shares. Navaraj Adhikari, a spokesperson for the board, noted that as the overall stock market becomes more technology-friendly, there should be provisions for online applications to purchase auction shares.

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