SEBON Chair Bhatta's Hasty Decisions: Directive Amended Within a Month, Investors and Energy Entrepreneurs Discontent
Two key directives issued by Nepal Securities Board (SEBON) Chair Dr. Gopal Bhatta in the name of capital market reform have been accused of being rushed without proper study. After opposition to the provision requiring 15-day notice for basic shareholders selling 5% or more shares and the mandatory 100% net worth for hydropower IPOs, the board amended the first directive within a month.
Since assuming office, Dr. Gopal Bhatta, Chair of the Nepal Securities Board (SEBON), has been rapidly publishing documents aimed at capital market reform. However, some directives have been criticized for being issued hastily without proper study.
Initially, the board issued a directive requiring basic shareholders to give 15 days' notice before selling 5% or more of their shares. Investors initially assumed this applied only to promoters and paid little attention. But when it became clear that shares bought from the secondary market would also count toward the basic share threshold as per the Act, and that selling such shares would also require 15 days' notice, a stir arose among investors. They opposed the provision.
Meanwhile, the board made 100% net worth mandatory for hydropower projects issuing IPOs. It also published a document stating that hydropower IPOs could be issued only after project construction was completed. Energy entrepreneurs opposed this. They argue that funds are needed during the construction phase itself, and are challenging the provision that prevents hydropower projects from issuing IPOs. They also disagree on the net worth requirement.
These two directives have been seen as reflecting Chair Bhatta's haste and lack of study. Although any directive or document should be brought after thorough study, the need to amend them later confirms this.
Ultimately, the board amended the provision regarding the 5% and 15-day notice for basic shares, changing it to require 5 days' notice for selling 15% or more shares. The directive issued on Bhadra 9 was amended on Asoj 23 (more than a month later).
This proves the saying, "In Nepal, one learns only after suffering, not by reading." Had the directive been brought after study, there might have been no opposition. General investors say this is why the market has fallen recently. Therefore, the board and its leadership should focus on issuing directives only after study, rather than publishing them first and seeking reactions.