42 companies fail to submit report to Sebon

REPUBLICA

KATHMANDU, March 6: In a clear violation of existing laws, 42 companies listed on Nepal Stock Exchange (Nepse) have failed to submit their financial reports of the second quarter of the current fiscal year 2010/11 to the Securities Board of Nepal (Sebon).

As per the Securities Registration and Issue Regulations 2008, the listed companies must submit their financial status to Sebon -- the security market regulator -- within a month of the completion of a quarter.
There are a total of 197 companies listed at Sebon.

The Sebon stated that of the 42 companies not submitting reports until February 13 -- the last date for submission, 14 are from manufacturing sector, ten development banks, nine from finance, three each from trading and one each from hydropower and hotel industries and others.

During the second quarter of the fiscal year 2009/10, 96 out of the 194 listed companies had not submitted their financial reports to Sebon in time. Corporate reporting status for the fiscal year 2010/11 released by Sebon shows that out of the total 45 companies who submitted reports late, two are commercial banks, 18 development banks, 17 finance companies, seven insurance companies and one from trading groups.

“The flouting of existing rules and regulations in submitting reports is encouraged by Sebon´s weak implementation capacity with the existing resources and structure. It also, however, indicates that the corporate culture is lacking among companies," said a share analyst.

The Securities Act has vested in Sebon the authority to delist the companies who fail to submit financial reports in time. Sebon, however, is reeling under a human resource crunch that has weakened its monitoring mechanism and the ability to execute securities law to regulate the market.

Officials at the Sebon agreed that listed companies are ignoring the instructions to file their reports in time in the absence of stringent action against them.

In case the companies don´t file their reports in time, Sebon can send them a reminder before issuing a written warning and finally taking them off the service list for violating the securities acts and regulations. Different provisions in Company Act and Securities Registration and Issue Regulations have also created some confusion among companies who are interpreting the rules to their benefits.

According to the Company Act, companies have to submit their report within six months of the completion of financial year while the Securities Registration and Issue Regulations has made it mandatory for them to submit annual reports within five months.