Kathmandu. The Securities Board of Nepal (SEBON) has decided to take action against the chairman and 2 directors of Ankhukhola Hydropower Company for violating the law. According to a source at the board, final preparations are underway to take action against Chairman Ram Shrestha and Directors Ram Prasad Sapkota and Dinesh Prasad Shrestha.

“We have been studying this issue for a long time,” said a source at the board. The matter will be resolved shortly. According to sources, other agencies and broker companies involved in illegal transactions will also come under the purview of action.

The board is going to take action against the chairman and director of Ankhukhola after completing investigation into the sale of 92,800 units of shares illegally. The company’s Chairman Ram Shrestha and its directors Ram Prasad Sapkota and Dinesh Prasad Shrestha have sold 92,800 units of shares on different dates.

Shrestha became the chairman of the company on May 27, 2018. The company had issued its initial public offering (IPO) on October 6, 2015. As of 2076, Shrestha had 35,000 units of shares in his name. He sold 15,000 units of shares and left only 20,000 units. A year later, Shrestha resold 5,000 units of shares. Currently, he has only 15,000 units of shares left.

Ram Prasad Sapkota, who was elected as a director along with chairman Shrestha, owned 83,000 units of shares in the company as of 2076. In 2017, he sold 9,000 units of shares and left only 74,000 units. Sapkota sold 58,800 units of shares out of the remaining 74,000 shares. Currently, he has only 15,200 units of shares left. In the period from 2076 to 2078, Sapkota sold 67,800 units of shares.

Similarly, another promoter Dinesh Prasad Shrestha had 50,000 units of shares in 2076. Two years later, he sold 5,000 units of shares. He now has 45,000 units of shares left. Chairman Shrestha and Director Sapkota sold their shares 2 times during their tenure. Another promoter Shrestha has sold his shares only once. The three are still the chairmen and directors of the company.

Sebon remains silent on 93,000 units of shares sold by chairman and directors of Ankhukhola

According to the Securities Registration and Issue Regulations-2073 BS and the Corporate Good Governance Directive-2074 BS, the directors of a listed company are barred from buying and selling the shares of a company until they hold office and for one year after leaving office.

Rule 38 1 (a) of the Securities Registration and Issue Regulations, 2073 states: “A director, chief executive officer, auditor, company secretary or a person directly involved in the management or accounting functions of a body corporate, at the time of holding such office or the date of retirement from such position, shall sell securities of the concerned body or its subsidiary company for a period of one year, by himself or his family member or any other person or a firm under the control of such a person, No one shall buy, sell, transfer or transact in the name of a company or institution or to any other person.

However, the directors of Ankhukhol sold 92,800 units of shares during their tenure as a director. Similarly, Directive 14 (6) of the Corporate Good Governance Directive-2074 BS states that no person shall be allowed to buy and sell any shares or debentures of the company until he holds the post of director and for one year after his removal from the post. The regulations and guidelines prohibit the sale of shares for the period of directorship and 1 year after leaving.

According to sources, the sub-section 7 of the penalty imposed under Section 101 of the Securities Act will be attracted to the chairman and two directors of Ankhukhola Hydropower Company who sell shares against the law.

Sub-section 7 states that the Board may impose a fine ranging from Rs 25,000 to Rs 75,000 on any person who violates the rules or by-laws framed under the Securities Act or any order or directive issued thereunder or the terms and conditions specified by the Board. Similarly, there is a provision to take action as per Section 108 of the Act for selling shares during the time of being a director.

Clause 108 of the Act states that if any director, general manager or any person holding the post of equivalent person receives any punishment pursuant to Section 101, such person shall not be eligible to hold the post of director, general manager or equivalent of any public limited, company or institution until the expiry of the period of 10 years from the date of imposition of such punishment.