Kathmandu. The Securities Board of Nepal (SEBON) had amended the rules to allow Himalayan Reinsurance Company to issue IPO at a premium price.

At that time, the Securities Board of India (SEBON) changed the law overnight to grant license to Himalayan Reinsurance. Ramesh Hamal, who was the chairman of the Securities Board at the time, had amended the Securities Registration and Issue Regulations-2073 BS.

Likewise, the Securities Market Operation Regulations, 2064 BS and the Directive on Providing Recommendation from the Board for Establishment of Corporate Entities for Operation of Stock Market, 2079 BS were also issued.

At that time, the Securities Board of Nepal (SEBON) had amended some laws overnight to allow Himalayan Reinsurance Company to issue shares at a premium price and to license the Himalayan Stock Exchange, which was proposed at that time.

Similarly, the Securities Registration and Issue Regulations-2073 were amended to allow Himalayan Reinsurance Company to bring IPO and a new provision was made in capital and profit. A new provision was added to Rule 25 (A) of the Securities Registration and Issue (Seventh Amendment) Regulations, 2073.

Rule 25 provides that securities can be issued at a premium. In which the corporate body can issue securities at a premium subject to the specified conditions.

Rule 25 (A) of Rule 25 stipulated that an organization had been operating on net profit for the last three years.

SEBON had amended the seventh amendment to the constitution to provide that an organization that has been making a profit for the last two years with a paid-up capital of at least one billion rupees can issue securities at a premium.

This provision is not in line with the Companies Act. According to the Companies Act, the company has been profitable for the last 3 years.

There is no greater regulation than the law. At that time, the Office of the Registrar of Companies had also opposed it. The issue was also raised in the meeting of the Accounts Committee. However, businessman Deepak Bhatta said that the Act was not amended as it was in accordance with the law.

Due to this arrangement, the Securities Board of Nepal (SEBON) issued shares to Himalayan Reel at Rs 206 per share by adding a premium of Rs 106 to the face value. The board had raised Rs 5.12 billion from the general public by amending the regulations to issue shares at a premium.

If there was only a face value, only Rs 2.49 billion would have been collected. Himalayan Reinsurance had raised an additional Rs 2.63 billion from the public due to the appointment of Bhatta as the chairman and the board of directors of Sebon at that time.

At that time, the Board prepared a directive for the recommendation of the Board to provide recommendation from the Board to establish a body corporate for the operation of the stock market in the interest of Bhatta and to give the license of new stock to Bhatta’s proposed Himalayan Stock Exchange.

Schedule 5 of the Directive contains the Inquiry and Evaluation. A company that fulfils the provisions specified in Schedule 4 will get an additional 24 points.

It was said to give 24 marks in the system related to transaction system and technology. It was said that 14 points will be given if the proposed transaction system and technology is used to operate at least three securities markets in countries other than Nepal.

An additional 5 points will be given if the proposed transaction system and technology is used to operate 4 to 7 securities markets in countries other than Nepal.

Similarly, if the proposed transaction system and technology is used to operate more than 7 securities markets in countries other than Nepal, an additional 5 points will be given in addition to clause (b).

This directive was issued on September 26, 2022. However, the proposed Himalayan stock had already signed an agreement with Mauritius Stock in Mauritius. The company was sure to get 24 points more than others. More than half a dozen employees of the Securities Board of Nepal had gone to Mauritius at that time.

They were out of the board.

Similarly, the Securities Board of Nepal (SEBON) had amended the Securities Market Operation Regulations 2064 times in a span of 24 hours. The amendment has made it mandatory for the stock exchange to issue at least 30 percent of its issued capital to the general public within two years of its operation.

He added that only a private company or corporate entity established under the law can accept the promoter shares of the stock market.

Earlier, it was supposed to be a company licensed by the board. The word “licensed by the board” was removed.

Similarly, a company or corporate organization or a director or shareholder of such an institution and his close relatives will not be allowed to receive more than 15 percent of the total share capital of the stock exchange. Earlier, it was 5 percent.

At that time, in order to issue shares at a premium, it was made mandatory to have completed 2 years of going public from Pvt. Ltd.

3 out of 9 were added to the Registration and Release Regulations. Provided that a company which has completed the period of one fiscal year by carrying out the necessary functions for carrying on the business as per its objectives as a public company, “provided that a company which has been registered as a private limited company and converted into a public limited company after the completion of at least two fiscal years after the completion of at least two fiscal years after being so converted into a public limited company, the general meeting has been held and the audit report of the last fiscal year has been approved by the general meeting. It won’t need to be completed.”

Similarly, (b) it was added that the audit and general meeting was held in accordance with the prevailing law and the audit report had confirmed that the organization would continue to operate in the future as well as there was no deficiency on the basis of going concern.

Bhatta had the support of the then chairman of the Securities Board of Nepal Ramesh Hamal to do these works. After getting Bhatta’s support, the board of directors also supported. Mukunda Chhetri of Nepal Rastra Bank (NRB) was a member of the board of directors at the time. Chhetri has now applied for the post of chairman of the Securities Board of Nepal. The selection committee has already prepared a short list of four candidates from the 47 candidates who have applied for the post of chairman of the board. Among them is Chhetri, who has helped Bhatta by sitting on the board. Meanwhile, the government is investigating Bhatta on charges related to money laundering, securities and insurance acts.