Public shareholders of National Hydropower Company have sought the regulator’s support to pressurise the company to hold its annual general meeting (AGM), since it has failed to hold an AGM for the last three years.
“The company has not held its annual meeting — which is mandatory — for the last three fiscal years which has left the public shareholders in the dark about its financial status,” said general secretary of Nepal Stock Investors’ Association Prakash Rajoria.
Investors have requested the capital market regulator — Securities Board of Nepal (Sebon) — to take action against the non-compliant company. “Different investors’ associations have lodged complaints against the company at Sebon,” he said, adding that Sebon has the authority to direct the company to hold its annual meeting, if it is delayed. “Moreover, the regulator can also hold the company’s annual meeting itself, if the executive board does not comply despite repeated orders, and audit the company’s balance sheet,” Rajoria added.
Some four hydropower companies are listed in the share market and the other three companies have been paying shareholders good returns, except for National Hydropower Company which has been mired in the majority promoters’ controversy.
The company’s stocks were being traded at as high as Rs 600 during the capital market peak around five years back but now share prices have plunged to around Rs 45.
“The promoter group — NB Group — that owned the majority stake then offloaded more than 50 per cent of its shares making a huge profit. But now the prospects of making money is low so they are shirking from even conducting the annual general meeting,” he said.
The company’s last AGM held in 2010 had announced a cash dividend of six per cent. “The company had set aside Rs 2 million to distribute dividends but it did not distribute it for no apparent reason,” pointed out Rajoria, who is also a public director of the company.
It is not a surprise that the board director of the company himself does not know the financial status of the company. “It is an example of the worst corporate governance and the regulator’s weakness has hurt shareholders,” he added.
National Hydropower Company promoted by NB Group has 13,863,462 unit shares listed at Nepal Stock Exchange with about 10 million units owned by minority shareholders. The group also owns majority stakes at other listed companies such as Nepal Bangladesh Bank, Nepal Credit and Commerce Bank, Harisiddhi Bricks and Tiles Factory and NB Insurance.
In May 2009, Sebon had suspended the trading of National Hydropower for suspicious distribution of unsubscribed rights shares but share trading had resumed later.
Recently, the share prices of National Hydropower had gone up due to rumours of its acquisition by Hydro Solutions but the acquisition was aborted due to the ‘suspicious activities’ of NB Group.
The capital market regulator has asked investors a few more days to figure out the steps that need to be taken. “We are discussing what can be done to protect the interests of investors and make the company compliant,” said an official at Sebon, that has the authority to punish the company.
