Kathmandu. The Securities Board of Nepal (SEBON) has made the ninth amendment to the Securities Issue and Allocation Guidelines, paving the way for issuance of preferential shares to banks and financial institutions.
The directive has been amended on the recommendation of an internal committee formed by the Securities Board. The securities board has cleared the way a year after the green signal given by the Rastra Bank on preference shares.
According to the revised guidelines, banks and financial institutions can apply to the Securities Board to issue preferential shares only after obtaining approval from the Nepal Rastra Bank. Banks and financial institutions can issue preferential shares at a face value of Rs 100.
Similarly, banks and financial institutions will be able to issue preferential shares only to institutional investors with less than 50 people through the circular method. General investors, securities entrepreneurs licensed by the board and collective investment funds will not be able to invest in it.
On July 27 last year, the Rastra Bank had cleared the way for issuance of preferential shares to banks and financial institutions. For this, the Rastra Bank has set various criteria.
Nepal Rastra Bank (NRB) and securities board have paved the way for issuance of preferential shares to banks which have not been able to maintain even the minimum limit of primary capital fund. At the same time, preferential shares can be a suitable option for banks that have not been able to expand their business due to pressure from capital funds.
Some of the banks under capital fund pressure have already applied to the Rastra Bank seeking permission to issue preferential shares. After the approval of the Rastra Bank, these banks will approach the Securities Board seeking permission to issue preference shares.
These banks are bringing preference shares
Nmb Bank’s 29th Annual General Meeting (AGM) has already approved the proposal to bring preferential shares.
The bank is preparing to bring ‘NMB 8.25 percent Unmoved Uninterrupted Priority Share’ worth Rs 3 billion at the rate of Rs 100 per share. After the issue of preference shares, the current authorized capital of the bank will increase by Rs 20 billion to Rs 25 billion. After the issuance of preference shares, the bank’s current issue and paid-up capital will increase from Rs 18.36 billion to Rs 21.36 billion.
Similarly, Nabil Bank’s Special General Meeting has already approved the proposal of ‘Nabil 8 percent Unbroken Uninterrupted Priority Share’ worth Rs 5 billion.
Nabil said that the priority shares will be issued as it is necessary to increase the capital base through additional primary capital to address the bank’s business growth and risk.
The 23rd Annual General Meeting (AGM) of Siddhartha Bank has approved a special proposal to issue ‘SBL 8.25 per cent Non-Redeemable Non-Cumulative Preference Shares’ worth Rs 3.5 billion at a face value of Rs 100 per share after the approval of the regulatory body. The proposal to increase the authorized capital of the bank from rs 16 billion to Rs 20 billion and the issued capital will be increased from Rs 14 billion 89 lakh 80 thousand 185 to Rs 17 billion 58 crore 99 lakh 80 thousand 185.
On the other hand, the 27th Annual General Meeting (AGM) of NIC Asia Bank has approved the main proposal to issue non-redeemable non-cumulative preference shares worth Rs 5 billion at a face value of Rs 100 per share. After the issue of preference shares, the authorized capital of the bank will increase from Rs 14.92 billion to Rs 19.92 billion, the issued capital will increase from Rs 14.91 billion to Rs 19.91 billion and the paid-up capital will increase from Rs 14.91 billion to Rs 19.91 billion.
Similarly, Nepal Rastra Bank (NRB) has already given prior approval to Kamana Service Development Bank to issue preference shares. The bank has issued non-redeemed unreachable preference shares worth Rs 350 million. The bank will issue a total of 3.5 million units of preference shares at a face value of Rs 100 each.
The dividend rate of this preference share is 9 percent. Which will be distributed only in the year of profit.
Similarly, the 18th Annual General Meeting of Muktinath Bikas Bank has approved a special proposal seeking approval from the regulatory body for issuing muktinath 8.5 per cent non-redeemed non-cumulative preferential shares worth Rs 2 billion at a face value of Rs 100. After the issuance of preferential shares, the bank’s current issue and paid-up capital will increase from Rs 7.04 billion to Rs 8.04 billion.
Other banks are preparing to issue preference shares.
