Nepse asks listed companies about information leakage affecting share prices

The Nepal Stock Exchange (Nepse) has asked all the listed companies to clarify if they have leaked information that could affect their share prices as some stocks have risen unusually high leading to suspicions of insider trading.
The stock exchange had recently told the companies through a circular to inform it about key board decisions before trading begins.
Nepse has also told the companies to inform it first about key board decisions before trading begins. There are 334 companies listed on the stock exchange.
“We have asked all the registered companies to present their clarification whether they release information about major board decisions to any of their shareholder,” said Sambhu Pant, Nepse spokesperson. He added that the move had been taken to confirm if stock prices had risen because of increasing demand from investors.
Nepse has asked the listed companies to inform the capital market about such decisions at least an hour before trading hours which last from 12 noon to 3 pm.
Nepse has suspected leakage of sensitive information in the case of the Rural Micro-Finance Development Fund (RMDC) whose shares were traded at a higher price before its decision to provide cash dividends was made public.
“We suspect that a few investors sold its stocks at a much higher price on the assumption that the RMDC would be issuing bonus shares,” said a Nepse official.
Share prices usually go up when a company announces issuance of bonus shares to its shareholders and go down when it announces distribution of cash dividends.
Nepse has asked all the listed companies to inform it first about sensitive board decisions on the distribution of cash dividends, bonus shares and rights shares and purchase or sale of property worth more than Rs 100 million. In addition, it has told the companies to make information about their book closure available at least seven days before doing so.
Likewise, Nepse has asked the companies to complete the ownership transfer of stocks trading within seven days after the books close. The companies have also been ordered to be more cautious in issuing information about merger initiatives.
Small Farmers’ Develop-ment Bank is one of the companies that received a letter from Nepse.
Jalan Sharma, the bank CEO, said they had recently sent a clarification to Nepse regarding the surge in their share prices. Stating that the increase in share prices was normal, Sharma denied that there had been any leakage of information that could influence the share market.
Pant said they had issued the circular just to caution the companies. “We had to come up with the step as most domestic companies deliberately neglect reporting their status to the stock market,” he said.
-kantipur