August 15: The Securities Board of Nepal (SEBON) is preparing to halt the share trading of companies listed in the secondary market for a maximum of 15 working days if they opt for the process of merger or acquisition.

This provision is included in the initial draft of the Guidelines for Merger and Acquisition of Organized Institutions 2079 prepared by the board. If the final draft of the guidelines is prepared according to the proposal of the board, the share transaction of the listed companies will only be stopped for a maximum of 15 days during merger or acquisition.

There is a provision in the preliminary draft of the directive to maintain the period for completion of the merger or acquisition process within six months. The board has released the initial draft of the guidelines and has asked for suggestions from the stakeholders.

Chairman of the board Ramesh Kumar Hamal showed special interest in reducing the delay in share transaction after investors expressed their dissatisfaction regarding the suspension of share trading of listed companies for a long time during the merger and acquisition process.

There are instances of companies being suspended for a long time from share trading in the name of merger or acquisition. Due to this, the people who have invested in the shares of the listed company, no matter how big the financial problems are, cannot avoid the risk by selling the shares. 

Hamal argued that shares should not be withheld for a long time during the merger and acquisition process. Due to his initiative, a new provision has been prepared for the suspension of share trading during the merger and acquisition process. 

Hamal had discussed this issue with Nepal Rastra Bank and said that such arrangement should be amended. Accordingly, Nepal Rastra Bank has given the board the authority to decide on the period of suspension of share trading. Accordingly, the board prepared a draft of the guidelines.

Banks and financial institutions have the largest share of companies listed in the secondary market. Through this year's monetary policy, Nepal Rastra Bank has abolished the existing provision of suspending share trading for merger and acquisition purposes and has made arrangements to comply with the regulation of SEBON.

According to the provision in the draft, from the date of commencement of integrated transaction, the merging organizations must be suspended for a maximum of 15 working days for work such as stock matching, re-registration of securities, dematerialization and listing of securities. In addition, the board is preparing to make a provision that if the name of the organization is not changed, the share trading of the organization will not be stopped.