November 9: The Securities Board of Nepal (SEBON) has decided to take action against 88 listed companies for the failure to submit their financial statements on time. A meeting of the Board of Directors of SEBON held on Monday decided to impose cash fines on those companies.

Information officer of the board, Tej Prasad Devkota, said that SEBON has decided to seek for an explanation from 69 companies that submitted their financial statements late and imposed a fine of Rs 50,000 each while 19 companies that did not submit their financial statements have been fined Rs 100,000 each. Devkota said that the board has already sent letters to all those companies to submit a written explanation. According to Devkota, this is the first time that the board has initiated action against so many listed companies that did not submit the required details on time.

Devkota said that the board has taken action in accordance with Section 101 of the Securities Act, 2063. According to subsection 4 of Section 101 of the Securities Act, if any person knowingly or maliciously fails to submit the financial details, statements, reports, notices, information or any other documents required to be submitted in accordance with the Act or the rules or regulations made under the Act, the board may impose a fine of Rs 50,000 to Rs 200,000. The board had issued a warning to those companies in mid-July. It decided to take action against those companies that ignored the warning of the board.

Since the financial statements to be submitted by the listed companies are considered very important for the securities market, the board said that it has taken strict measures against the companies for their failure to submit such important documents on time. The board informed that the action was taken to maintain corporate good governance.

Organizations that have been registered with SEBON must submit their financial statements to the board within 30 days of the end of the quarterly period and publish such report in a national level daily newspaper as per Schedule 14 of the Securities Registration and Issuance Regulations, 2073. Such organizations have to submit the annual report according to Schedule 15 of the Securities Registration and Issuance Regulations, 2073 to the board within five months from the end of each fiscal year. In addition, the listed companies have to include the audited report’s summary with the main points of the compliance report in the annual report according to sub-section (4) of section 20 of the Institutional Governance Guidelines, 2074.

Similarly, if there is any event or transaction mentioned in Schedule 16 of the Securities Registration and Issuance Regulations, 2073 that may affect the market value of the listed securities, there is a provision that a notification of such matter must be immediately given to the securities market and submitted to the board within three days.