KATHMANDU, Sept 18: The government has tabled a new bill to amend the Securities Act, 2007 proposing a removal of a provision in the law that ensures representation from the private sector and the regulatory body of chartered accountants as board members of the Securities Board of Nepal (SEBON).
If the amendment bill is approved by the parliament as it is, there will be no board director in the Sebon from the private sector and the regulatory body of chartered accountants.
The government proposes to end the representation of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and the Institute of Chartered Accountants of Nepal (ICAN) in the Sebon board on the ground of possible conflict of interest in the capital market’s apex regulatory agency.
Currently, the FNCCI and ICAN send one representative each in the seven-member Sebon board.
“The provision was introduced initially to give the private sector a representation in the Sebon. But, their representation often raises conflict of interest as the Sebon is the regulatory body of listed companies, merchant bankers and brokerage firms,” Rewat Bahadur Karki, the executive chairman of Sebon, told Republica. “To prevent any potential conflict of interest, we have proposed to end their access to the board as directors and make the Sebon truly a regulatory body,” he added.
He said that many chartered accountants who are the members of the ICAN also carry out accounting and auditing of listed companies and their representation in the board also raises ethical concern.
Currently, the seven-member Sebon board is led by a Chairperson who is appointed by the government. Other board members include a joint secretary each from the Ministry of Finance and the Ministry of Law, Justice and Parliamentary Affairs, a representative each from the FNCCI, Nepal Rastra Bank, the ICAN and an expert nominated by the government.
The government’s move to end the representation of the private sector and ICAN in the Sebon board came following ‘undue influence’ from them while making decisions in the board.
“Instead of abstaining from the decision making or meeting if there is any conflict of interest in any agenda, there used to be undue influence in the meeting,” said a senior official at the Sebon, requesting anonymity.
“As a regulatory body of securities market, the board has to decide on taking action against listed companies or merchant banks or stock brokers. But, the private sector representatives often try to block such decision,” the official said.
The FNCCI seemed to be unaware about the new proposal. FNCCI Vice President Shekhar Golchha, who currently represents the umbrella organization of businesses in Nepal in the board of the Sebon, said that he was not aware about the amendment proposal in the act.