secret share transfer deal

Govt shareholding in Biratnagar Jute Mills comes down to 23.9 percent

Published On: October 31, 2017 05:00 AM NPT By: Ajit Tiwari

Gov secy, joint-secty have also purchased promoters shares of the company

BIRATNAGAR, Oct 31: It has been revealed that two government employees were involved in opaque share ownership transfer in Biratnagar Jute Mills Limited which has made the government a minority shareholder in the state-owned jute company.

A government secretary and a joint-secretary were involved in the share transfer process that reduced government's two-thirds majority into minority, and gave majority to the private sector.

The government's ownership in the company reduced to 23.9 percent after Secretary of the Ministry of Federal Affairs and Local Development Dinesh Kumar Thapaliya, Joint Secretary Uddav Prashad Timilsina and eight others purchased 50 units of promoter shares each in the company in April last year, according to share transfer document obtained by Republica. 

This share transfer increased private sector's shareholding to 66.91 percent. Before the transfer, private sector owned only 32 percent of shares in the company.

In a secret share transfer deal reached on April 17, 2016, company's chairperson Nilhari Kafle and director Rajendra Karki had transferred the company's shares to ten individuals, including Thapaliya and Timilsina. But how these government-appointed directors acquired shares of the company is still a mystery. 

The then industry minister Mahesh Basnet had appointed the duo to the company's board of directors in July, 2015. As per existing rules, government employees cannot purchase promoter shares of a government-owned company. “

"The share transfer has been done with the ill intention of lowering the government's stake in the company, and make private sector majority shareholder”," Dipak Lohani, a shareholder of the company, told Republica.

The company later said that the share transfer has been done to revive the ailing factory.
Office of the Company Registrar and the Commission for the Investigation of Abuse of Authority (CIAA) have launched separate investigations against the share transfer. The company has already responded to queries made by the CIAA during its investigation.

According to a source the jute mill, organizing a special general body meeting on April 16 decided to issue rights shares for revival of the factory. The next day, it decided to raise paid-up capital by Rs 4 million by selling 25,000 units of shares. It also published a 15-day notice for the rights issue, going against the company law that requires publishing of 35-day notice.

Along with Thapaliya and Timilsina, Basant Ban (9,202 units) , Rajendra Karki (764 units), Lokmanya Golchha (382 units), Baburam Khadka (764 units), Nilhari Kafle (8,020 units), Fulkumar Lalbani (3,500 Units), Ashok Pokhrel (500 units), Mukunda Prasad Nepal (1,910 units) purchased rights shares of the company. 

Lohani also disclosed that even the Ministry of Industry and the Ministry of Finance did not have any information about selling and buying promoter & right share.
Chairman Kafle also had called a special general meeting on July 8 this year and tabled his resignation to the board and got it approved. However, he was elected to the board from shareholders group the same day and became general manager by making amendment to the company's articles of association. 

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