KATHMANDU, Sept 23: In what appears to be the first action against a board director of a listed company, the Securities Board of Nepal (Sebon) has decided to fine a former board director of Himalayan Distillery Limited, Rahisha Shah Shrestha, and brokerage firm Investment Management Nepal Pvt Limited for flouting corporate governance related guidelines while selling the shares of the listed company.
Himalayan Distillery Limited is a public company listed at Nepal Stock Exchange.
The securities market regulator decided to fine Shrestha, a former board director, Rs 75,000 for violating a provision of ‘Guidelines Related to Corporate Governance of Listed Companies 2018’. According to Sebon, Shah sold her shares at the Himalayan Distillery Ltd on various dates before one year of leaving the company as a board director flouting the guidelines.
According to a Sebon source, Shrestha sold her shares worth Rs 270 million before the lock-up period of one year after resigning from the post of the board director of Himalayan Distiller.
Shrestha’s resignation as the director was approved by the company’s board on August 26 last year.
The corporate governance related guidelines bar any board director from either selling or buying any type of shares or debentures of the same company while serving as the board director or for at least one year of leaving the board.
Similarly, the Sebon also decided to fine the stock brokerage firm Investment Management Private Limited for executing her transactions. While carrying out the transactions of Shrestha, the brokerage firm did not maintain the know-your-customer record and make background checks, resulting into a violation of a provision in the Securities Businessperson (Stock Broker, Securities Dealer and Market Maker) Regulations, 2008 as well as a provision in the Securities Businessperson (Stock Broker, Securities Dealer and the guidelines on prevention of money laundering and terrorist financing, according to the Sebon.
“Following an investigation, the Sebon decided to take action against Shrestha for selling her shares one year before resigning from the post of board director in violation of the guidelines that bar a board director from doing so,” said Niraj Giri, the Sebon’s Spokesperson. “The brokerage firm has been fined for not following KYC norms while carrying out her transactions,” he added.
However, he clarified that there was no insider trading while carrying out such transactions.
Shrestha and Himalayan Distillery could not be immediately contacted for their comments while the stock brokerage firm Investment Management Private Limited’s Amit Gorkhali said that he was yet to read the decision of the Sebon.