NEPSE officials said the Indian joint venture bank through its annual general meeting decided to issue 25 percent bonus shares to share holders without seeking approval from the board of directors of the bank in violation of the existing Company Act.
“We have given notification about the suspension of SBI Bank’s share transactions as the bank violated the clause 77 (6) of Company Act which requires companies to issue bonus through annual general meeting only to the limit approved by the board of directors,” Pramod Bhattrai, deputy general manager of NEPSE told myrepulica.com.
In another case of violation of the Company Act, the bank had proposed to increase paid up capital to Rs 2 billion from a meeting of board of directors but the proposal was silent over how to mobilize the capital. However, all of a sudden the annual general meeting approved a proposal of distributing 25 percent bonus shares and 50 percent rights shares though the bank had made public notification only for raising paid up capital.
Navaraj Pokhrel, former president of stock brokers’ association said SBI Bank hoodwinked investors by hiding true information.
However, Madhukar Anand, SBI´s chief operating officer claimed that the bank’s decision was not against the Company Act since the general assembly is the supreme body to make decisions.
“As the general assembly is the supreme body of the bank, there is no need to seek approval from the board of directors for declaring bonus shares,” said Anand adding that the decision is also subject to approval by Nepal Rastra Bank.
India-based SBI Bank owns 50 percent shares of SBI Bank (Nepal) while 30 percent shares are owned by the general public, 15 percent by Employees’ Provident Fund and 5 percent by the Asian Development Bank.
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