KATHMANDU, Oct 18: Securities Board of Nepal (Sebon) -- the capital market regulator -- has asked Reliable Development Bank to launch rights issue before it is acquired by the Global IME Bank.
Reliable's 10th Annual General Meeting (AGM) held on July 1 had approved 1:1 rights shares and 10 percent bonus share from the net profit earned in the last fiscal year. Instead of launching rights issue, the development bank, however, had signed a Memorandum of Understanding (MoU) for its acquisition by the Global IME Bank.
"The beginning of acquisition process without distributing rights shares would hurt investors," Sebon said in a statement issued on Monday.
The regulator on Monday directed the national-level development bank registered in Kathmandu to launch rights issue before the acquisition as failure to do so would be against the interest of investors who bought the development bank's shares in anticipation of rights and bonus shares.
"Since the decision was price-sensitive and approved by the AGM, Reliable Development Bank cannot avoid its AGM's decision," the Sebon said in the statement.
Earlier on October 1, Global IME Chairman Chandra Dhakal and Reliable Chairman Radhe Shyam Agrawal had signed the MoU on behalf of their respective organisations to complete the acquisition process within three months.