IMAGE: ONLINE KHABAR
IN KATHMANDU transparency has long been treated as a polite suggestion rather than a requirement. That casual attitude has crept into the boardrooms of some of Nepal’s most visible listed companies. Since the opening of the Nepal Stock Exchange, investors have had to navigate a fog of late filings and opaque governance. Now the Nepal Securities Board, the capital-markets watchdog, seems to have decided enough is enough. Its latest enforcement spree signals a less patient era for corporate Nepal.
The simplest of obligations—quarterly reports—proved too much for some. In the last fiscal year, the regulator handed out penalties like confetti at a festival. Fifteen companies (including Himal Dolakha Hydropower, Kuthali Bukhari Hydropower, Best Finance Company and Corporate Development Bank) were fined Rs100,000 each for failing to submit their fourth-quarter results from the previous year. In the books of a big firm, that is pocket change. But in a market where trust is fragile, the stigma matters more than the cash.
Then there are the late filers. A group of 69 institutions, spanning hydropower, microfinance, insurance and banking, turned in their reports late and didn’t even bother to ask for an extension. Among them: Nepal Life Insurance, Neco Insurance, Jeevan Bikash and Garima Development Bank. The penalty was Rs50,000 each. That’s small, certainly, but the symbolic blow lands hard. The list reads like a directory of the Nepali economy itself—companies meant to drive growth, now exposed as chronically tardy.
Such widespread tardiness hints at a cultural problem. When nearly 70 firms cannot meet a simple reporting deadline, or fail to request a little leeway, it suggests a disregard for minority shareholders. In finance, information is oxygen; without it price discovery becomes guesswork. The board’s point is that if a company can raise money from the public, it must also respect calendars.
The watchdog is also poking at boardrooms. Upper Tamakoshi Hydropower, one of the country’s flagship projects, was told to correct its governance structure after failing to appoint independent directors as mandated by the Corporate Governance Directive. These independent directors are supposed to be the adults in the room, watching over outsiders’ interests and tempering managerial whim. The regulator is sending a warning: the days of “closed-shop” boards are over.
Critics might mutter that the fines are trivial—a few tens of thousands of rupees will not keep a CEO awake. True, but the bigger effect is a tightening leash. Using the Securities Act of 2063 as a measuring stick, the board is sort of signalling that Nepal is serious about maturing its markets. Foreign investors, it implies, will only show up if they see companies that are disciplined and governed with at least a hint of professionalism.
Whether this newfound zeal sticks is to be seen. If reports start landing on time, the regulator can congratulate itself. If the silence continues, heavier hammers may follow. Executives should ensure their accountants are working overtime. The watchdog is finally wide awake. ■
