Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: The Commission for the Investigation of Abuse of Authority (CIAA) has launched an investigation into allegations of intermediaries demanding commissions for Initial Public Offering (IPO) approvals, implicating Nepal Securities Board (SEBON) Chairman Santosh Narayan Shrestha. The probe follows reports that intermediaries, citing Shrestha’s name, demanded 5-7% commissions from company directors applying for IPO approvals.
A CIAA team visited SEBON on Wednesday afternoon to gather details about companies in the IPO pipeline, a SEBON source confirmed. “At noon, a team led by an under-secretary arrived and inquired about companies that applied for IPOs and their submitted documents,” a SEBON employee said. “They only collected information today and did not take any documents.”
The team sought details on the status of companies in the pipeline and reasons for delays in approvals. SEBON staff spent one-and-a-half hours compiling the requested information.
According to CIAA sources, a complaint with evidence of commission demands was submitted to Chief Commissioner Prem Kumar Rai four days ago, prompting the investigation. “There have been institutional allegations of commissions in IPO approvals. We received a complaint with evidence, and based on that, we initiated the probe,” a CIAA source said.
“Today, we visited SEBON to gather initial information. Next, we will take statements from relevant officials, request documents, and proceed. We are treating the issue of intermediaries demanding commissions in the name of a regulatory body’s chief very seriously.”
The investigation intensified after the Independent Power Producers’ Association, Nepal (IPPAN), held a meeting in Kathmandu on Tuesday, resolving to draw SEBON Chairman Shrestha’s attention to the commission demands and threatening pressure campaigns if IPO approvals remain delayed.
Hydropower project promoters have alleged that intermediaries, claiming to act on Shrestha’s behalf, demanded 5-7% commissions for expedited IPO approvals. Promoters reported intermediaries visiting their offices with such offers.
Currently, 89 companies, including 43 hydropower firms, have applied for IPO approvals at SEBON. The hydropower companies seek to issue IPOs worth NPR 19.44 billion. Promoters claim delays in approvals have caused significant financial losses, including NPR 4.96 billion in bank interest payments.
Since Shrestha’s appointment as SEBON Chairman five-and-a-half months ago, only seven companies have received IPO approvals.
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