NEPSE What ?

NEPSE Jargon: Promoter Share

Published by Octron on May 24, 2009

Note: Credit goes to Sano Khiladi & Voicer of Jamb forum

PROMOTER share is all the shares of any public company except shares sold through IPO to general public. This is the definition given by NEpal Rastra Bank vide it’s circular 01/2065/2066 dated 2065.04.12.

In simple words, even shares sold through private placement, sale through share convertible deposit scheme ( recent example Vibor Super Share Deposit) are all Promoter group share.

Till now the saleability and price of these promoter shares are low in comparison to their counter part ordinary public shares due to the constraint that any promoter shareholder holding more than 1% of issued capital, wish to sell share must get the prior approval of NRB. This approval sometimes also take several months.

All the benefits of ordinary share are same with promoter group share like right share, bonus share, dividend etc.

According to Nepse bye-law there are 2 policies to determine the price of promoter share to transact in the market:

(1) For the companies which has POSITIVE BOOK PRICE (net worth per share), the share should be transacted in either half the market price or 5 times its book price, whichever will be less.

(2) For the companies which has NEGATIVE BOOK PRICE, the share should be transacted in either half the market price of previous day transaction or the 50% of average of prices of last 180 days, whichever will be less.

That’s why it is obvious that promoter share is transacted in lower price than the current market price.

Please visit www.nrb.org.np for further details.

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