Nepal | September 21, 2020

Stock market to adjust share price on cash dividend of over 10 per cent

Himalayan News Service
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Kathmandu, September 11

Nepal Stock Exchange (Nepse) has decided to adjust the secondary market price of listed companies if they decide to provide cash dividend of more than 10 per cent of their market price.

Earlier, Nepse used to adjust share price of the listed companies after issuance of bonus shares on the day of book closure before its annual general meeting.

“The share price will be adjusted only if any listed company announces extraordinary cash dividend,” explained Murahari Parajuli, spokesperson for Nepse.

As per the new provision, Nepse will adjust the share price of the companies as per the calculation method used for bonus shares. “We will adopt the calculation method for adjustment of price after cash dividend like in adjustment process of bonus shares,” he informed.

Nepse’s decision  to adjust the share price has come on the heels of the direction of Ministry of Finance to adjust the share price if the firms announce cash dividend of 10 per cent or more than their market value on August 31.

“We noticed that a few companies had announced higher cash dividend — more than 10 per cent of secondary market price. So, we subsequently started the homework to introduce the new policy and we have finally implemented it,” he clarified.

After implementation of the new provision, Nepse will adjust the price if any listed company decides to distribute 10 per cent or more in cash dividend to shareholders. “It is an international practice to adjust price on extraordinary cash dividends, and we also implementing it from now,” Parajuli said.

A version of this article appears in print on September 12, 2017 of The Himalayan Times.

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