MP Lima Adhikari has raised concerns regarding the accountability of companies that present attractive financial projections during Initial Public Offerings (IPOs) but fail to deliver on those promises once listed.
Lima Adhikari, a Member of Parliament from the Rashtriya Swatantra Party (RSP), recently questioned a common practice in the stock market. She highlighted that many companies attract public investment by showing very promising financial forecasts when they issue an Initial Public Offering (IPO). However, once these companies are listed on the stock exchange, their actual financial health often appears much weaker than what was initially presented.
During a meeting of the House of Representatives’ Finance Committee, where they were discussing the Nepal Securities Board (SEBON)’s activities for the fiscal year 2082/83, MP Adhikari pointed out a significant gap. She observed a big difference between the profit and Earnings Per Share (EPS) projection shown in IPO prospectuses and the actual financial state of companies after they get listed. This situation, according to her, significantly harm general investors.
Adhikari directly asked SEBON if there is a clear mechanism in place to hold the involved company, its auditors, and the sales managers accountable. This would be for instances where a large discrepancy is found between the financial projections in an IPO prospectus and the real financial outcomes.
Furthermore, she sought clear information about how premium price for pre-IPOs are set, how the collected premium amount is utilized, and how its transparency is ensured. She also suggested implementing a system to publicly release a comparative report. This report would show the difference between a company’s financial projection made during its IPO and its actual financial results after listing. This way, investors can understand the company’s true condition.
AI Disclaimer: This article was originally published on https://bajarkochirfar.com. It has been translated with the help of AI. For the best understanding and accurate facts, we recommend reading the original Nepali version.
