Patan High Court directs for suspending IPO issuance of Reliance Spinning

KATHMANDU, JULY 11 : Patan High Court has issued an interim order barring the Initial Public Offering (IPO) issuance of Reliance Spinning Mills. The bench of three justices—Dr. Awatar Neupane, Dr. Keshav Prasad Shrestha, and Rapis Pokharel—did so while responding to a writ filed by two advocates, Hari Bahadur KC and Khushalram Dhital. In the lawsuit, they asked the court to immediately suspend the issuance of primary shares planned for today, i.e., July 11 through a book-building process, arguing that the price of such shares was manipulated by the company.

The defendants in this legal case are the Ministry of Finance, the Security Board of Nepal (Sebon), and Reliance Spinning Mills. With the latest court direction, they have to present themselves in the Patan High Court to furnish their respective clarifications. According to experts, there is a possibility of the judicial body rendering the entire IPO issuance null and void.

In connivance with some Qualified Institutional Investors, Reliance is suspected to have increased the rate of IPO in a fraudulent way. “The opening range of the company’s IPO has been set at Rs 820.20. This is unjustifiably high and should not exceed Rs 538.35 per share, given the current net worth of the company standing at Rs 179.45 per share,” say experts.

Notably, Sebon yesterday sent a letter to the company, instructing it to halt the process of issuing IPOs. The share market regulator made such a move after the Public Account Committee raised questions over the financial aspects of the proposed share issuance.