Writ petition against Reliance Spinnng Mills nullified

KATHMANDU, NOVEMBER 7: The High Court has dismissed a writ petition challenging Reliance Spinning Mills Limited’s issuance of ordinary shares at a premium price. This petition, filed on July 9 by lawyer Hari Bahadur KC and three others, was intended to stop the company from issuing shares through a book-building process. With this dismissal yesterday, Reliance now has legal clearance to proceed with its share issuance.

Earlier, the Parliamentary Committee and the Central Investigation Bureau (CIB) of Nepal Police had also cleared the path for Reliance's share issuance. CIB conducted its own investigation and, in response to an explanation from the Securities Board of Nepal (SEBON) confirming no irregularities in the financial statements, issued a clean chit to the company. However, the writ was still pending in the Patan High Court.

Initially, the High Court had issued an interim order to halt the share issuance, but after a hearing on July 10, it decided not to extend this order. This allowed Reliance to move forward with its Initial Public Offering (IPO).

Reliance, established in 1997, has Rs. 15 billion in investments and provides direct employment to over 4,000 people. The company meets a significant portion of Nepal’s demand for yarn and exports to countries like India and Turkey. For its achievements in exports, Reliance has been honored multiple times as an outstanding exporter.

Instead of supporting such industries in becoming public companies, the government has often delayed the process for various reasons. The appointment of a new chairman for the Securities Board has been pending for over a year, which has added to these issues. This delay and the scrutiny surrounding Reliance’s share issuance have attracted criticism and hindered progress.

Concerns were raised with SEBON and other regulatory bodies regarding Reliance’s IPO price and financial standing. Reliance’s IPO price was set at Rs. 820 per share, which became a point of contention.