ERC Moves to Facilitate Bonus Share Approval Process for Electricity Companies

The Electricity Regulatory Commission (ERC) has moved to streamline the process for prior approval of bonus share issuance by electricity companies and other licensed entities. The decision was discussed during the Commission’s 311th meeting held on 2083/04/13. Under Section 12 of the Directive on Prior Approval and Regulation of Public Issuance of Shares of Electricity-Related Companies, 2078, companies must obtain prior approval from the Commission if a change in their shareholding structure exceeds 5%. Companies are also required to inform the Commission when issuing bonus shares to shareholders. The Commission noted that if the issuance of bonus shares results in a change of more than 5% in the shareholding structure, the licensed entity must seek approval from the Commission in accordance with Regulation 17(1) of the Regulation Concerning Conditions to be Followed by Electricity Purchase and Sale and Licensed Persons, 2076. For such approval, the entity is required to submit an application in the prescribed format under Schedule 6, along with the required documents specified in Schedule 7. The existing provisions under Schedule 7, Point 7, and Schedule 8, Point 5 require applicants to submit decisions of both the Board of Directors and the General Meeting regarding changes in the shareholding structure. The ERC has discussed facilitating this requirement by replacing the existing provision requiring decisions from both bodies with a provision referring to a decision of the Board of Directors or the General Meeting. The proposed facilitation is intended to simplify the approval process while maintaining regulatory oversight over changes in the shareholding structure of electricity companies. The ERC’s decision comes in the context of increasing bonus share issuances and other changes in the capital structures of electricity-sector companies, where compliance with prior-approval requirements can affect the timing and administrative burden of corporate actions. The Commission’s discussion is aimed at making the regulatory process more practical and facilitating licensed entities in obtaining approval for changes in their shareholding structures, particularly where such changes arise from the issuance of bonus shares. The existing regulatory framework continues to require prior approval where the change in shareholding structure exceeds the prescribed 5% threshold.