Himal Press 
KATHMANDU: The Public Accounts Committee (PAC) of the House of Parliament has raised concerns about the transfer of 80% of shares of the holding company that owns GSM operator Ncell.
The committee has directed a set of nine inquiries to three key state agencies – the Inland Revenue Department, the Office of the Company Registrar, and the Nepal Telecommunication Authority, seeking clarification on the details of the deal and its potential implications for Nepal.
Firstly, PAC has questioned the authenticity of Axiata Group’s announcement that it has sold all its shares in Ncell to Spectrelight Limited, a UK-registered company. Another key concern raised by the committee revolves around whether the laws of the country where the holding company is based and operating should be adhered to during the change of ownership. Furthermore, the house panel is seeking information on the adherence to regulations, specifically, whether the provision requiring pre-approval for the sale of more than 5% of shares, as per Sub-rule 4 (A) of Nepal Telecommunications Authority Regulations, 2019, was followed in the ownership change of Ncell. Additionally, the committee is interested in understanding the potential actions that may be taken if this provision has been violated.
The PAC has also expressed concern about how the regulatory body views the sale of the holding company’s ownership at a significantly lower value compared to past share transactions. Additionally, the committee has asked the three state agencies whether the reasons cited by Ncell for the ownership transfer would impact the investment environment in Nepal.
Axiata has cited reasons like dual taxation, regulatory uncertainties, risks associated with the expiry of its license, and the possibility of the government taking ownership with the license expiration for its ownership transfer.
“What will be the legality of the ownership transfer if the Nepali regulator does not provide its approval?” PAC has questioned the state agencies.
Since ownership has been transferred at a far lower rate compared to the previous transaction and the share transactions have been made outside the country, the committee has asked the state agencies whether the company is liable to pay tax to the government, whether it has declared how much tax it will pay, and whether the Inland Revenue Department has made any jeopardy assessment. The PAC has also asked the state agencies whether the government will get capital gains tax as per the Income Act, 2001, and the ownership transfer tax as per Section 57 of the Act.
Furthermore, the PAC has asked the state agencies why Ncell did not issue public shares as required by law for telecom service providers with a paid-up capital exceeding Rs 50 million within two years of launching operations. “The share transaction looks like that of a privately-held company. What is your response to this?” the committee has asked the state agencies.
“It has been learned that the ownership transfer was done by avoiding Nepal’s taxation system and by keeping Nepali regulators in the dark. What is your take on the ownership transfer process and the transparency of the entire process?” it asked the state agencies.
Likewise, it has asked the state agencies whether the regulator will approve the ownership transfer of a company that is coming under government ownership after six years. “What will be the legality of the ownership transfer if the Nepali regulator does not provide its approval?” it questioned.
