The dividend proposal of Api Power Company Limited (API) has been officially canceled by the Electricity Regulatory Commission (ERC). Previously, during the 4th board meeting held on Bhadra 07, the company had recommended a 9.4737% dividend for the fiscal year 2080/81, which included 9% bonus shares and a 0.4737% cash dividend. The company’s paid-up capital stands at Rs. 578.65 crores.
However, in the 107th board meeting held on Ashwin 10, the company decided to cancel this proposed dividend. According to a notification from the Nepal Stock Exchange (NEPSE), the proposed dividend, which required the approval of the ERC, was rejected, resulting in its cancellation.
In response, Api Power issued a clarification as per Sub-section (2) of Section 108 of the Companies Act, 2063, confirming that the financial statements for FY 2080/81 were prepared following Nepal Financial Reporting Standards (NFRS), accurately reflecting the company’s financial status. The company explained that its financial reports were audited according to relevant standards established by the authorized regulatory bodies.
The company further elaborated that, in compliance with NFRS 9, investments in various entities are recorded at market value using the Fair Value through Profit and Loss (FVTPL) method. Market value fluctuations are reflected in the profit and loss statement, and provisions have been made for deferred tax liabilities arising from these gains or losses. The profit recorded under NFRS 9 is regular profit, not related to asset revaluation.
Api Power also clarified that Section 56 of the Companies Act permits the alteration of share capital, but Sub-section (10) explicitly prohibits the increase of share capital or issuing bonus shares based on asset revaluation. Nepal Accounting Standard (NAS) 16, which governs the revaluation of property, plant, and equipment, requires that any revaluation surplus be recorded in a distinct revaluation reserve rather than in the profit and loss account. Therefore, the company deemed it incorrect to classify profits under NFRS 9 as revaluation profit, as it contradicts existing legal and accounting regulations.
The company has communicated with the ERC, submitting the necessary documents and is preparing to engage in further discussions to seek approval for the proposed dividend. Api Power’s share price closed at Rs. 284.10.
