According to the Bank and Financial Institutions Act (BAFIA), 2073 BS, and the unified directives of the NRB, no director or high-ranking official is allowed to buy or sell shares of their respective financial institution for one year after stepping down from office.
An NRB investigation revealed that Bohara directly breached this regulation by selling 20,507 units of ordinary shares under his name through the secondary market. The trades were executed at various intervals starting from Poush 16, 2080 BS. These transactions occurred less than a year after he had previously stepped down as chairman, making the sales illegal under banking regulations. The central bank axed him after finding his subsequent clarification unsatisfactory.
This is not Bohara's first clash with the banking regulator. The friction dates back several years on Bhadra 2080 BS. Bohara (who chaired the former Mirmire Laghubitta in 2076 BS) was initially stripped of his post by the NRB, slapped with a Rs 500,000 fine, and slapped with a five-year ban from holding any directorial positions. Bohara challenged the NRB's decision at the Patan High Court. The court issued a stay order, pausing the NRB’s penalties and allowing him to resume institutional activities. Leveraging the court order, he successfully got re-elected to the board of directors during the company’s 18th Annual General Meeting on 5 Jestha, 2082. However, his return was cut short when the NRB uncovered his illicit share trading activities during his time away from the board.
Bohara has vehemently denied wrongdoing and announced his intention to challenge the NRB’s latest dismissal in court. He argues that because his initial removal was unlawful, the "one-year cooling period" rule should not apply to him. He claims he only traded converted ordinary shares rather than newly issued shares, noting that the central depository system did not flag or restrict his account. Bohara has openly alleged that the regulatory actions against him are fueled by personal animosity and bias.
The Bohara incident has exposed critical loopholes and technical vulnerabilities within Nepal's stock market regulatory framework, prompting a blame-game among authorities. CDS and Clearing Limited (CDSC) admitted a technical gap, explaining that a departing director's shares are not automatically frozen by their system. CDSC freezes accounts only after receiving formal documentation and a direct request from the concerned company. In the meantime, Securities Board of Nepal (SEBON) countered that while technical systems matter, the primary legal and ethical obligation rests on the individual director to comply with the law, regardless of whether the system permits the trade or not.
This high-profile ouster is expected to trigger intense debates regarding the synchronization of Nepal’s capital market systems and push regulators toward urgent structural reforms to prevent future insider trading loopholes.
