Nepal’s Securities Board (SEBON) has introduced stricter rules for investment companies that want to issue an Initial Public Offering (IPO). The board recently revised its existing policy and announced eight new criteria that any organized institution or investment company must meet before they can offer shares to the public.
According to SEBON, investment companies will now have to meet the following conditions:
The company must have been in operation for at least three years and made a profit in the last two fiscal years.
Its net worth per share must be higher than its face value.
It cannot invest in founder shares or other securities from sectors like energy, transport, communication, agriculture, tourism, production, IT, or mining unless it is approved by SEBON as a Qualified Institutional Investor (QII). If approved, it can only invest through book-building IPOs in those sectors.
The company must be established specifically to invest in securities of companies operating in the mentioned key sectors.
It must have earned at least one level above the minimum credit rating.
Its paid-up capital must be at least NPR 50 crore (Rs. 500 million).
It must either be founded by the Government of Nepal, or set up to invest in major sectors such as energy, agriculture, tourism, and so on.
If it is a foreign-invested company, it must complete all legal procedures under Nepal’s Foreign Investment and Technology Transfer Act.
These new rules are part of SEBON’s effort to make the stock market more secure and to ensure only financially strong and sector-focused investment companies enter the market.
