Kathmandu. The Securities Board of Nepal (SEBON) has issued guidelines on mergers of stockbrokers.
The guidelines on mergers and acquisitions of stockbrokers, 2081, which were passed by the SEBON board a few days ago, have been made public. The guidelines state that a broker who wants to merge can acquire or merge another broker with the approval of the Securities Board in accordance with Section 7 (a) of the Securities Business (Stock Brokers and Stock Dealers) Regulations, 2064.
The guidelines stipulate that a broker who wants to merge must have his assets and liabilities assessed. According to which, brokers who have received in-principle approval from the Securities and Exchange Board of Nepal will have to conduct an independent appraisal of their assets, liabilities and business transactions for the last period (due diligence audit).
Similarly, the guidelines clearly stipulate the bases to be determined while evaluating the independent appraiser.
It has been provided that the adjusted net worth of the acquiring or acquiring broker should be 75 percent, the business valuation prepared using the discounted cash flow method should be 15 percent, and the valuation made using any other method calculated based on the International Valuation Standard should be 10 percent.
The guidelines stipulate that the broker’s final share swap ratio should be determined based on the valuation report and that such share swap ratio should be approved by the board of directors of the concerned broker.
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