Kathmandu. The Nepal Securities Board has prepared and implemented a guideline for the merger of stock brokers. After the implementation of this guideline, the way has been opened for brokers who are struggling to meet the minimum paid-up capital to merge with each other.
The fourth amendment to the Securities Businessmen (Securities Brokers and Securities Dealers) Regulations has set the minimum paid-up capital of a broker doing limited work at Rs 200 million and Rs 600 million for a broker doing full work. This minimum paid-up capital is due by mid-Ashar 2082.
The Securities Board had given time until mid-Poush to brokers doing limited work to submit a plan to raise the minimum paid-up capital to Rs 200 million. The Securities and Exchange Board of Nepal (SEBON) had already issued a letter to 38 old brokers to submit capital plans.
More than 2 dozen of those 38 brokers had submitted capital plans to the SEBON to merge or issue bonus shares and right shares to maintain minimum paid-up capital. Along with this, the SEBON has prepared and implemented the Guidelines on Mergers, Acquisitions or Acquisitions of Securities Business Operators, 2081. Earlier, there was no separate guideline on broker mergers.
There is a provision that brokers who want to merge must go through various stages as per the guidelines and obtain the final approval of the SEBON. The merger between the brokers will take final form after the approval of the Securities Board.
The directive has made clear provisions regarding the integrated business of the broker after the merger. The broker must obtain approval for integrated business transactions from the Securities Board in accordance with the prevailing law on companies. After that, the Securities Board, Nepal Stock Exchange (NEPSE) and CDSC should be informed by fixing the date for the integrated business.
The directive has made provision that the securities in the securities pool account of the broker who has joined the merger should be cleared before starting the integrated business. Before the integrated transaction, TMS arrangements should be made so that transactions can be made only through the broker formed after the merger.
Before starting the integrated transaction, the CDSC should make arrangements to open a beneficiary account through the broker formed after the merger. The directive stipulates that after the start of integrated trading, the beneficiary account that existed before the merger should be maintained in the account of the broker that remains after the merger.
Provisions in the directive regarding suspension of trading
For merger purposes, the concerned broker may suspend trading of securities with the approval of the Securities Board. For this, the broker must inform the Securities Board 3 working days in advance.
Before that, the Securities Board may grant approval to suspend the securities transactions of such broker for a specified period, if it deems it necessary.
