Kathmandu. The Securities Board of Nepal (SEBI) has taken the process of amending the Securities Registration and Issue Rules to the final stage.
The committee formed by the Securities Board under the leadership of Executive Director Muktinath Shrestha has taken the work of amending the regulations to the interim stage after a long study and discussion. “The process of amending the regulations will be completed soon,” said Tolakanta Neupane, information officer of the Securities Board. ’
The Securities Board of Nepal is going to amend the Securities Registration and Issue Regulations to make the primary market transparent and timely. The Securities Board believes that after the amendment of the regulations, the primary market will be transparent and the criteria will be set so that the investment of the investors will be protected.
On what subjects will the amendment be made?
Company net worth
There is a lot of controversy about the net worth of the company issuing the IPO. The Public Accounts Committee of the House of Representatives (HoR) has directed the Securities Board of Nepal (Sebi) to allow only companies with real net worth to issue IPOs. On the other hand, the Finance Committee has asked the Securities Board not to implement the directives of the Accounts Committee. Due to the directives of the Accounts and Finance Committee, the process of granting IPO permission by the Securities Board has slowed down.
However, there is no provision in the current regulation regarding the net worth of the company issuing IPO. “Now, discussions are underway to set a provision regarding the company’s net worth in the regulations through the amendment,” the source said.
10 units policy in IPO
According to securities board sources, preparations are being made to remove the existing 10-unit policy in the IPO through the amendment of the rules. “Discussions have been going on for a long time to remove this policy. “We have received suggestions from investors to remove the policy of 10 units in the IPO,” the source said, adding, “Our study analysis has also concluded that the provision of filling a minimum of 10 units in the IPO will increase the risk in the market.” Because now many investors have entered the market, but the number of investors who do not understand the market is very high. ’
Sources said that now there may be a provision to fill a minimum of 50 units in the IPO. “If this arrangement is in place, only investors who can take risks will invest,” the source said, adding, “On the other hand, there is a provision to fill a minimum of 50 units in the book building method.” Officials of the Securities Board are unanimous that this will organize the market. ’
Time period for Nepalis in foreign employment to apply
Similarly, the Securities Board is preparing to reduce the fixed time limit for Nepalis in foreign employment to fill the IPO by amending the regulations. “Discussions are now underway to make arrangements for applying for the IPO issued for Nepalis in foreign employment by giving them four days’ time,” the source said, “Because many applications have also been received from Nepalis in foreign employment.” Some IPOs are oversubscribed within 1-2 days. That is why discussions are underway to reduce the existing 15-day arrangement to four days. If there is not enough application within 4 days, then there may be a provision to extend the deadline for applying like the general public. ’
Provision of right shares
Companies issue right shares to their shareholders. In recent times, the shareholders of some companies do not seem to be fully applying for the rights. Even if the companies do not know that the notice has been issued, the shareholders fail to fill the right. In such a situation, the rights of the companies are not fully sold. And the remaining right shares are sold by the companies to the general public through the auction process.
The securities board officials seem to be thinking of managing the right shares of the company as the shareholders have a right. “Now the rules are being amended to provide rights shares to the shareholders of the company,” the source said, adding, “For this, the shareholders will be able to apply for more shares than their rights.”
For example, at present, if a company has issued 100 percent right shares, then shareholders can apply for only 100 units of shares if they have 100 units of shares. Now, by amending the rules, shareholders can apply for only 100 units of shares and now they can apply up to 110, 120 or 150 units. “That is, the provision of allowing investors to apply 10 percent, 20 or 50 percent of their rights can be made through the amended rules,” the source said. A maximum of 50 percent more applications can be made. ’
