Kathmandu. The Securities Board of Nepal has opened the way for mergers for stock brokers who cannot meet the minimum paid-up capital.
The board of directors meeting of the Securities Board held today passed the guidelines related to broker mergers. With this, the way has been opened for brokers who cannot meet the minimum paid-up capital to merge with each other.
Some time ago, the Securities Board had directed the old 38 stock brokers to submit a ‘capital plan’ to meet the minimum paid-up capital by mid-December. As per the same directive, those brokers have already submitted capital plans to the Securities and Exchange Commission.
Most of the 38 brokers have submitted capital plans to meet the minimum paid-up capital by merging, distributing bonus shares and issuing rights shares. A dozen brokers have submitted capital plans to maintain the minimum paid-up capital within the current fiscal year 2081.82.
The fourth amendment to the Securities Businessmen (Securities Brokers and Securities Dealers) Regulations has set the minimum paid-up capital for brokers doing limited work at Rs 200 million and for brokers doing full work at Rs 600 million.
The Securities and Exchange Board of Nepal (SEBON) had amended the regulations two years ago to fix the minimum paid-up capital for brokers. Currently, 90 brokers are in operation. Of these, 40 brokers have maintained the prescribed paid-up capital since they came into operation after the revised regulations.
The old brokers have until mid-Ashar 2082 to maintain the minimum paid-up capital. The revised regulations provide that brokers who cannot maintain the minimum paid-up capital of Rs 200 million by that time can merge. To further clarify the provisions in the regulations, SEBO has prepared and passed a separate guideline for mergers between brokers.
According to Securities Board sources, the board of directors has passed the guideline related to broker mergers today. ‘The directive has been passed but has not been officially made public,’ the source said, ‘Preparations are being made to make the directive public in a day or two.’
The source said that the criteria and provisions related to mergers between brokers will be clear after the directive is made public.
Among the old brokers, Opal Securities Investment, Pragyan Securities, Nepal Stock House, Primo Securities, Nepal Investment and Securities, Trishuli Securities, Lynch Stock Market, South Asia Bulls, Niv Securities, Crystal Kanchenjunga Securities, Sundhara Securities and Bhrikuti Stock Broker have submitted capital plans to the Securities and Exchange Board of Nepal to meet the minimum paid-up capital in the current fiscal year.
The remaining 25 are Kumari Securities Services, Arun Securities, Marchet Securities Exchange, Jeff Securities, Ashutosh Brokerage, Mall & Mall Stock Brokerage, Thrive Brokerage House, ABC Securities, Sagarmatha Securities, Cipla Securities, Midas Stock Brokerage, Shweta Securities, Asian Securities, Shree Krishna Securities, Kalika Securities, Kohinoor Investment and Securities, Secured Securities, Sumeru Securities, Creative Securities, Investment Management Nepal, Sewa Securities, Srihari Securities, Aryatara Investment and Securities and Divya Securities and Stock. House has submitted a capital plan to the Securities and Exchange Board of Nepal (SEB) to achieve the minimum paid-up capital through merger, bonus shares or right shares.
Agarwal Securities has informed the Securities and Exchange Board of Nepal that it has already achieved the minimum paid-up capital.
