Kathmandu. The Securities Board of Nepal (SEBON) has decided to tighten the public offering (IPO) of corporate institutions.
The Securities Board of India (SEBON) is going to tighten the provisions related to IPOs of corporate entities in the draft Guidelines on General Qualification for Public Issue, 2083. The draft has proposed that the net worth per share of the corporate body should not be less than the face value for the IPO.
Similarly, for IPOs, the Securities Board can set minimum net worth criteria for various industries or sectors. The draft also proposes that the board can examine the stability of the operating income of the corporate body, operating cash flow, extraordinary or one-time earnings ratio, impact of transactions with related parties, acquisition and payment status, etc.
It has also proposed that the Securities Board of India (SEBON) can conduct necessary investigations if it is found that income or profit has been artificially increased.
The draft guidelines propose that the capital structure of the corporate entity seeking an IPO should be financially sustainable and balanced. The corporate should evaluate its debt liability, debt repayment capacity and financial risk.
The directive also proposes that the Securities Board of Nepal (SEBON) can determine the criteria related to debt-capital ratio, interest payment capacity and other financial indicators according to the sectoral nature of the corporate entity seeking to launch an IPO.
The corporate entity should have fulfilled the tax and other financial obligations in accordance with the prevailing laws. It has also been proposed that if there is any disputed amount in tax and other liabilities, the amount should be provisioned in accordance with the prevailing accounts in the financial statements of the corporate body.
The draft directive has proposed a provision that the Securities Board of Nepal (SEBON) may refuse to grant approval for the public issue if it is not deposited in the revenue account after it is proved to have evaded tax or intentionally caused loss of revenue.
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