Directive Amended to Bring Non-Resident Nepalis into the Securities Market

To formally involve Non-Resident Nepalis (NRNs) in Nepal’s securities market, the government has issued the Securities Issuance and Allotment (Eighth Amendment) Directive 2081.

The directive introduces the concept of joint investment companies, where investments are limited to the Government of Nepal and NRNs, and share trading is restricted to NRNs only. Such companies can issue shares exclusively for NRNs, with a limit ranging from 10% to 49% of their issued capital.

Key Highlights of the Directive:

• Mandatory Registration: Joint investment companies must register with the Securities Board of Nepal (SEBON) before issuing shares.

• No Premium Pricing: Shares cannot be issued at a premium.

• Trading Restrictions: Share trading will be limited to NRNs only.

• Lock-in Period: Shares cannot be traded for one year from the date of allotment.

If all shares are not sold, the application period can be extended by 15 days. However, the issuance process will only proceed if at least 50% of the shares are subscribed. Any remaining shares can be purchased by existing shareholders, or the capital structure must be adjusted as per the Companies Act.

This directive aims to increase NRN investments and internationalize Nepal’s capital market.