SEBON Prepares to Amend Securities Registration and Issuance Regulation; Proposal Tabled for Board Discussion

The Securities Board of Nepal (SEBON) has moved forward with the process of amending the Securities Registration and Issuance Regulation, 2073. Although the Board has been working on the amendment for over a year, the proposed changes are now finally being prepared for discussion at the Board of Directors’ level.

According to SEBON Chairman Santosh Narayan Shrestha, the amendment has been long overdue, and the Board is now ready to table the proposed revisions for discussion. A separate committee had earlier been formed to study the regulation, and its report has already been completed. Based on this report, detailed deliberations will take place among board members.

Once approved by the Board of Directors, the amended regulation will be forwarded to the Ministry of Finance for approval. While the Ministry of Finance is the supervisory authority of SEBON, legal provisions require that SEBON’s regulations be approved by the Government of Nepal (Council of Ministers). However, as decision-making authority on SEBON-related matters has recently been delegated to the Finance Minister, the regulation may be approved directly by the minister, after which it will come into effect.

Through the amendment, SEBON aims to make the issuance process both more facilitative and more stringent. Currently, companies from all sectors are subject to uniform issuance standards. Under the proposed revision, sector-specific criteria will be introduced, allowing different standards for different industries. This is expected to make it easier for companies from emerging sectors to access the capital market.

Hydropower companies, however, will face stricter provisions. Under the proposed amendment, hydropower companies will be allowed to apply for public issuance only after commencing power generation. In addition, the regulation will formally incorporate provisions related to net worth, addressing the ongoing issue of companies with net worth below NPR 90 being effectively barred from issuance.

The lock-in period for promoter shares is also set for revision. At present, 100 percent of promoter shares are unlocked at once, increasing the risk of promoters exiting simultaneously. To mitigate this risk, SEBON plans to introduce a phased lock-in release based on fixed percentages. However, the exact percentage structure is still under discussion.

Provisions related to book building and premium pricing are also being revised. Under the proposed changes, the allocation ratio in book building issues will be adjusted, with 40 percent reserved for the general public and 60 percent for qualified institutional investors. SEBON believes this change will help reduce risk for retail investors.

Similarly, new and revised provisions will be introduced for companies seeking to issue shares at a premium. Once the amendment is implemented, premium-based issuances that have been stalled for a long time are expected to resume.

Despite these developments, the amendment process is unlikely to conclude anytime soon. Even the submission of the proposal to the Board for discussion has been delayed for over a month. Based on past precedents, it may take at least another two years for the regulation to be approved by the Ministry of Finance and implemented, as amendments to SEBON regulations have historically taken considerable time.