Kathmandu, March 30
The Securities Board of Nepal (SEBON) has decided to allow eligible small and medium enterprises to issue their securities as well as make related transactions.
Publishing the preliminary draft related to regulation on securities issuance and transactions of small and medium enterprises today, the board has decided to allow companies or organisations having a paidup capital of Rs 250 million to register their securities if found eligible. However, the board can still modify the paid-up capital limit after considering the applicant SMEs and market conditions.
As per Section 27 of the Securities Act 2007, interested SMEs can fill out an application and submit it alongside a copy of the decision and authority given by the board of directors of the organisation regarding the registration of securities, audited financial statements of the organisation for the last financial year; and details regarding the board of directors of the organisation, among other documents.
Public issuance of securities of registered companies is limited to no less than 30 per cent and not more than 49 per cent of the issued capital unless specified by the regulatory body. A minimum of 250 shares can be issued for initial public offering by such companies.
Organisations that have operated as a public company for a year and have carried out the necessary activities as per their agendas will be allowed to issue their securities to the public. Also, companies that have been registered as private limited companies in the past and were operated for at least two financial years before converting into a public limited company will be allowed to issue their securities.
While the SMEs issuing securities don't need undergo credit rating, the board may instruct such companies to get a credit rating before issuing securities to the public.
There is also a provision that organisations, except the public, cannot sell ordinary shares before the completion of a period of five years from the date of IPO issuance.
A version of this article appears in the print on March 31, 2023, of The Himalayan Times.
