Government Comments Are Requested on the Proposed Regulation Regarding Secondary Market Trading by SME Firms by SEBON
The Securities Board of Nepal has developed and published a proposal for the Securities Issuance and Trading Regulations of Small and Medium-Sized Enterprises (SMEs) (SEBON).
Companies with paid-up capital of less than Rs. 25 crores will be classified as SME firms by SEBON. A minimum of 250 shares may be sought for in the IPO issued by these companies, and the shares normally have a nominal value of 100 rupees.
A minimum of 30% and a maximum of 49% of the authorized capital must be raised in an initial public offering (IPO) before SME enterprises can access the secondary market. They can also offer rights to raise money.
The Board has also made provisions for the premium public issuance of securities. The financial documents show that the issue price may be no less than twice the net worth per share and no more than double that amount.
Also, such businesses must have a credit record that is ordinary or above. Such firms’ stock trading will take place through TMS. A listed corporate company may unilaterally delist securities if it so wishes.
Common shares of a corporation are not transferable for five years. Securities established entities are prohibited by rules from selling shares prior to five years have passed since the date of the initial public offering for the general public.
The board has been considering operating a separate SME platform for trading shares of small and medium-sized enterprises for a very long time.
The draft is supplied below in pdf format. (Secondary Market Trading)
The board also authorized NEPSE to begin the required preparations. Nevertheless, in response to NEPSE’s assertion that the SME platform must have a solid legal basis in order to be used. It will be included in the guidelines by passing legislative amendments.
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Low-capital enterprises have included to a unique SME platform index that SEBON has built in order to facilitate commercial transactions.
The relevant organizations have contacted SEBON with questions and suggestions on the aforementioned draft. And they have been instructed to do so within 15 days of the draft’s publication.
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