NEPSE Unveils Streamlined Classification System for Listed Companies

Nepal Stock Exchange (NEPSE) has recently implemented a comprehensive classification system for listed companies, categorizing them into distinct groups denoted as A, B, G, and Z. This move aims to provide investors and stakeholders with a more nuanced understanding of companies based on their financial standing, performance, and governance.

Within the A category, comprising 31 companies, NEPSE has identified entities with a minimum paid-up capital of Rs. 1 Arba. These companies have been listed for a minimum of 3 years, consistently demonstrated profitability over the past 3 fiscal years, distributed dividends and conducted their annual general meetings within 6 months of the fiscal year-end. Notably, companies in the A category are characterized by exceptional corporate governance.

The B category includes companies with a paid-up capital of at least Rs. 50 crores. To be classified under B, companies must have been listed for a minimum of 3 years, recorded profits in two out of the past three fiscal years, and held annual general meetings within 6 months of the fiscal year-end. Additionally, these companies must not have accumulated losses. NEPSE has selected 35 companies within the B category based on these stringent criteria.

Companies that have been listed for 2 years but have not met the criteria for either A or B groups find placement in the G group. On the other hand, companies that do not meet the specified criteria for the A, B, or G groups fall into the Z group.

In summary, NEPSE's categorization system encompasses top-performing companies with exceptional governance in the A group, those meeting rigorous financial criteria in the B group, companies listed for less than 2 years in the G group, and companies not meeting the criteria for the first three groups in the Z group.