SEBON amends Merchant Bankers Regulation; directs merchant bankers to hike paid up capital by 3 times

Securities Board of Nepal (SEBON) has made amendment in the Merchant Banker Regulation 2064. Now, SEBON has implemented new Merchant Banker Regulation 2074 which was approved by the Government of Nepal  and Ministry of Finance. As per the new amended rules, the board is extending the working area of the merchant bankers and the proposed regulation has also hiked their paid-up capital requirement by three times. As the merchant bankers are increasing day by day  and in order to improve the financial conditions SEBON  has increase the paid-up capital requirement, the capital required for issue manager is Rs 5 crore from existing Rs 3 crore. Likewise for underwriter the minimum capital has been set at Rs 7 crore from existing Rs 4 crore.  Also, for share registrar, the required capital is Rs 3 crore from Rs 1 crore . The board has amended Rs 5 crore from existing Rs 1 crore for investment manager and Rs 3 crore for an institutional consultant. Likewise, the proposed regulation has also inserted a provision that the banks and financial institutions (BFIs) undergone for merger/ acquisition process then the company have to merge or acquire their subsidiary companies as well. Earlier merchant bankers has been operating as sales and issue manager,underwriter, share registrar and investment manager and now the  regulation has widen the services, can now serve as a consultant to structural changes of incorporated institution, evaluation, corporate plan, loan syndication, working capital financing, venture capital, private equity, operating funds similar to hedge fund and asset management. Likewise, as the current regulation also implement that the underwriting and issue manager cannot takes service charge less than Rs 1 lakh in order to minimize unfair competition among merchant bankers. Also click here to read SEBON's new regulation