SEBON Sets Investment Criteria for Non-Resident Nepalese in Joint Investment Companies

The Securities Board of Nepal (SEBON) has introduced the Securities Issuance and Allotment (Eighth Amendment) Guidelines, 2081. The amendment, issued under Section 118 of the Securities Act, 2063, aims to revise the existing Securities Issuance and Allotment Guidelines, 2074.

Provisions for Joint Venture Investment Companies

1. Share Issuance Limits:
   Joint venture investment companies, formed with the collaboration of the Government of Nepal and non-resident Nepalese (NRNs), must allocate between 10% and 49% of their issued capital exclusively to NRNs.

2. Disclosure of Material Changes:
   If significant changes occur in the approved prospectus during the application period, the issuance process must be suspended. Details of the changes, their impact, and related updates must be published on the websites of the issuing company and issue manager, and SEBON must be notified.

3. Application Period and Extension:

   • The application period for shares will remain open for a minimum of four working days.
   • If the shares are not fully subscribed, the application period can be extended by up to 15 days, with SEBON being informed accordingly.

4. Public Notification:
   A public notice inviting applications for shares must be published at least seven working days prior to the issuance date in a national daily newspaper and on the issuing company’s website. SEBON must be informed of such notices at least one working day before publication.

5. Documentation for NRNs:
   Applicants must submit their foreign citizenship certificate, passport, or permanent residency permit, along with NRN citizenship or identity card. Beneficiary accounts for NRNs can be opened electronically, verified by deposit members.

6. Electronic Share Applications:
   Licensed ASBA banks and financial institutions can facilitate electronic applications for NRNs.

7. Trading Restrictions:
   Shares issued by joint venture investment companies can only be traded among NRNs. Additionally, these shares cannot be sold or transferred within one year of their allotment date.

The revised guidelines are designed to streamline share issuance, enhance transparency, and promote investment opportunities for NRNs while safeguarding the interests of investors and issuers alike.