The Securities Board of Nepal (SEBON), the securities market regulator, has started revising the Securities Registration and Issue Regulation to allow companies to issue shares to the public prior to the launch of initial public offering (IPO).
This will pave the way for firms like Nepal Purwadhar Bikash Company, which is building the 58-km Kathmandu-Kulekhani-Hetauda tunnel highway, to pool financial resources by launching pre-IPO.
Such firms, however, need to be registered as a public limited company at the Office of Company Registrar and should have completed at least one year of operation at time of launching pre-IPO.
“We have already incorporated the new provision in the regulation and made other amendments as well. We will soon forward the revised regulation to the board, seeking approval,” SEBON Spokesperson Niraj Giri said.
The new regulation will come into effect once the SEBON’s board of directors endorses it.
The revised Securities Registration and Issue Regulation will also include a provision on re-registration of shares of listed firms that have undergone consolidation process.
Currently, shares of Nepal Stock Exchange-listed firms that have merged do not need to be re-registered and can automatically be traded on the stock market once companies formally wrap up the merger process.
“We are basically adding the new provision to keep record of shares floated on the stock market following merger. And additional fee will not be levied on re-registration of such shares,” Giri said.
Among others, the revised regulation will also pave the way for international financial institutions like the Asian Development Bank (ADB) and the International Finance Corporation (IFC) to list local currency bonds on the stock market.
Although SEBON had previously initiated the process in this regard, it had later decided to make other changes to the Securities Registration and Issue Regulation as well, prior to forwarding the legal document to the board.
“By making all the changes at one time, we do not need to revise the regulation again and again. This saves time,” Giri said.
Once the provision on listing of local currency bonds is introduced, securities can be traded on the bourse like any other stock or through over-the-counter trading — the process of buying and selling securities without any bidding process.
But prior to listing those bonds, issuers of those securities need to prepare prospectus mentioning the yield on bonds, maturity
period, areas of investment and other related information. “The issuers of such securities must take necessary permission from the government to float the securities on the market and disclose information on the status of bonds every quarter to SEBON.”
The government, through a guideline introduced in October last year, allowed international financial institutions with AAA credit rating from global credit rating agencies to float local currency bonds here.
Since the introduction of the guideline, the ADB and the IFC have obtained permission from the government to issue the debt instruments.
The ADB has received permission to float bonds worth Rs 50 billion to fund eight hydropower projects, while the IFC has received permission to float local currency bonds worth up to $500 million.
The government hopes issuance of bonds will facilitate collection of large sums of money required for construction or implementation of huge infrastructure projects from the domestic market itself. This, the government hopes, will reduce the country’s reliance on foreign loans, open new investment avenue for institutional investors, prop up country’s capital market and provide another tool for liquidity management.
source: the himalayan times,1 feb 2015
LINK
This will pave the way for firms like Nepal Purwadhar Bikash Company, which is building the 58-km Kathmandu-Kulekhani-Hetauda tunnel highway, to pool financial resources by launching pre-IPO.
Such firms, however, need to be registered as a public limited company at the Office of Company Registrar and should have completed at least one year of operation at time of launching pre-IPO.
“We have already incorporated the new provision in the regulation and made other amendments as well. We will soon forward the revised regulation to the board, seeking approval,” SEBON Spokesperson Niraj Giri said.
The new regulation will come into effect once the SEBON’s board of directors endorses it.
The revised Securities Registration and Issue Regulation will also include a provision on re-registration of shares of listed firms that have undergone consolidation process.
Currently, shares of Nepal Stock Exchange-listed firms that have merged do not need to be re-registered and can automatically be traded on the stock market once companies formally wrap up the merger process.
“We are basically adding the new provision to keep record of shares floated on the stock market following merger. And additional fee will not be levied on re-registration of such shares,” Giri said.
Among others, the revised regulation will also pave the way for international financial institutions like the Asian Development Bank (ADB) and the International Finance Corporation (IFC) to list local currency bonds on the stock market.
Although SEBON had previously initiated the process in this regard, it had later decided to make other changes to the Securities Registration and Issue Regulation as well, prior to forwarding the legal document to the board.
“By making all the changes at one time, we do not need to revise the regulation again and again. This saves time,” Giri said.
Once the provision on listing of local currency bonds is introduced, securities can be traded on the bourse like any other stock or through over-the-counter trading — the process of buying and selling securities without any bidding process.
But prior to listing those bonds, issuers of those securities need to prepare prospectus mentioning the yield on bonds, maturity
period, areas of investment and other related information. “The issuers of such securities must take necessary permission from the government to float the securities on the market and disclose information on the status of bonds every quarter to SEBON.”
The government, through a guideline introduced in October last year, allowed international financial institutions with AAA credit rating from global credit rating agencies to float local currency bonds here.
Since the introduction of the guideline, the ADB and the IFC have obtained permission from the government to issue the debt instruments.
The ADB has received permission to float bonds worth Rs 50 billion to fund eight hydropower projects, while the IFC has received permission to float local currency bonds worth up to $500 million.
The government hopes issuance of bonds will facilitate collection of large sums of money required for construction or implementation of huge infrastructure projects from the domestic market itself. This, the government hopes, will reduce the country’s reliance on foreign loans, open new investment avenue for institutional investors, prop up country’s capital market and provide another tool for liquidity management.
source: the himalayan times,1 feb 2015
LINK
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