SEBON suggest govt to attract big company to stock market

Kathmandu, May 19

The Securities Board of Nepal (SEBON) has suggested the Ministry of Finance to make it mandatory for  the companies with a capital of Rs. 1 billion or more and conducting transaction worth Rs. 5 billion to be listed in the share market.

In the suggestions submitted to the MoF, the capital market regulator recommended making it mandatory for the companies with a capital of Rs. 1 billion or more or conducting transaction of more than Rs. 5 billion, companies using natural resources or receiving grants, concessions and tax exemptions from the state to be listed in the stock market by the public issuance of securities.

The board has also suggested structural changes including capital increment at the Nepal Stock Exchange (NEPSE) and CDS and Clearing. According to it, the two companies needed structural changes to make the secondary market of securities more competitive and transparent.

In its 12-point suggestions to the government for the development and expansion of the overall capital market, the SEBON wanted to reduce the transaction cost of an Initial Public Offering (IPO) and maintaining reservation in IPO for the Nepali migrant workers.

It recommended the government to establish SMEs platform to trade small and medium enterprises’ shares and improve the current situation of high volatility in the secondary market price and index of securities.

"In order to encourage long-term investment in the securities market, provision will be made to levy capital gains tax of 6.5 per cent for short term investment of less than 180 days, and 4 per cent for long term investment," read the SEBON suggestion.

Its recommendations to the MoF also include charging no tax on the income earned from specialised investment funds, developing bond market by managing the secondary market transactions of institutional and government bonds.

It said that commodities exchange market and its infrastructure should be brought into operation to help in the commercialisation of the agricultural sector in the country.

SEBON also said that to make the securities market investor-friendly, fees for investing in the primary and secondary markets should be reviewed and permission will be given for the operation of the private equity and venture capital.

Meanwhile, Nepal Investors' Forum has demanded withdrawal of the provision of Rs. 40 million and Rs. 120 million limit set by the Nepal Rastra Bank (NRB) on margin lending. In a four-point demand submitted to the Governor of the NRB, Maha Prasad Adhikari on Thursday, Forum also suggested maintaining the risk-weighted average at 100 per cent instead of the provision of 150 per cent which is announced to be implemented from the beginning of the next fiscal year 2022/23.

A delegation led by its President Tulsiram Dhakal said that the suspension of trading of shares during the merger and acquisition of companies had negatively impacted the investors as well as the country. It recommended  reducing the suspension time to the minimum. 

 Published in The Rising Nepal daily on 20 May 2022.