CDSC, private sector spar over dual-ISIN

CDSC wants it to enhance transparency, promotors say it will add complexity

 

Kathmandu, Feb. 23

Citing continued irregularities in securities transaction, lack of transparency and breach of investors' rights, the CDS and Clearing (CDSC) Limited insists on the relevancy of the dual ISINs (International Securities Identification Numbers) implementation.

But the private sector representatives maintain that the new system will discourage the investors and add complexities in securities trading.

The CDSC has been advocating for the dual ISINs to separate the promoter shares and public shares of the companies listed at the stock exchange to protect the interest of the investors. The CDSC formulated draft of the Securities Dematerialisation Operation Directives 2082 and sent to the Securities Board of Nepal (SEBON) more than six months ago but the capital market regulator has not given any verdict on the policy.

The proposed directives include the provision to have two separate ISIN to distinguish the promotor shares and general shares with separate identification.

According to the CDSC, the new policy addresses the systematic registration of securities. If a company intends to convert promoter shares into public/ordinary shares, the directive mandates a formal resolution via an Annual General Meeting (AGM) and a public declaration.

Conversion of the shares after informing the investors through a public notice will maintain greater transparency and facilitates the investors, Managing Director and Chief Executive of the CDSC Prabin Pandak said at an informative programme on the Directives organised by the company in Lalitpur on Monday evening.

Following notification to SEBON and Nepal Stock Exchange (NEPSE), these shares can then be merged under a single ISIN through a prescribed process. There will be no fee for merging promoter shares into a unified ISIN, according to the proposed directives.

CDSC is a subsidiary of the NEPSE.

However, President of the Nepal Chamber of Commerce (NCC) Kamlesh Kumar Agrawal said that the dual ISIN will discourage the investors, especially the promotors. He suggested the regulators and clearing company not to add any complexities in the capital market.

Treasurer of the Federation of Nepalese Chambers of Commerce and Industry Bharat Raj Acharya said that whatever the law or policies the government or its agencies bring about, they should not create obstruction for the entrepreneurs and investors. The double ISIN system should also not impact it.

Likewise, Chairman of the Banking and Finance Committee at the Confederation of Nepalese Industries (CNI) Barun Kumar Todi said that the dual ISIN system will not help the investors.

"Dual ISIN is implemented if the securities are of different nature such as debenture and equity shares in a company," he said. He urged to find out the reasons behind the delay in bringing about new policies rather than blaming the market systems.

President of the Independent Power Producers' Association of Nepal (IPPAN) Ganesh Karki said that there are disparities on the percentage of the investment to be raised from the market which ranges from 10 to 30 per cent.

"The regulators and government should work to check the legal loopholes instead of complaining about them publicly. If you don't allow the promoters to sell the shares, they will not sell it," he said.

According to him, disputes like these will not only deter the domestic investment but also the foreign one.

 

New policy comes after 15 years

Meanwhile, Pandak expressed her dissatisfaction against the SEBON for the delay in ratifying the document. In accordance with the Securities Central Depository Service Rules, 2067 and Bylaws, 2068, these directives must receive formal approval from SEBON before implementation.

According to her, although Rule 30(1) of the Central Depository Service Rules, 2067 required such directives to be prepared 15 years ago, the previous lack of a formal framework led to data discrepancies between legal documents and CDSC systems, occasionally causing confusion for retail investors.

CDSC statistics are full of differentiated decisions for various companies with some companies having single ISIN and some two while some have already mixed them. City Hotels, Pure Energy and Kalinchowk Cable are some examples.

"How can you sell the promotors shares when you agreed not to sell it for the next three years before raising millions or billions of rupees from the public? Only a corrupt system permits it," Pandak asked.

Share investors said that there have been instances where the users of the TMS were deceived with the sales of promotor shares.

Non-transparency is the major problem behind multiple malpractices in the capital market. The new policy is an instrument to check such maladies including the deliberate practices to deceive 'innocent' investors, they said.

Pandak also said that it began with a company seeking approval to mixing promotor shares with the general shares. "It's our weakness that some companies are assigned with single ISIN while some others are with two. We were hopeful that the SEBON would swiftly process the procedures and will implement immediately but it couldn't happen so," she said.

To prevent the misleading sale of promoter shares to the public and to protect promoters from future legal complications, the directive proposes assigning a distinct ISIN to promoter shares during their Lock-in Period.

The CDSC insisted that this framework is based on the ANNA (Association of National Numbering Agencies) Guidelines 2023 (8th Edition), ensuring that any merger of shares follows the fundamental capital market principle of full disclosure.

Prakash Rajaure, a share investor, said that the implementation of the proposed dual ISIN system will check the malpractices in the capital market which will also protect the interest of the investors. 

 Published in The Rising Nepal daily on 24 February 2026.