SEBON Publishes Draft Public Issue Eligibility Guidelines 2083 for Stakeholder Feedback

The Securities Board of Nepal (SEBON) has made public the draft “General Eligibility Guidelines for Public Issue, 2083” for stakeholder feedback, marking a step toward making Nepal’s public issuance system more fair, transparent, organized, and reliable.

The proposed guidelines have been prepared with the objective of ensuring the selection of eligible, transparent, and sustainable companies seeking to issue securities to the general public. The framework also aims to strengthen investor protection and promote good governance, financial discipline, transparency, and accountability in Nepal’s capital market.

The draft guidelines are also part of the implementation process of the Capital Market Strengthening and Revival Action Plan, 2083, publicly released by the Ministry of Finance, Government of Nepal, on Bhadra 29, 2083. The proposed framework begins implementation of the program outlined in Point No. 1 of the action plan.

What Are the New Public Issue Eligibility Guidelines 2083?

The proposed Public Issue Eligibility Guidelines 2083 establish general eligibility requirements for organizations seeking to issue securities to the public.

The provisions are intended to apply to:

• Organized institutions seeking approval to issue securities to the general public
• Companies converting into public companies and planning to make a public issue
• Other institutions eligible to receive approval for public issuance under prevailing laws

The proposed framework introduces a more structured eligibility system for companies entering Nepal's capital market through public issuance.

Key Provisions of the Draft SEBON Guidelines

The draft guidelines cover several important areas related to Initial Public Offering (IPO) eligibility in Nepal.

1. General and Financial Eligibility

Companies seeking to conduct an IPO will need to meet prescribed general and financial eligibility requirements.

These requirements are intended to help distinguish financially and operationally suitable companies from entities that may present higher risks to public investors.

2. Corporate Governance Requirements

The proposed guidelines include provisions related to institutional governance, with the objective of promoting responsible management and greater transparency within companies seeking public investment.

Corporate governance standards are particularly important because public companies have responsibilities toward a large number of shareholders.

3. Eligibility of Promoters, Directors and Management

The draft also establishes requirements concerning the eligibility of:

• Promoter shareholders
• Directors
• Senior management
• Other responsible persons associated with the company

These provisions are intended to strengthen accountability and reduce governance-related risks in public companies.

4. Information Disclosure and Prospectus

The proposed framework contains provisions concerning information disclosure and prospectus preparation.

Companies seeking public issuance are expected to provide investors with relevant and transparent information so that potential investors can better understand the company's financial condition, business operations, risks, and proposed use of funds.

5. Due Diligence and Professional Responsibility

The draft guidelines also introduce provisions related to due diligence and professional responsibilities.

This could strengthen the role and accountability of professionals involved in preparing and reviewing public issue documents.

6. Use and Monitoring of IPO Proceeds

Another important area covered by the draft is the use of funds raised through public issuance.

The framework includes provisions for monitoring how funds obtained from investors are utilized, helping improve accountability after the public issue.

7. Post-Issue Obligations

Companies will also have obligations following the completion of a public issue.

The proposed provisions cover areas such as compliance, reporting, and regulatory monitoring to ensure that responsibilities do not end once shares are issued to the public.

8. Offences, Penalties and Administrative Action

The proposed guidelines also include provisions relating to offences, penalties, and administrative action for non-compliance.

This is intended to establish greater accountability and encourage companies and responsible parties to comply with applicable public issuance requirements.

Why Could the Guidelines Matter for Nepal's IPO Market?

Nepal's IPO market has seen significant participation from retail investors. A clearly defined eligibility framework could provide a more structured basis for assessing companies before they enter the public market.

The proposed guidelines focus on several areas that directly affect investors, including:

• Financial eligibility
• Corporate governance
• Transparency
• Risk management
• Disclosure
• Use of public funds
• Post-issue compliance
• Regulatory oversight

The framework also proposes developing a risk-based IPO eligibility system according to the nature of different industries.

Such an approach could allow eligibility requirements to better reflect differences between industries and their associated business risks.

SEBON Invites Public Feedback

SEBON has requested stakeholders to provide their comments, suggestions, and feedback on the proposed General Eligibility Guidelines for Public Issue, 2083.

Stakeholders can submit their feedback within seven days from the date of publication of the notice.

Feedback can be sent to:

Email: support@sebon.gov.np

Investors, listed companies, prospective IPO issuers, market professionals, and other stakeholders can review the proposed provisions and provide their views to the regulator.

SEBON's Capital Market Reform Agenda

SEBON has stated that it remains committed to implementing capital-market development and reform programs included in the Government of Nepal's action plan within the specified timeframe.

According to the board, implementation of the proposed guidelines is expected to make Nepal's public issuance process more:

• Organized
• Transparent
• Timely
• Reliable
• Consistent with international practices and standards

The board expects the framework to encourage eligible companies to enter the capital market and create an environment for greater capital mobilization from the private sector and general investors.

Ultimately, improved public issuance standards could contribute to broader economic activity and economic development by strengthening the mechanism through which companies raise capital from the public.

What Should IPO Investors Watch?

For investors participating in Nepal's IPO market, eligibility requirements are only one part of investment analysis. Investors should also examine a company's financial statements, business model, profitability, debt position, management quality, industry risks, valuation, and future growth prospects.

Understanding IPO analysis, fundamental analysis, technical analysis, and NEPSE market trends can help investors make more informed investment decisions.

For those looking to develop their knowledge of Nepal's stock market, share market training in Nepal can provide structured learning about IPOs, secondary-market investing, technical analysis, risk management, and NEPSE analysis.

Frequently Asked Questions (FAQ)

What is the Public Issue Eligibility Guidelines 2083?

The Public Issue Eligibility Guidelines 2083 is a draft framework proposed by SEBON to establish general eligibility requirements for organizations seeking to conduct public securities issuance in Nepal.

Who will the proposed SEBON guidelines apply to?

The proposed provisions apply to organizations seeking approval for public issuance, companies converting into public companies for public issuance, and other institutions eligible for public issuance under prevailing laws.

What does the draft IPO guideline cover?

The draft covers financial eligibility, corporate governance, promoter and director eligibility, management requirements, information disclosure, prospectus requirements, due diligence, use of IPO proceeds, post-issue obligations, compliance, regulatory monitoring, penalties, and administrative action.

Why is SEBON introducing new IPO eligibility requirements?

The proposed framework aims to make Nepal's public issuance system more transparent, organized, reliable, and investor-focused while promoting good governance and financial discipline.

How can stakeholders submit feedback on the draft?

Stakeholders can submit their comments, suggestions, or feedback to SEBON at support@sebon.gov.np within seven days from publication of the notice.

Will the guidelines affect IPO companies in Nepal?

If implemented, the guidelines would establish eligibility and compliance requirements for organizations seeking to conduct public issuance, subject to the final provisions approved by SEBON.

Where can I learn IPO and NEPSE analysis in Nepal?

Investors interested in learning IPO analysis, technical analysis, fundamental analysis, and NEPSE market analysis can explore structured share market training in Nepal through Sarbaguna.

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