Nepali Companies Can Now Access Foreign Capital Markets: New Rules, Opportunities and Challenges

Nepal Opens a New Path for Companies to Raise Capital Abroad

Nepal has taken an important policy step toward connecting Nepali companies with international capital markets by revising the Securities Registration and Issuance Regulations, 2073.

The revised framework provides Nepali organized institutions with a clearer pathway to issue bonds, debentures and other securities in foreign currencies in overseas capital markets, subject to approval from the Securities Board of Nepal (SEBON) and Nepal Rastra Bank.

The policy could help expand Nepal's access to international capital and create new opportunities for Non-Resident Nepalis (NRNs) and Nepalis working abroad to invest in productive sectors of the domestic economy.

For investors learning about Nepal's evolving capital-market environment, understanding these regulatory changes is becoming increasingly important. Sarbaguna provides resources and training related to the Nepal share market, stock market analysis and investment education.

What Has Changed in the Foreign Securities Issuance Rules?

Under the revised framework, eligible Nepali companies can issue foreign-currency securities within a range of 10% to 85% of their paid-up capital, subject to the applicable requirements.

The foreign currency raised through such issuance must be invested in Nepal.

The revised provisions also specify several important conditions:

• Securities must be issued at face value, without adding a premium.
• Trading arrangements will follow the requirements determined by the relevant stock exchange.
• The minimum trading unit or lot size is 1,000 shares/securities.
• The company must comply with applicable approvals and regulatory requirements in Nepal as well as the destination market.

This creates a potential bridge between Nepal's domestic capital market and international investors.

Foreign Listing Does Not Mean Easy Access to International Investors

Although the regulatory amendment creates a legal pathway, Nepali companies cannot simply issue securities overseas after obtaining approval in Nepal.

Companies must also comply with the laws and listing requirements of the country where the securities will be issued.

For example, depending on the destination market, companies may need to satisfy requirements imposed by regulators such as the U.S. Securities and Exchange Commission (SEC), the UK Financial Conduct Authority (FCA) or Singapore's Monetary Authority of Singapore (MAS).

This means cross-border securities issuance can involve:

• Foreign regulatory approval
• Registration requirements
• Listing rules
• Legal compliance
• Underwriting arrangements
• International disclosure standards
• Financial reporting requirements

Therefore, obtaining approval from Nepali regulators is only one part of the process.

Disclosure Requirements Could Be a Major Challenge

One of the biggest challenges for Nepali companies could be meeting international disclosure and corporate-governance standards.

Nepal's securities market has traditionally placed considerable emphasis on regulatory eligibility criteria such as financial performance, net worth and earnings.

Many developed capital markets, meanwhile, operate with a stronger disclosure-based regulatory framework, where investors, underwriters and book runners play a greater role in evaluating investment risk.

International markets can require extensive disclosure, accounting standards, corporate governance systems, cybersecurity controls, internal controls and detailed audit trails.

For Nepali companies, meeting these requirements could significantly increase the cost and complexity of issuing securities abroad.

Foreign Currency Risk Could Affect Investors and Issuers

Another important issue is foreign exchange risk.

Suppose a Nepali company earns most of its revenue in Nepalese rupees but issues a bond denominated in U.S. dollars.

The company would potentially need to make principal and interest payments in U.S. dollars.

If the Nepalese rupee weakens against the dollar, the company's repayment burden could increase substantially.

This creates what is commonly called currency mismatch.

Foreign investors may therefore evaluate not only the company's financial position but also:

• Currency risk
• Sovereign risk
• Country creditworthiness
• Ability to hedge foreign-exchange exposure
• Foreign-currency revenue generation
• Debt-servicing capacity

These factors could influence the attractiveness of Nepali securities in international markets.

Could NRNs Become the Main Target Investors?

One of the most practical opportunities could come from Non-Resident Nepalis (NRNs) and Nepalis working overseas.

Large international institutional investors may initially be cautious because of regulatory, currency and country-risk considerations.

However, millions of Nepalis living and working abroad already have an economic connection with Nepal.

A properly structured foreign-market security could potentially provide these investors with a more formal channel to invest their savings into Nepal.

This could support investment in:

• Infrastructure
• Hydropower
• Manufacturing
• Tourism
• Technology
• Productive businesses
• Other capital-intensive projects

The framework could therefore become an important mechanism for attracting overseas Nepali capital into Nepal's formal financial system.

Could This Help Bring Capital Back to Nepal?

Another potential benefit is capital repatriation.

Some Nepali capital is held outside the formal domestic investment system. A regulated mechanism for issuing securities internationally could provide an opportunity to bring such capital into Nepal through formal channels.

However, the success of this approach will depend on the credibility of the issuing companies, investor protection, regulatory clarity, transparency and the competitiveness of the securities being offered.

What Does This Mean for Nepal's Capital Market?

The regulatory change could be viewed as a step toward the internationalization of Nepal's capital market.

It potentially gives larger Nepali companies another financing option beyond domestic bank loans, local bonds and the domestic equity market.

At the same time, the actual impact will depend on whether Nepali companies can meet international standards and whether overseas investors find the risk-return profile attractive.

The policy creates the legal opportunity, but market development will require strong implementation, transparency and investor confidence.

Key Takeaways for Nepali Investors

For people following the Nepal stock market, this development is important for several reasons:

1. Nepali companies may gain another avenue for raising capital.
2. NRNs could receive additional opportunities to invest in Nepal.
3. Foreign-currency securities could increase Nepal's connection with international capital markets.
4. International disclosure and governance standards could encourage better corporate practices.
5. Foreign-exchange risk remains a major consideration.
6. High regulatory and issuance costs could limit participation initially.
7. The policy does not guarantee immediate large-scale foreign institutional investment.

Investors should distinguish between a regulatory opportunity and an immediately available investment opportunity.

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Conclusion

Nepal's revised securities regulations have created a potentially important pathway for Nepali companies to access foreign capital markets.

The ability to issue securities abroad could diversify corporate financing options and provide NRNs and overseas Nepalis with new avenues to invest in Nepal.

However, regulatory approval in Nepal alone will not guarantee success. Companies must overcome international compliance requirements, disclosure standards, issuance costs, foreign-exchange risk and investor-confidence challenges.

Therefore, the latest reform should be viewed as an important first step toward internationalizing Nepal's capital market, rather than an immediate guarantee of large foreign capital inflows.