SEBON Share Selling Rules in Nepal: Why Selling Shares Has Become a Concern for NEPSE Investors

SEBON's New Share Selling Rule Raises Questions Among NEPSE Investors

Nepal's stock market is facing renewed debate over the balance between regulatory transparency and investors' freedom to trade shares. While the government has introduced changes to capital gains tax with the stated objective of encouraging investment and market activity, a new directive from the Securities Board of Nepal (SEBON) has raised concerns about the process of selling shares held by certain major shareholders.

The new provision requires qualifying shareholders to provide advance public notice before selling a specified portion of their holdings. Although the measure is intended to improve transparency, market participants have questioned whether its implementation could create additional hurdles for investors who acquire substantial shareholdings through the secondary market.

The issue has become particularly relevant for investors in companies with relatively small paid-up capital, where purchasing a large number of shares may result in an investor crossing the threshold for classification as a major shareholder.

Source: Nepal Clicks, September 22, 2026 (Ashoj 6, 2083). This article is an English-language rewrite of the original report.

1. What Is SEBON's 15-Day Advance Notice Rule?

According to the report, SEBON issued a directive on Bhadra 9, 2083, requiring certain shareholders of listed companies to provide public notice at least 15 days before selling more than 5% of their shareholdings.

The reported provision applies to shareholders holding 1% or more of a listed company's shares who fall within the relevant definition of a fundamental shareholder.

Under this arrangement, qualifying shareholders must consider the advance-notice requirement before proceeding with a share sale that exceeds the specified threshold.

The stated regulatory objective is to make large share transactions more transparent and provide market participants with advance information about significant selling activity.

However, questions have emerged regarding how the rule applies to investors who acquire their holdings through ordinary secondary-market transactions rather than through a company's founding or promoter group.

Important: Investors should consult the applicable SEBON directive and the relevant company and securities laws to confirm the exact scope, definitions, thresholds, and compliance requirements before making a transaction.

2. Why Are Secondary-Market Investors Concerned?

One of the main concerns raised by market participants is the potential difference between founding shareholders and investors who purchase shares from the secondary market.

A promoter may acquire shares during a company's establishment and hold a substantial ownership stake for an extended period. In contrast, a secondary-market investor may gradually accumulate shares based on the company's fundamentals, valuation, financial performance, or future prospects.

If both investors fall under the same regulatory classification, they may face similar advance-notice obligations when selling a qualifying portion of their holdings.

Critics argue that this could create practical difficulties for investors who need to sell shares because of changing market conditions, portfolio rebalancing, liquidity requirements, or personal financial needs.

The concern is especially relevant when an investor crosses the applicable ownership threshold without fully understanding the regulatory implications.

3. How Could the Rule Affect Investors in Small-Capital Companies?

An investor does not necessarily need to purchase millions of shares to acquire a significant ownership percentage in a company.

In a company with a relatively small number of outstanding shares, a comparatively modest purchase may represent 1% or more of its total share capital.

For example, consider a hypothetical listed company with 10 million outstanding shares:

• An investor holding 100,000 shares owns 1% of the company.
• A 5% sale of that investor's own holding would equal 5,000 shares.
• If the applicable rule requires advance notice for a qualifying sale exceeding 5% of the shareholder's holding, the investor may need to complete the required process before selling.

This example is for illustration only. It does not establish the legal interpretation of the directive or determine whether a particular transaction requires notice.

The issue highlights why investors should monitor their ownership percentages, particularly when accumulating large positions in smaller listed companies.

4. IPPAN Calls for a Review of the Share Selling Provision

The Independent Power Producers' Association, Nepal (IPPAN), has reportedly requested that SEBON reconsider the advance-notice provision.

IPPAN's concern is that regulatory requirements should balance market transparency with shareholders' property rights and their ability to sell or transfer investments when appropriate.

The association has argued that the practical consequences of the rule deserve further examination, particularly for investors who acquire shares through the secondary market.

Former IPPAN president Ganesh Karki also raised concerns about applying the same requirements to company promoters and secondary-market investors.

According to the report, Karki believes that the provision could create uncertainty for investors who purchase substantial holdings in listed companies and subsequently need to sell them.

5. Could the Rule Discourage Large Investors?

Some market participants believe the advance-notice requirement could make investors more cautious about acquiring large positions in listed companies.

Potential concerns include:

• Reduced flexibility: Investors may have to plan qualifying sales in advance rather than respond immediately to market conditions.
• Compliance uncertainty: Investors may be unsure whether their ownership status triggers additional obligations.
• Portfolio management challenges: Institutional and large investors may need to account for the notice period when managing their portfolios.
• Liquidity considerations: Investors may factor the additional process into their decisions to accumulate shares.

These are potential effects raised in the debate, not established outcomes. The actual impact will depend on how the rule is interpreted, implemented, and enforced.

6. Supporters Say Advance Disclosure Can Improve Transparency

Not all market participants oppose the new provision.

Investor Dev Gangai, as quoted in the original report, supported advance disclosure of large share sales, arguing that it can improve transparency and help the market receive information about significant transactions.

From this perspective, advance notice may help reduce information gaps between major shareholders and other market participants.

Large share sales can influence supply, demand, and investor expectations. Making relevant information public in advance may help investors assess the implications of substantial selling activity.

The central question is how to achieve these transparency objectives without creating unnecessary procedural burdens for shareholders.

7. Capital Gains Tax Changes: A Different Part of Nepal's Share Market Reform

The debate over SEBON's selling rule is taking place alongside changes to capital gains tax on share transactions.

According to the Nepal Clicks report, the government introduced revised rates through the fiscal year's budget and a 21-point capital market reform action plan.

The reported rates are:

These rates apply to capital gains under the reported framework, rather than to the full sale proceeds.

The government has presented the tax changes as a measure intended to encourage investment and market activity. However, the tax treatment and the advance-notice requirement address different aspects of share trading.

A lower capital gains tax rate may affect the cost of realizing investment profits, while an advance-notice rule may affect the timing and process of certain share sales.

Investors should verify the current tax provisions and their individual tax obligations before trading.

8. What Does the Debate Mean for NEPSE Investors?

The discussion highlights the importance of understanding both market fundamentals and regulatory requirements before building a substantial position in a listed company.

Investors should consider the following:

Check your ownership percentage

Monitor the number of shares you hold relative to the company's total outstanding shares. Ownership percentages can be particularly important when investing in smaller companies.

Understand the applicable rules

Review SEBON directives, relevant company-law provisions, and official disclosures. Do not assume that all shareholders are subject to identical requirements in every circumstance.

Plan large transactions carefully

If your holdings approach a regulatory threshold, confirm whether any advance-notice or disclosure obligation applies before placing a sale order.

Evaluate liquidity and risk

A share's fundamentals, trading volume, market depth, valuation, and regulatory considerations all matter when determining an appropriate position size.

Follow official updates

Any clarification, amendment, or implementation guidance from SEBON could affect how investors should approach the rule.

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Conclusion: Balancing Market Transparency and Shareholder Flexibility

SEBON's reported 15-day advance-notice requirement for certain major shareholders has prompted debate about the practical implications of share-selling regulations in Nepal.

Supporters emphasize transparency and timely disclosure of substantial share sales. Critics have raised concerns about the impact on secondary-market investors, particularly those who acquire significant ownership positions in smaller listed companies.

The key issues are the clarity of the rules, their consistent implementation, and the balance between transparency and shareholders' ability to manage their investments.

As Nepal's capital market evolves, investors should remain informed about regulatory developments and verify their obligations before making significant transactions.

Disclaimer: This article is for educational and informational purposes only. It is not legal, tax, or investment advice. The regulatory details are based on the cited news report and should be verified against the latest official SEBON directives and applicable laws.

Frequently Asked Questions (FAQ)

1. What is SEBON's new share selling rule in Nepal?

According to the cited report, certain shareholders holding 1% or more of a listed company must provide public notice at least 15 days in advance when selling more than 5% of their own shareholding. The exact applicability should be checked against the official directive.

2. Who is considered a major or fundamental shareholder?

The report describes a fundamental shareholder as someone holding 1% or more of a listed company's shares in the relevant circumstances. The applicable legal definition and any company-specific conditions should be verified.

3. Does the 15-day notice rule apply to secondary-market investors?

The report raises concerns that secondary-market investors who cross the relevant ownership threshold may also be affected. Investors should confirm their status and obligations under the current rules.

4. Why has IPPAN requested a review of the rule?

IPPAN has reportedly asked SEBON to reconsider the provision, citing concerns about the practical impact on shareholders' ability to sell or transfer their investments while maintaining market transparency.

5. What is the capital gains tax on shares in Nepal?

The cited report states a rate of 5% for shares held for up to 365 days and 3.75% for shares held for more than 365 days. Investors should verify the current tax rules and how they apply to their transactions.

6. Can an investor sell shares immediately after buying them?

The answer depends on the applicable trading rules and the investor's circumstances. Investors who meet the relevant major-shareholder criteria should check whether an advance-notice requirement applies to their proposed sale.

7. Where can I learn NEPSE fundamental and technical analysis?

You can explore Sarbaguna's Share Market Training Course in Nepal for educational resources covering fundamental analysis, technical analysis, trading strategies, and risk management.

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