Provisions for Listing of Securities
For any securities to be listed in secondary market of Nepal, the securities should be firstly issued and allotted by a corporate body then only the company’s security will be eligible for transaction in secondary market.
To list the securities by the corporate body in the market, following steps need to be carried out
1. Application to be submitted for the Listing of the Securities
In order to the listing of the securities issued and allotted, Corporate Body shall submit an application along with other necessary documents to the Stock Exchange.
2. Then the inquiries into Application is done by stock exchange
After receiving the application form, Stock Exchange shall conduct necessary inquiries with regard to the application and particulars and documents received along with application and while conducting such inquiries, the Stock Exchange shall also examine within 15 days of submission of such application whether or not the economic, financial and business condition of the Corporate Body is satisfactory, as well as the arrangements made for the consolidation, sub–division, registration of transfers or transactions, etc. of securities, the issued and paid–up capital of the Corporate Body, the number of its shareholders, and the dynamism of its transactions and during the inquiries if it deems so necessary it may demand additional documents, particulars or information from the concerned Corporate Body.
3. In case additional documents, particulars or information are demand, it shall be the duty of the concerned Corporate Body to submit the same within 7 days from the date of such demand.
4. In case the Stock Exchange, after inquiry, deems it–appropriate to list the securities it shall, within 30 days of receipt, notify the Corporate Body of the fact that securities are listed in the format as per regulation. In case in deems in inappropriate to list the securities the fact shall also be notify to Corporate Body within 30 days of receipt of application.
5. If corporate body’s securities get approved for listing then Stock Exchange should entered into the listing agreement with the concerned Corporate Body accord to standard format of the exchange. In this agreement necessary preconditions for Listing of Securities will be mentioned
(a) In case the securities to be listed are Ordinary Shares:
(i) The paid–up capital must be at least Rs. 2.5 million.
(ii) The number of shareholders must be at least 500.
Provided that in the case of a Corporate Body which has not yet issued share publicly, its securities may be listed on the condition that the required number of shareholders will be reached within two years from the date of listing.
(iii) The face value of the share must be either Rs.10 (Ten) or Rs.100 (One hundred).
(iv) At least 25% of the shares, in case the issued capital does not exceed Rs.10 million but not more than Rs. 50 million, at least 15%, in case the issued capital is more than Rs. 50 million but not more than Rs.100 million, and the percentage of the shares fixed from to time by the Stock Exchange with the prior approval of the Securities Board, in case the issued capital exceeds Rs.100 million, must have been sold or allotted to the public, or set aside for public sale, In the case of a Corporate Body which has not yet issued and sold its shares publicly, it must issue and allot shares within time as fixed by Stock Exchange and attain the prescribed percentage.
(b) In case the securities to be listed are Preference Shares, Debentures, Unit Saving Scheme Certificates or Mutual Saving Scheme Certificates:
(i) Securities amounting to at least Rs. 5 million in the case of Preference Shares or Debentures, and at least Rs. 20 million in the case of Unit Saving Schemes or Mutual Saving Schemes, must have been issued and allotted.
(ii) The number of holders of Preference Shares, Debentures, or Unit Saving Scheme or Mutual Saving Scheme certificate must be at least 200.
(iii) The face value of the securities must be either Rs. 10 (Ten) or Rs. 100 (One hundred), Rs. 1,000 (One thousand).
(iv) The Ordinary Shares must have been listed.
Provided that in the case of the Corporate Body on which His Majesty’s Government or a Corporate Body with His Majesty’s Government’s ownership amounting to more than 50%, it shall not be compulsory to have the Ordinary Shares listed.
(v) In case the securities are redeemable, the remaining term thereof must be at least one year.
Apart from the above mentioned criteria in the agreement, the corporate body will also be liable for providing information of the company, which can affect the price of securities, to the Stock Exchange immediately. Then, the Stock Exchange shall publish a notice thereof in prominent newspapers of the information of general public investors.
After all the agreement is completed, the transactions of listed securities may be commenced after 7 days from the date of publication of the notice of listing in newspapers. To carry out the service of listing in the Stock Exchange, the corporate body will have to bear certain charge accord to the nature of the securities which is mentioned in the heading of listing fee and annual fee.