SEBON Revises Share Sale Rules for Basic Shareholders, Introduces 15% Threshold and Stricter Purchase Disclosure

The Securities Board of Nepal (SEBON) has revised and tightened the rules governing share sales by basic shareholders of listed companies, introducing changes to the advance disclosure requirement and a new provision requiring shareholders to disclose share purchases under certain circumstances.

The board issued a circular on Ashwin 23, amending and updating the directives it had issued on Bhadra 9. The revision was made under the authority granted by Section 84(1) of the Securities Act, 2007 (2063 BS).

Under the revised provision, basic shareholders who held shares at the time of a company's Initial Public Offering (IPO) must notify the respective company at least five trading days in advance if they intend to sell 15% or more of their shareholding after the expiry of the lock-in period.

The provision is based on Rule 38 of the Securities Registration and Issue Regulations, 2073 BS.

Previously, basic shareholders intending to sell 5% or more of their holdings were required to inform the listed company 15 days in advance. The information was then made public through the Nepal Stock Exchange (NEPSE).

Under the revised arrangement, the threshold for advance disclosure has been raised from 5% to 15%, while the notice period has been changed from 15 days to five trading days.

Once a listed company receives notification from a basic shareholder regarding the intended sale, it must arrange for the information to be published through NEPSE as soon as possible.

The validity of the disclosed intention to sell will remain in effect for three months, according to the revised directive.

The disclosure mechanism is intended to make information about basic shareholders' planned transactions available to the market through the stock exchange.

SEBON has also added a new provision requiring basic shareholders to disclose share purchases if they previously announced an intention to sell but did not sell the specified shares or did not complete the intended sale.

Under the new provision, if such shareholders subsequently purchase shares of the same company, they must inform the listed company of the purchase as soon as possible after the transaction is completed.

The disclosure must include details of the transaction, including the price and quantity of shares purchased.

The listed company is then required to arrange for the purchase details to be made public through NEPSE as soon as possible.

The revised provision expands disclosure obligations beyond the initial announcement of an intended sale, covering subsequent purchases by basic shareholders who have not completed their previously announced sales.

With these amendments, SEBON has revised the disclosure framework for basic shareholders' transactions in listed companies, covering advance notice of significant share sales and the reporting of subsequent share purchases in specified circumstances.