Federal Government tables number of amendments in Securities Act proposed by SEBON into Federal Parliament; board expects to develop more professional and strong stock market with new amendments

The government of Nepal has tabled the amendment proposal for the Securities Act 2063 in the federal parliament that if endorsed marks the groundbreaking changes in the securities and commodities market of Nepal. As per the proposed amendment, chairman of the board after his/her retirement will never be eligible to work in any official position with the listed organizations or that have received operational approval from the board. In the same way, the same rule will be attracted for the executive director and the deputy director of the board until two years of receiving retirement from the board.

Similarly, the amendments also make following major provisions:

1.Stock brokers, stock traders, market maker bylaws 2064: Provision for the stock brokers to function as stock dealers and investment consultants, for merger and acquisition of stock brokers, for creating reserve fund for stock brokers

2.Stock registration and issuance bylaws 2073: provision of fixing IPO prices as per book building method, for mandatory general meeting after declaration of right shares within two months of declaration, for more than 100% application of right shares, for auctioning of remaining right shares within 7 days

3.Mutual funds act 2067: provision for managing mutual fund schemes even by insurance company and other financial institutions, for fund managers to establish reserve fund for possible risk management, for reduction of service charge to 3 % from 5 % payable to the board

4.Credit rating agency bylaws 2068: provision for compulsory credit rating for debentures before floating them, for credit rating of the loans, for compulsory reserve funds of credit rating agencies, for reduction of service charge to 2% from 3% payable to the board, for prohibiting the agency to rate its own agency/products or of other institutions with more than 1 % of its stake

5.Stock brokers, merchant bankers bylaws 2065: provision for underwriting upto three times the net worth value of the last audited report, for upto 15 times investment management of the net worth of the company as per the last audited figure, for establishment of reserve fund, for reduction of service charge from 5% to 3% payable by the merchant banks to the board,

6.Insider trading prevention bylaws 2076