NEPSE ties to woo real sector: trade shares without IPO

ShareSansar, April 28:

Nepal Stock Exchange Limited (NEPSE) is mulling over a new securities listing by-law as per which a company can directly trade their shares in the share market even without issuing the Initial Public Offering (IPO) for a certain period of time.

The proposed ‘Securities Listing By-law 2071’ that the NEPSE has posted on its website since Sunday to solicit feedbacks from the stakeholders is basically aimed at wooing the real sector companies to enter the only stock market of the country, according to officials concerned.

As the proposed by-law, such companies can trade their scrip on the NEPSE floor for two years at the most provided that they complete all the conditions set by the NEPSE for share listing so that the shares can be handed over to the ordinary investors either through the IPO or other means.

NEPSE is trying to follow a provision in the international share market where companies are allowed to float their shares without issuing the IPO.

“We have posted the by-law on our website so that we can incorporate valuable inputs from the stakeholders before we forward the draft of the proposed by-law to the SEBON (Securities Board of Nepal) for its approval,” said NEPSE’s officiating General Manager Shambhu Panta said.

Temporary and permanent listing

The proposed by-law, which actually aims at amending the existing ‘Securities Listing By-law 2053’, also envisages ‘permanent’ and ‘temporary’ listing provisions.

The permanent listing concerns ordinary shares of the listed companies, irredeemable preferential shares and bonds, and temporary listing are related to mutual funds, redeemable preferential shares, preferential shares to be converted to ordinary ones, bonds, right shares advice slips, unitary saving scheme, and securities to be converted to ordinary shares.

The proposed by-law has also envisaged stringent measures to enforce corporate good governance of the listed companies.

Owing to the complaints from the share investors that some companies have been releasing important information (which could affect the share price), the proposed by-law stipulates that the companies must directly post such information on NEPSE’s website. NEPSE will provide ‘log in’ to all the listed companies for the purpose.

The by-law has also tries to cover the share auction.