SEBON Amends 2079 Guidelines; Paid-up capital of the Broker Companies Opening New Branch Has Increased

The Securities Board of Nepal (SEBON) is set to increase the paid-up capital of broker companies opening branches.

In order to manage the branch offices effectively and reduce the financial risks associated with the securities broker business, as well as given that the primary market for securities has now reached all 77 districts of the nation, it is necessary to develop and broaden access to the secondary market. As can be observed, the Securities Board put into effect the 2079 guidelines for securities brokers opening branches on Friday.

Earlier, the broker company was asked to increase the additional paid-up capital of Rs.1 crore per branch for branch expansion. But in the directive, the board has increased it to Rs. 1.5 Crore per branch.

While operating a branch office, securities brokers must now hold paid-up capital of Rs. 1.5 Crore per branch. The board has also introduced a clause stating that the aforementioned capital must be provided within 6 months because the branch has already been extended.

Also, not only the paid-up capital but the broker companies must raise their financial worth as well. The directive states that "The net worth of the securities broker who intends to operate a branch office shall be larger than the paid-up capital."

The board has also established a new plan to permit broker companies to open additional branches in Kathmandu.

In a similar vein, the board has denied all petitions from those who have previously requested branch extensions but have not received board approval. Following the introduction of the rules, anyone wishing to open a new branch must reapply in accordance with this rule.

One broker branch application is allowed per applicant at a time. The board will decide whether to approve the application within 15 days of receiving it. Those that are granted authorization have three months to prepare the proposal.

More information regarding the directive for broker branch expansion have been attached in this PDF file.