SEBON becoming proactive in addressing concerns of investors; brings a number of amendments to Securities Issuance and Allotment Guidelines 2074

SEBON has brought reforms in Securities Issuance and Allotment Guidelines 2074 to adjust the recommendations listed by the high-level technical committee that was recently formulated by the Ministry of Finance. The reforms include

1. Public companies that wish to issue IPO shares will now have to receive credit rating that is one notch higher than the minimum grading in practice. With this, the companies with poorest fundamentals can’t issue IPO shares.
2. The banks are now required to allocate 40% of their debenture issuance to the public which if goes unsubscribed can then be issued to other investors.
3. Even the company with one notch higher credit rating than the poorest rating are now required to have 100% guarantee for the shares while floating them to public in IPOs and FPOs.
4. Companies who wish to issue IPO shares with premium can now add up the premium at maximum double the value of their net worth, down from earlier 4 times the net worth.

Moreover, the board is also committed to permitting the stockbrokers to provide margin loan and is currently working towards the same direction, as mentioned further in the media statement.