SEBON brings new guidelines on Specialized Investment Funds Regulations 2075; another step towards bringing private equity fund, venture capital fund and hedge fund in Nepal

Securities Board of Nepal has rolled out the Specialized Investment Fund Regulation 2075 to be effective from Falgun 22, 2075 in order to promote alternate investment vehicles in Nepal that would include private equity fund, venture capital fund, hedge fund among others.

As per the major provisions in the newly introduced regulation, SEBON has primarily made way for establishing Equity fund, Venture Capitals and Hedge Funds in the Nepalese market.

Moreover, the interested firms having the paid up value of Rs 2 crore and fulfilling all the requirements to perform as fund managers can obtain the permission from the board to begin operation, as per the board.

Likewise, the firms having the fund size of minimum Rs 15 crore can get permission to perform as equity fund, venture capital fund or hedge fund where the fund manager should maintain minimum stake of 2 % in the fund size.

Similarly, the regulation has also mandated the fund managers to sign a contract with the eligible investors before making investment and the investment could be made in any sector except those which are prohibited by the government.

The market regulator has also proposed the qualification that the board members and the executive officials in the fund managers are expected to fulfill with an aim to ensure professional and ethical practice in the field. It has also mandated for regular audits as per the established practice, transparent public financial statements for the fund managers.

SEBON has set the locking period of 1 year for the equities of the fund managers from the date of their allotment. It has further clarified that it will soon come up with a separate directive for the hedge funds which will make investment in the highly risky sectors.