Kathmandu. KATHMANDU: Nepal Merchant Bankers’ Association (NEA) has presented policy recommendations for capital market reforms in the upcoming budget of the country. The association has submitted a 6-point suggestion to the Finance Minister to make the capital market modern, transparent, competitive and investor-friendly.

The report prepared by collecting suggestions from the chief executive officers of the merchant bank has incorporated topics related to capital market reforms, regulatory development, tax policy, mutual funds, IPOs and FPOs and alternative investment sector.

The association has demanded that capital gains tax should be the final tax. Likewise, the committee has suggested the government to implement the provision of opening accounts in the secondary market for the Non-Resident Nepali (NRNA) investors in an easy and easy manner.

The association has proposed to upgrade the CDSC system with the modernization of NEPSE, introduction of advanced market tools, complete online reporting system, online auction system and automatic settlement facility. The bill also mentions that the banks and financial institutions should have easy entry and exit in capital market transactions.

The association has suggested implementing formal certification and licensing examination system for the employees, registrars, investment advisors and analysts of the capital market sector. It has also demanded that companies should mandatorily disclose quarterly financial statements.

Under the IPO and FPO reforms, it has been proposed to legalize equity crowdfunding and review the existing provision related to the issue of minimum 10 percent shares.

The association has suggested that tax exemption facility should be provided to the unit owners of open-minded mutual funds for the improvement of the mutual fund sector. Seed capital requirement has been proposed to be set at 2 percent for mutual fund schemes above Rs 10 billion and a maximum of 5 percent for other funds.

Similarly, mutual funds should be allowed to invest up to 25 percent of their portfolio in foreign markets, voting rights in invested companies and representation in the board of directors.