Kathmandu. The Securities Board of Nepal (SEBON) has increased the limit of giving prior notice to the shareholders of listed companies to 15 percent while selling shares. Earlier, when selling more than 5 percent of the shares, there was a provision to give information 15 days in advance, but now only 15 percent or more shares will have to be given prior notice.

The Board has made this provision by amending the directive issued on August 22 in accordance with sub-section (1) of Section 84 of the Securities Act, 2063. The Board has changed both the limit of sale of shares and the time to give prior notice.TAG_OPEN_p_29

According to the new provision, if the primary shareholder wants to sell 15 percent or more of his shares after the end of the locking period, he will have to inform the concerned company at least 5 business days in advance. Earlier, if more than 5 percent of the shares were sold, the notice was to be given 15 days in advance.

Personal Ownership{ Basis Information

The new system exempts the shareholders who own more than 5 percent but less than 15 percent of the shares from the obligation to give prior notice before selling the shares. This will make it easier for many shareholders who own less than 15 percent of the shares individually to sell their shares.

In particular, the number of shareholders with more than 15 percent of the shares may be limited on the basis of individual ownership in the case of separate share ownership in the name of a member of the same family. Therefore, after the new system, many shareholders who were required to give prior notice when the 5 percent limit was implemented will now be able to sell shares without following the process.

Company via NEPSE Information Public

After receiving the notice of sale of shares from the basic shareholders, the concerned company should make it public through the Nepal Stock Exchange (NEPSE) as soon as possible. The validity period of the notice issued for the sale of shares will be three months.

{{TAG_OPEN_p_22} Similarly, the original shareholder who has not sold or has not sold the shares in full even after giving notice of the sale of the shares of the same company will have to provide the details along with the price and quantity of the purchase to the concerned company after the completion of the transaction.

The new arrangement is expected to reduce the procedural hassle involved in the sale of small shares by retaining the provision of prior intimation to the market about the sale of a large amount of shares of the primary shareholder.