Kathmandu. Kathmandu: The Securities Board of Nepal has sent a proposal to the Ministry of Finance to extend the paid-up capital of the broker company by nine months. On Friday, the Securities Board sent the proposal to the Ministry of Finance.

Meanwhile, the Stock Brokers Association of Nepal had requested the board to extend the deadline for raising capital by two years. The Securities Board of Nepal (SEBI) has said that it is going to extend the time of adding capital by nine months in the first phase as per the style adopted by the Nepal Rastra Bank earlier. Accordingly, the proposal was submitted to the Ministry of Finance on Friday, said a high-ranking official of the Board. The board is preparing to make it public after getting approval from the ministry.

At present, the paid-up capital of the broker has to be increased by 10 times to Rs 200 million by mid-July 2082. Brokers had demanded an extension of time, saying they could not raise capital at that time. The Board has amended the Securities Entrepreneurs (Securities Brokers and Securities Traders) Regulations, 2064 BS to provide capital within nine months. A committee was formed to amend the rules in the board. According to the recommendation of the committee, the proposal has been sent to the finance ministry.

The Board has issued the Guidelines-2081 on The Merger or Acquisition of Securities Entrepreneurs on April 15, 2019. Association president Sagar Dhakal said that the board has asked for an extension of time as it took time to plan to provide capital to brokers due to the delay in issuing the merger guidelines.

“At present, about two dozen brokers do not have paid-up capital. “Brokers who do not have capital are old,” Dhakal said, adding, “The board has brought the guidelines only three months before the expiry of the deadline. It is not possible for brokers to pay capital within three months due to technical reasons. It cannot be said that the old brokers, who have played a role in keeping the stock market moving for such a long time, will not be punished if they do not get capital now. That is why the association has demanded an extension of the time to raise capital, he said.

According to the board, the capital of 39 brokers did not reach. Of these, eight brokers have submitted plans to raise capital to the board. The broker who submitted the plan included Kohinoor Investment and Securities, J. F. They are Nepal Investment and Securities Trading, Sundhara Securities, Lynch Stock Market, Aryatara Investment and Securities, Agarwal Securities and SriKrishna Securities.

On the other hand, Opal Securities Investment, Pragyan Securities, Nepal Stock House, Primo Securities, Trishul Securities and Investment, South Asian Bull, Nibha Securities, Crystal Kanchenjunga Securities and Bhrikuti Stock Broking Company will also raise the capital fixed by SEBON within the current fiscal year.

The Board had made the fifth amendment to the Securities Entrepreneurs (Securities Brokers and Securities Traders) Regulations, 2064 BS on September 29, 2019, fixing the paid-up of the broker company. According to Schedule 9 of the regulations, the paid-up capital of a securities broker should be Rs 200 million, the paid-up capital of a full-functioning securities broker should be Rs 600 million and the paid-up capital of a securities trader should be Rs 1.5 billion.

According to The Nepal Stock Exchange (NEPSE), there are currently 2 (Citizen Stock Dealers and Nabil Stock Dealers). Similarly, the number of full-fledged brokers is 2. These include Himalayan Securities and NIMB Stock Market. The remaining 88 are limited-functioning brokers.

Sub-rule 3 of Rule 7 of the Fifth Amendment to the Securities Traders (Securities Brokers and Securities Traders) Regulations, 2064, states that the Board may formulate necessary guidelines regarding the acquisition or merger and merger of another securities broker or trader by the securities broker or trader. This arrangement was made to raise the broker’s capital.

The board had sent a letter to 39 broker companies that did not have paid-up capital to submit a plan to raise capital as soon as possible. The board had demanded that 38 brokers who did not have capital should be given capital as per the provisions of Rule 10 (91A) of the regulations.

Rule 10 (1A) states that “If the securities broker and securities trader are not in a position to raise minimum capital in accordance with the restrictive clause of Sub-rule (1), they may make an application to the Board to be acquired or merged pursuant to Rule 7A at least six months before the expiry of the stipulated time.” Article 7A states that “the securities broker or trader may acquire or merge with another securities broker or trader with the approval of the Board”.

Rule 10(1) of the regulations states that “securities brokers and securities traders who were in operation at the time of commencement of the rules shall not be obstructed from reaching the minimum paid-up capital pursuant to Schedule-9 by mid-July 2082 BS”. According to the board, the plan was sought six months ago as per the same arrangement. However, so far, eight people have presented the plan clearly.

On the other hand, the Securities Board is preparing to amend the Securities Entrepreneurs (Securities Brokers and Securities Traders) Rules, 2064 to allow brokers with paid-up capital of less than Rs 200 million to carry out margin transactions. Sebon had made the fifth amendment to the Securities Entrepreneurs (Securities Brokers and Securities Traders) Regulations, 2064 BS on September 29, 2079, fixing the paid-up of the broker company. According to Schedule 9 of the regulations, the paid-up capital of a securities broker should be Rs 200 million, the paid-up capital of a full-functioning securities broker should be Rs 600 million and the paid-up capital of a securities trader should be Rs 1.5 billion.

According to The Nepal Stock Exchange (NEPSE), there are currently 2 (Citizen Stock Dealers and Nabil Stock Dealers). Similarly, the number of full-fledged brokers is 2. These include Himalayan Securities and NIMB Stock Market. The remaining 88 are limited-functioning brokers. Now brokers with a paid-up capital of Rs 200 million will also be able to do margin trading. For this, the board has said that it is in the process of amending the rules. An official of the board said that this is also necessary for the development of the market.