Kathmandu. The Securities Board of Nepal (SEBI) has decided to extend the deadline for 23 broker companies that do not provide paid-up capital by nine months.
The Board has sent a proposal to the Ministry of Finance to extend the paid-up capital of the broker company by nine months. This arrangement will come into force once the ministry approves the provision. The Board has amended the Securities Entrepreneurs (Securities Brokers and Securities Traders) Regulations, 2064 BS and sent a proposal to the finance ministry with the provision of raising capital within nine months.
A committee was formed to amend the rules in the board. The proposal has been sent to the finance ministry as suggested by the committee. Once the proposal is approved by the Finance Ministry, the regulations will be implemented.
On the other hand, the Stock Brokers Association of Nepal had been demanding an extension of two years. However, in the first phase, the board has proposed to extend the time of only nine months. In the first phase, if the capital is not available in the added time, the time will be added again.
At present, the paid-up capital of the broker has to reach Rs 200 million by mid-July 2082. Brokers had demanded an extension of two years saying they could not raise capital at that time. The Board has issued the Guidelines on Merger and Merger or Acquisition of Securities Entrepreneurs-2081 BS on March 15, 2019. Association President Sagar Dhakal said that the board has requested the broker to extend the time as it took time to plan to raise capital due to the delay in issuing the merger guidelines.
“At present, the paid-up capital of about 23 brokers has not reached,” Dhakal said. 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, 23 are yet to reach. Abc Securities, Aran Securities, Asian Securities, Creative Securities, Crystal Kanchenjunga Securities, Dibya Securities, Investment Management Nepal, Kalika Securities, Malla and Malla Stock Broking, Market Securities, Midas Stock Broking and Nepal Stock House have not received capital.
Similarly, Opal Securities Investment, Pragyan Securities, Sagarmatha Securities, Secured Securities, Sewa Securities, Silpa Securities, South Asian Bull, Shree Hari Securities, Sumeru Securities, Sweta Securities and Trishul Securities and Investment Company. The capital of these companies is less than Rs 20 crore. Most of the 23 companies have less than Rs 100 million in broker capital.
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.
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