Kathmandu. A total of 23 broker companies, which have not paid-up capital fixed by the Securities Board of Nepal, have got nine months to raise capital.

The Securities Board had amended the Securities Entrepreneurs (Securities Brokers and Securities Traders) Regulations, 2064 and extended the provision to raise the broker’s capital by nine months and sent it to the Ministry of Finance for approval.

The Ministry of Finance has amended the regulations and sent them to the Securities Board today. The regulations approved by the Ministry will come into effect after the board meeting of SEBON approves it. The board meeting will approve the rules by Mid-July.

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. There was a provision to increase the paid-up capital of the broker to Rs 200 million by mid-July 2082. The deadline was extended by nine months after the broker failed to provide capital within the stipulated time set by the board.

The broker had demanded an extension of time 2. But now the broker has given only 9 months time. 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 April 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.

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, Sri 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 a broker’s capital of less than Rs 10 crore.

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.