KATHMANDU: The Securities Board of Nepal (SEBON) has published a draft of the ‘General Eligibility Directive for Public Issue, 2083’ with the objective of making the public issue system fair, systematic and credible.

The board, which has been suspending the issuance of ordinary shares (IPO) for a long time, released the draft on Thursday. The board said that it has released the draft to take the opinion and suggestions of the stakeholders. This will further prolong the IPO issuance process.

The Board has prepared the draft of the directive with the objective of ensuring the selection of qualified, transparent and sustainable corporate entities for the public issue, protecting the interest of the investors and developing a fair, systematic and credible public issuance system in the capital market.

The directive aims to promote good governance, financial discipline and transparency and develop a risk-based initial public offering (IPO) qualification system according to the nature of various industries.

The Board has prepared and made public the draft of the directive as a prelude to the implementation of the program included in the ‘Capital Market Strengthening and Revival Action Plan, 2083’ released by the Ministry of Finance on September 12, 2083. Point No. 1 of the action plan includes a programme to streamline the qualification system for public issuance.

According to the Board, the proposed directive has been prepared in such a way that the proposed directive will be applicable to the corporate organizations that want to issue securities to the general public, the corporate organizations that want to convert into a public corporate institution and other institutions licensed for the public issue as per the prevailing laws.

The draft guidelines specify the general and financial qualifications to be fulfilled by the corporate entity that wants to hold the initial public offering. It also incorporates the standards related to corporate governance, the qualifications of the promoter shareholders, directors and management, and the necessary information flow and prospectus during the public issue.

The directive also incorporates due diligence in the securities issuance process and the responsibilities of the professional side concerned.

The draft has also proposed provisions on how to use the money received from the public issue and how to monitor it. The guidelines also include provisions related to the obligations, compliance and regulatory monitoring to be fulfilled by the concerned institution after the completion of the issue.

Similarly, provisions related to offences, penalties and administrative action have also been included in case of violation of the provisions of the Directive, the board said. The board expects that it will make aspects such as the eligibility of the public issue company, financial condition, corporate governance and management capacity more systematic.

The Board has requested all stakeholders to provide their opinions, suggestions or feedback on the provisions of the proposed guidelines within seven days from the date of publication of the notice. Opinions and suggestions can be sent to the Board’s email address [email protected].