May 29: As per the new mechanism introduced by Securities Board of Nepal (SEBON) under Securities Issue and Allotment Guideline, 2074, now onwards only individual investors are eligible to apply for initial public offering (IPO). SEBON, terminating earlier mechanism under which institutions and companies could also apply for the IPO, has decided to prioritize individual investors in IPOs.

With the decision, SEBON ensured allocation of at least 10 units of IPO shares to all investors possibly.  However, the guideline allows other investors to apply for the IPO if the issue is undersubscribed. “The mechanism will boost investors’ participations in initial issue that will ultimately expand secondary capital market,” said Dr Rewat Bahadur Karki, Chairman of SEBON.

Along with implementation of Securities Registration and Issue Regulation, 2073, the directive also encourages real sector to enter capital market, premium fixation of securities and limits the time period of share listing to two months from earlier six months, as per the board. “Given that the board has already made ASBA compulsory from upcoming FY, the board expects that the capital market will flourish in coming days with the increased accessibility of investors in the capital market,” said Karki.