January 1: The government is planning to introduce book building system for public issuance of shares. The government took such decision as per the recommendation of a committee formed to study the problems of the share market. The committee announced that the government has decided to introduce the system for Initial Public Offering (IPO) as well as for Further Public Offering (FPO).

Until the new system comes into operation, the committee has recommended the government not to allow issuing of FPO at a price more than the net worth of the company and IPO at a price more than double the net worth.

The committee has recommended the Securities Board of Nepal (Sebon) to implement this suggestion with immediate effect.

Book building system is a kind of bidding process. Under this system, the companies issuing shares will have to auction a certain portion of their shares. International practice is to adopt the ‘Dutch Auction’ for such bidding process.