February 13: Citizens Investment Trust (CIT) has established a separate stock dealer company for share transactions. The CIT registered Citizens Stock Dealer Company at the Company Registrar’s Office on Wednesday (February 12). The new company has 51 percent share of CIT.
This has opened the door for the CIT to operate officially as a stock dealer.
The subsidiary company of CIT will have a paid-up capital of Rs 5 billion and authorized capital or Rs 10 billion. CIT will invest Rs 2.55 billion in the company.
CIT claimed that Nepal Telecom will have 9 percent stakes in the company while Nepal Reinsurance Company will have 10 percent share. CIT said that Nepal Telecom has invested Rs 450 million to purchase the share of the company while Nepal Reinsurance Company has invested Rs 500 million.
The remaining 30 percent share will be made available to the public through Initial Public Offering (IPO).
The company is likely to issue IPO of Rs 1.55 billion after completing all the due process.
Securities Board of Nepal (SEBON) had amended the Securities Businessperson (Stock Broker, Dealer and Market Maker) Regulation, 2064 this week, allowing companies like CIT and Employee Provident Fund set up through special acts and commercial banks to operate as stock dealers.
CIT had been lobbying to set up a stock dealer company since a long time.
The amended Securities Businessperson Regulation states that any ‘A’ class commercial bank and companies established through special acts can operate stock dealer company provided that such companies have 51 percent stake of the parent company.
Finance Minister Yuba Raj Khatiwada had recently informed a parliamentary committee that CIT will now play a role of “market maker” in the capital market through a subsidiary company.
He said so while speaking at the Finance Committee of Lower House of Parliament on January 27 to discuss on the bill to amend CIT Act 2047.