The Securities Board of Nepal (SEBON) has enacted the “ Securities Issuance and Transactions Regulation for Small and Medium-Sized Enterprises, 2081 ,” effective Thursday, January 16. The regulation introduces a dedicated platform aimed at easing SME access to the capital market and attracting investment.  

The regulation specifies that companies listed on the SME platform can have a maximum paid-up capital of Rs 250 million post-IPO issuance. This move aims to address concerns about the current NEPSE framework, where businesses of all sizes trade on the same platform.  

Under the new rules, companies must issue 30% to 49% of their paid-up capital to the public, with shares priced at Rs 100 each. Investors must apply for a minimum of 500 share units to participate in an IPO. Additionally, 5% of the issued shares are to be allocated to the sales manager, and 15% to qualified institutional investors, who will face a three-year lock-in period. Share allocation is to be completed within 15 days of the IPO’s closure.  

The regulation also allows SMEs with a consistent three-year profitability record to issue shares at a premium price. While credit ratings are not mandatory, SEBON reserves the right to require them if deemed necessary.  

SEBON, the country’s capital market regulator, has informed NEPSE and CDS and Clearing Ltd. about the regulation’s implementation and confirmed that a separate process will be introduced for IPO issuance by companies with lower paid-up capital.  

These reforms aim to simplify the capital-raising process for SMEs, create new financing opportunities, and foster economic growth.  

In November 2024, NEPSE’s Information Officer Murahari Parajuli had expressed optimism about the draft regulation , emphasizing that the SME platform would streamline capital access for such enterprises. Parajuli had noted that NEPSE would adjust its systems to align with the new provisions once they come into effect.  

SEBON had submitted the draft regulation to the Ministry of Finance in May 2023.