IPPAN Urges Withdrawal of Proposal for Dual ISIN Codes

Independent Power Producers’ Association Nepal (IPPAN) has called on CDS and Clearing Ltd (CDSC) to withdraw its proposal to issue separate International Securities Identification Numbers (ISINs) for promoters and the general public in non-financial companies, including hydropower firms.

ISIN is a 12-character code used to identify financial instruments such as shares and bonds. While separate ISINs are currently issued for promoters and the public in financial institutions, companies in sectors like hydropower have been using a single ISIN for both categories of shares.

The debate gained momentum after promoter shareholders of Emerging Nepal Ltd were unable to sell their shares after the lock-in period ended due to separate ISINs. Following the incident, the Securities Board of Nepal (SEBON) instructed CDSC to assign a single ISIN in line with existing practices.

Despite this, CDSC has submitted a draft directive to SEBON requiring all companies, including those in the hydropower sector, to adopt dual ISINs. CDSC claims the measure is intended to mitigate risks for general investors.

Investment Concerns Raised

In a statement, IPPAN warned that implementing separate ISINs for hydropower companies would hurt investment from Nepal’s private sector, the Non-Resident Nepali community, and foreign direct investors. IPPAN President Ganesh Karki said the proposal has already caused delays in the dematerialization of shares for companies currently undergoing IPO allotment and listing.

“Introducing two ISINs for every company will create confusion and discourage investors,” Karki said. He added that the proposal could create an environment in which foreign investors, who invested under existing laws, would be unable to divest their holdings, thereby undermining Nepal’s foreign investment promotion policy, capital market development, and broader economic reform agenda.

IPPAN argued that promoter and public shares carry the same value, rights, and dividend entitlement, making separate ISINs unnecessary and contrary to existing legal provisions. The association urged the Ministry of Finance and SEBON to maintain a single ISIN system for all companies to protect market transparency and investor confidence.

According to IPPAN, enforcing dual ISINs would impact 870 million shares worth Rs 87 billion across 58 companies in sectors such as energy, media, and cement currently under lock-in periods. Specifically, 530 million shares worth Rs 53 billion in 47 hydropower projects would be affected. It also warned of potential repercussions on 370 million shares worth Rs 41 billion from 37 companies awaiting SEBON’s approval for share issuance.

Regulatory Response

SEBON spokesperson Niranjaya Ghimire confirmed that CDSC submitted the draft ISIN directive to the board on July 28 for approval. “The board will hold discussions on the proposed directive and move forward with the approval process,” he said.