KATHMANDU, April 5: The Securities Board of Nepal (Sebon) has formulated a draft of Credit Rating Regulations 2011, making credit rating mandatory for companies before public issues of securities worth more than Rs 100 million.
Public issues include initial public offering (IPO), right shares, debenture, preference shares and IPO issued at premium price. [break]
The draft also proposes making credit rating compulsory for companies seeking loans worth Rs 100 million or more banks and financial institutions.
“The mandatory provision of credit rating has been included in the draft to enhance the faith of investor toward the companies," said Mukti Nath Shrestha, deputy director of Sebon, told an interaction with stakeholders on Tuesday.
Sebon organized the interaction to collect suggestions of stakeholders on the draft.
Basu Dev Adhikari, director of Nepal Rastra Bank (NRB), suggested lowering limit for credit rating from Rs 100 million to Rs 30 million to attract more companies for credit rating.
Similarly, the draft also asks the companies seeking status of credit rating agency to set up infrastructures like office premises, facilities and equipment for information analysis and necessary human resources within six months of the registration as credit rating agency.
The draft, however, states that companies having at least 25 percent stake of international credit rating agencies need not follow provision on infrastructure if their international partners have agreed to provide human resource and technical assistance.
As per the draft, Sebon holds the authority to conduct field inspection of infrastructure at aspiring credit rating agencies.
A company having paid-up capital of Rs 200 million and net worth at 75 percent of the total paid-up capital can apply at Sebon for license of credit rating agency.