KATHMANDU, May 4: The Securities Board of Nepal (Sebon) is making the applications supported by blocked amount (ASBA) system mandatory for public offering of stocks by the beginning of Fiscal Year 2017/18.

The system, which is being implemented on a voluntary basis since mid-January, will be fully enforced from mid-July. “The ASBA will become mandatory from mid-June or mid-July,” Rewat Bahadur Karki, the chairman of Sebon, told Republica. 

In ASBA, investors’ money equivalent to the subscription of initial public offering (IPO) or follow-on public offer (FPO) gets blocked until the share allotments are made. Respective bank or financial institutions (BFIs) will deduct funds from the applicant’s bank account only after share allotments are made and the remaining funds will be freed. 

The decision to implement ASBA is a part of the Sebon’s initiative to reform and modernize Nepal’s capital and secondary market. Niraj Giri, the spokesperson for Sebon, told Republica that the ASBA will be implemented once the Central Depository System and Clearing Ltd resolves the technical issue.  

The capital market regulator had introduced the ASBA system on a voluntary basis in mid-January.  It drew overwhelming response from stock investors. 

The issuance (IPO or FPO) of three public companies have been done through the ASBA system so far. The funds collected through voluntary ASBA system accounts for nearly 60 percent of the total money drawn from these issuances, according to the Sebon. 
In applications made through traditional system, money equivalent to the subscription of shares is debited from their account as soon as they apply for shares. The money is held by the issue manager until shares are allotted to the applicants.

 “The ASBA system will be made mandatory by holding our board meeting and enforced by issuing a circular. We will issue license to regional-level development banks to provide ASBA service so that more investors from all over the country can fill applications through ASBA system,” Giri said. “The ASBA system is a breakthrough in the history of the capital market. It will simplify and shorten the IPO and stocks issuance process,” he added.

According to Sebon officials, the ASBA system is available in all 75 districts of the country. 

All commercial banks provide ASBA service, while most of the development banks are also the member of this new system. 

Amid complaints from investors that the application fee with ASBA was costly, the Sebon last month reduced the maximum application fee that BFIs can levy on applicants to Rs 100. Earlier, they were allowed to charge a maximum of Rs 250 per application.

 
• securities board of nepal
 
• applications supported by blocked amount
 
• asba