KATHMANDU, Jan 17: Small and medium enterprises (SMEs) with a capital of less than Rs 250 million can also issue their initial public offerings with the Securities Board of Nepal (SEBON) enforcing a regulation in line on Thursday.
According to SEBON, its board approved the Securities Issuance and Transaction Regulations for Small and Medium Enterprises 2025. Niranjaya Ghimire, spokesperson for SEBON, informed Republica that the new rule has come into effect from Thursday. According to Ghimire, the regulation has been enforced to facilitate small firms to go public.
In the new arrangement, the SMEs will have to issue at least 500 units of their primary shares. The threshold is, however, subject to change based on the presence of the SMEs’ products in the market.
24 companies preparing to issue IPOs worth Rs 6.5 billion
The share allotment should be concluded within 15 days from the closing date of subscription called for the general public. They have to float their IPOs within two months of receiving the final approval from SEBON.
In order to float their shares for the public, the SMEs concerned should be a public entity for at least the past one year. Likewise, these SMEs should have conducted their annual financial audits and general meetings on time.
The SMEs will also be permitted to issue their right shares by following the due process set by the sector’s regulator. They can also issue IPOs at premium price provided they earned net profits for the past three years and their per share net worth exceeds their paid-up capital.
SEBON has capped the IPOs valuation to be issued by the SMEs at a maximum of 49 percent of their issued capital. The locking period of the SMEs’ primary shares owned by the merchant bankers and eligible institutions has been maintained at three years from the allotment date.
On SEBON’s demand, the SMEs will have to receive credit ratings. In general, the SMEs, however, can issue their IPOs even without receiving credit rating.
