“We have sent the draft to India´s Central Depository Service Ltd and Securities Board of India -- India´s share market regulator-- for feedback and comments. We are also in the process of collecting suggestions from experts and stakeholders within the country,” said Surbir Paudel, chairman of SEBON.
SEBON has prepared the draft regulation as per the existing Securities Exchange Regulations 2006 in a bid to facilitate opening CDS Company in the country. CDS is aimed at introducing a paperless share transactions and settlement of shares´ ownership through online technology, which would make transactions faster.Under the existing system, investors have to wait at least two weeks to get ownership of shares transferred.
The modern technology in share transaction will enable online security transactions and settlements, online keeping of share accounts of investors, online deposits and transfer of shares, distribution of electronic version of certificates of deposits, among others.
The draft includes the provision such as opening of separate accounts of investors on the basis of agreement, keeping record of share transactions both online and manually.
The draft has provisioned at least five years of working experience, Chartered Accountant or post graduate to become the Chief Executive of the CDS Company and except in a case of permission from Nepal government, CEO of the company would be a Nepali citizen and elected by the board of directors that comprise nine members of which three would be independent.
Under the regulation the CDS Company can appoint Depository Participants (DPs) accept deposits of securities including government bonds, share certificates, shares.
However, such DPs must be listed in the securities market, not included in the black list of Credit Information Bureau, submit audit report for last consecutive three years and have branches in all five development regions.
In the CDS Company, Nepal Stock Exchange (Nepse) will be major promoter with 50 percent share where as Citizen Investment Trust and different commercial banks including Himalayan Bank, Nepal Investment Bank, Bank of Kathmandu, Kumari Bank and NIC Bank will have 25 percent stake each.
In addition to the government´s investment, India has agreed to provide Rs 140 million to implement the CDS through a public limited company to systematize the security trading in Nepal´s stock market. The government has, in the current fiscal´s budget, announced to introduce CDS by the mid-October 2009. In the beginning, the total paid-up capital of the company would be Rs 300 million.
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