Sebon simplifies ASBA system for IPO, FPO applications

Published On: April 11, 2017 11:35 AM NPT By: Republica  | @RepublicaNepal

Application fee of a maximum of Rs 100 can be levied

KATHMANDU, April 11: Investors will now be able to apply for shares through Applications Supported by Blocked Amount (ASBA) system from all over the country.  

Making amendments to the Securities Registration Regulation 2073, the Securities Board of Nepal (Sebon) has decided to also allow the government-owned commercial banks to provide ASBA service to investors. 

The new amendment means state-owned Rastriya Banijya Bank Ltd (RBBL) will also be able to accept application of investors for initial public offering (IPO) and follow-on public offering (FPO) of any public company. 

Earlier, only listed companies could provide such service. 

“Since the broader objective of the ASBA system is to provide services of IPO and FPO from across the country, the board decided to pave way for all the government-owned banks to work as a member of the ASBA system. Since Rastriya Banijya Bank has presence in many districts, the ASBA service will now reach to all 75 districts,” Niranjaya Ghimire, the deputy spokesperson for Sebon, said.

The securities market regulator has implemented the ASBA system on a voluntary basis from mid-January this year with a plan to make it mandatory after few months. In ASBA, investors’ money equivalent to the subscription of IPO or FPO gets blocked on the applicant’s bank account until the shares are allotted.  For all ASBA applications, the respective bank or financial institution will deduct the funds from the applicant’s bank account only after share allotments are made and the remaining funds will be again unfrozen. 

The decision to implement ASBA is a part of Sebon’s initiative to modernize Nepal’s capital and secondary market.

So far, issuance (IPO or FPO) of three public companies have been done through the ASBA system. The funds collected through the voluntary ASBA system accounts for nearly 60 percent of the total money drawn from these issuances, according to a statement of the Sebon.   

Meanwhile, Sebon has also scrapped a rule that required banks or financial institutions to send the application and other details of the applicants to the issue manager for the purpose of verification purpose. “Now, the respective BFI can verify such applications and documents on their own as they can have access to the central depository system,” said Ghimire. “It will remove the hassles that BFIs, issue manager and investors were facing, and shorten the entire process,” he added. 


Similarly, Sebon has also reduced the maximum application fee that BFIs can levy on applicants to Rs 100. Earlier, they were allowed charge a maximum of Rs 250 per application.

The capital market regulator decided to lower the maximum application fee following complaints from the investors that the charge was too high. 

Similarly, the issue manager will be able to receive only Rs 10 per application, down from Rs 20 earlier, according to the new amendment. Sebon board has also scrapped 3 percent fee that it used to receive from the application. 

Investors now do not need to visit BFIs or issue manager’s office to get the application form for ASBA as the issue manager has directed BFIs to provide application form on their website. People can download the form from the website of BFIs, according to the Sebon statement.

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