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New rule allows companies to float shares at premium

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Kathmandu, December 30, 2016: The Securities Board of Nepal (Sebon) has enacted the Securities Registration and Issue Regulation 2073 that allows companies to issue their shares to public at a premium price.

The new provision comes in the wake of complaints that the requirements for companies to offer shares at par value of Rs 100 were discouraging many companies to go public.

Though a company is allowed to float shares at a premium price, the condition that the premium should not exceed the net worth per share had been holding back companies which want to embrace such pricing model.

However, Sebon, the capital market regulator, is yet to come up with the guidelines about the methods, conditions and procedures for companies to float their primary shares at a premium price.

“We have introduced the premium pricing model in the new regulation. We will allow companies to float their shares at premium price, but with some caps,” Rewat Bahadur Karki, chairperson of Sebon, said at an interaction organized in Kathmandu on Thursday.

The new regulation also makes it possible for public companies to float only 10 percent of their ownership to the public, except for the companies whose regulator requires otherwise. Earlier, a company going public was required to float at least 30 percent primary shares to the public.