Regulatory measures implemented to curb uninformed trading of lock-In period shares

KATHMANDU: The Securities Board of Nepal (SEBON) has issued directives regarding the commencement of the lock-in period for promoter shares. The board has mandated that promoter groups and other entities listed on NEPSE be notified 30 days in advance of the initiation of the lock-in period for shares.

In a circular, SEBON has directed the Nepal Stock Exchange, CDS and Clearing, as well as all listed organizations, to inform investors a month before the conclusion of the lock-in period.

With the exception of banks and insurance companies, NEPSE-listed firms are restricted from selling promoter shares for a three-year period from the allotment date.

The board emphasized the need to address the issue of shares from the lock-in period being traded extensively without prior information, causing adverse impacts on the stock market and resulting in losses for small investors.

In accordance with Section 87 of the Securities Act of 2063, SEBON has issued these directives to foster a well-informed and organized market environment, with the goal of providing crucial information to investors and stakeholders.

Henceforth, listed companies are obligated to inform investors and stakeholders a minimum of 30 days before the conclusion of the stipulated lock-in period to prevent the sale of shares by the promoter group. Immediate notification to Nepal Stock Exchange Limited and CDS and Clearing Limited is now mandatory upon the expiration of the lock-in period.

The board has specified that public disclosures must clearly indicate whether the shares in the lock-in period belong to the founders or local entities, and should include the number of shares in lock-in as well as the expiration date of the lock-in period. This information should be disseminated through public notices.