Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: A serious conflict has emerged between the Public Accounts Committee (PAC) and the Finance Committee of the Federal Parliament regarding the criteria for granting Initial Public Offering (IPO) approvals by the Securities Board of Nepal (SEBON). At the heart of the debate lies the requirement of a minimum net worth of Rs 90 per share for companies seeking IPO approval.
The dispute began on December 27, 2023 (Poush 12, 2080 BS), when the PAC issued a directive to SEBON instructing it not to grant IPO approval to companies with a per-share net worth below Rs 90. However, in a contradictory move, the Finance Committee wrote to SEBON on June 2, 2024 (Jestha 19, 2081 BS), asserting that existing laws do not specify net worth as a minimum threshold for IPO approval and therefore directed SEBON not to withhold approval solely based on the Rs 90 net worth benchmark.
The PAC, doubling down on its directive, sent another letter on June 21, 2025 (Asar 5, 2082 BS), demanding a progress report within three days on the implementation of its earlier instruction. This ongoing back-and-forth has led to institutional confusion within SEBON over which committee’s directive holds legal precedence.
SEBON, which had paused IPO approvals for nearly 18 months, recently began granting permissions again. Since November 2024 (Mangsir 2081), 12 companies have received IPO approval, all with a net worth above Rs 90. SEBON maintains that it has complied with PAC’s directive by denying approval to companies that fall short of the benchmark.
However, the Finance Committee has remained firm in its position, arguing that as long as companies meet the legal criteria outlined in the prevailing laws, the net worth issue should not be a barrier. Committee Chairperson Santosh Chalise criticized PAC for overstepping its jurisdiction and claimed that only the Finance Committee has the authority to direct IPO-related policy.
Meanwhile, PAC Chairperson Rishikesh Pokhrel defended the directive, emphasizing that it was based on thorough study and issued in the public interest. “In a parliamentary system, one committee respects the decision of another,” Pokhrel stated, adding that SEBON is accountable to Parliament and must report on its compliance with the directive.
SEBON has already rejected IPO applications from 14 companies with net worth below Rs 90 and advised them to reapply after meeting the threshold. It has also requested the Electricity Regulatory Commission not to forward IPO applications of hydropower companies with inadequate net worth.
As two parliamentary oversight bodies lock horns, regulatory uncertainty continues to cloud Nepal’s IPO approval mechanism, affecting companies and investors alike.
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