Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: Nepal’s capital market regulator, Securities Board of Nepal (SEBON), has paved the way for banks and financial institutions to issue perpetual non-convertible preference shares, following the 9th amendment to the Securities Issuance and Allotment Directive.
Under the new provision, banks and financial institutions approved by Nepal Rastra Bank (NRB) can now apply to SEBON to issue such shares. However, the issuance must be conducted through private placement and be limited to fewer than 50 institutional investors only.
The updated directive also mandates that dividends on these shares cannot be withheld if the issuing institution has distributable profits—except when explicitly restricted by the regulator.
In addition, SEBON has clarified that the dematerialization of these shares must be carried out through the Central Depository System (CDSC), while listing and trading must follow the procedures set by the stock exchange. Only institutional investors will be allowed to trade these securities, and retail investors, licensed brokers, and mutual funds are barred from participating.
This move is expected to provide significant relief to banks under capital pressure, allowing them to raise long-term capital without diluting ownership or violating regulatory thresholds.
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