IPPs demand withdrawal of dual ISIN provision: Over Rs 128 bn in promoter shares at stake

KATHMANDU: The Independent Power Producers’ Association, Nepal (IPPAN) has strongly objected to a proposed regulatory change that would require dual International Securities Identification Numbers (ISINs) for dematerialized shares of companies, warning that it could severely harm Nepal’s capital market, investor confidence, and the country’s broader investment climate.

In a formal letter submitted to Finance Minister Barsha Man Pun, the Parliamentary Finance Committee, the Securities Board of Nepal (SEBON), and CDS and Clearing Limited (CDSC), IPPAN urged the authorities to immediately scrap the proposal to assign separate ISINs for promoter shares and public shares of the same company.

Dual ISIN Proposal: A Controversial Shift

The proposal, forwarded by CDSC to SEBON, seeks to apply separate ISINs to promoter and public shareholders during the share dematerialization process. Currently, both classes of shares are held under the same ISIN, ensuring simplicity in trading and valuation.

IPPAN claims the proposed dual ISIN structure contradicts:

Nepal’s prevailing securities laws

Global best practices

Established market norms

If implemented, the association argues, it will introduce unnecessary confusion, undermine investor confidence, and severely distort the operational integrity of Nepal’s capital market.

Impact on Capital Market and Investment Climate
According to IPPAN, the dual ISIN provision will:

Discourage foreign investors who rely on consistent and predictable regulatory frameworks

Hinder repatriation of foreign investments, especially when promoters attempt to liquidate holdings

Reduce liquidity in the secondary market by restricting trading of promoter shares

Violate the spirit of the Foreign Investment and Technology Transfer Act (FITTA)

Undermine Nepal’s efforts to attract Foreign Direct Investment (FDI) and mobilize diaspora capital

NPR 128 Billion in Promoter Shares at Risk

IPPAN estimates that NPR 128 billion worth of promoter shares across multiple sectors could be locked or lose market value if dual ISINs are implemented. This includes:

NPR 87 billion from 58 industries currently under lock-in period

NPR 53 billion from 47 energy companies alone

NPR 41 billion from 43 companies in the IPO pipeline

“This would deeply affect the liquidity of the market and the government’s revenue from capital gains taxes,” said Ganesh Karki, IPPAN President. “The energy sector in particular will be disproportionately impacted, deterring future investment in upcoming hydropower projects.”

Voices from the Sector
Mohan Kumar Dangi, Senior Vice President of IPPAN, warned that thousands of investors and hundreds of power producers will face direct consequences. “This puts at risk the government’s plan to produce 28,500 MW as outlined in the national energy roadmap.”

Balram Khatri, IPPAN’s General Secretary, emphasized that the issue is not limited to the power sector. The move would also negatively affect investment in tourism, healthcare, infrastructure, and other capital-intensive industries that rely on IPO funding and share dematerialization to raise domestic capital.

Final Warning from IPPAN
IPPAN has stated that if the dual ISIN regulation proceeds, it will:

Severely shrink IPO pipelines

Hamper capital mobilization

Threaten the sustainability of investment-led growth

Damage Nepal’s reputation in the global investment community

“The current single ISIN system has been working well,” President Karki added. “Why disrupt it with a policy that adds no value but instead creates chaos and distrust?”