New arrangement to bring NRNs into the capital market, IPO limit up to 85%
The government has eased the way for Non-Resident Nepalis (NRNs) to invest in Nepal's capital market through the eighth amendment to the Securities Registration and Issuance Regulations. Under the revised rules, investment companies jointly established by NRNs and the Nepal government can issue IPOs exclusively for NRNs, ranging from 10% to 85% of issued capital. This opens the door for companies like NRN Nepal Development Fund to launch IPOs by 2027.
Kathmandu. The government has introduced a facilitative arrangement to bring Non-Resident Nepalis (NRNs) into Nepal's capital market.
The Ministry of Law, Justice and Parliamentary Affairs made this arrangement through the eighth amendment to the Securities Registration and Issuance Regulations. According to the revised regulations, an investment company established with joint investment of the Nepal government and Non-Resident Nepalis can now issue an IPO of up to 85 percent exclusively for Non-Resident Nepalis who have acquired foreign citizenship or permanent residency of any foreign country.
The revised regulations stipulate that when issuing shares, the issuance must be not less than 10 percent and not more than 85 percent of the issued capital. This has opened the door for as many Non-Resident Nepalis as possible to invest in Nepal's capital market.
Similarly, such companies cannot issue shares at a premium. This means companies must issue shares at face value.
The revised regulations state that the trading system for shares issued by such companies must be separately arranged by the securities market, i.e., the Nepal Stock Exchange. The trading unit for shares has been set at a minimum of 1,000 units.
Such companies, with the approval of Nepal Rastra Bank, can invest in shares, bonds, and debentures in infrastructure-related projects. They can issue securities as per the rules, with payments also made in foreign currency.
Trading of securities issued for investment in such foreign currency shares, bonds, or debentures shall occur only between Non-Resident Nepalis who have acquired foreign citizenship or permanent residency of any country and Nepal.
This arrangement will particularly facilitate the NRN Nepal Development Fund in launching an IPO. The company aims to issue an IPO by 2027.
In the company's proposed capital, the founders' share is 10 percent, the Nepal government's share is 5 percent, and the remaining 85 percent is targeted to be raised through the IPO. Accordingly, the company will raise its capital to Rs 10 billion, with Rs 8.5 billion raised through the IPO.