SEBON's new rule: IPO-time promoters need to give prior notice only when selling 15% or more shares
The Securities Board of Nepal (SEBON) has amended the rules regarding share sales by promoters of listed companies. Under the new arrangement, promoters holding shares at the time of IPO must notify the company at least five trading days in advance only if they intend to sell 15% or more of their shares after the lock-in period expires. Additionally, a new provision requires notification even when shares are repurchased after announcing an intent to sell.
Kathmandu. The Securities Board of Nepal (SEBON) has amended the rules regarding share sales by promoters of listed companies. The board has changed both the threshold of shares requiring prior notification and the notice period.
According to a circular issued by the board on Ashwin 23 to all listed companies, promoters holding shares at the time of the Initial Public Offering (IPO) must notify the concerned company at least five trading days in advance if they intend to sell 15% or more of their shares after the lock-in period expires.
Previously, promoters of companies listed on the Nepal Stock Exchange (NEPSE) were required to notify the concerned company at least 15 days in advance if they intended to sell 5% or more of their shares.
With the new arrangement, the threshold for prior notification of share sales has increased from 5% to 15%, while the notice period has decreased from 15 days to five trading days.
The amended directive explicitly covers promoters who have completed the lock-in period and were holding shares at the time of the company's IPO, as per Rule 38 of the Securities Registration and Issuance Regulations, 2073.
Share sale notice valid for three months
Under the amended arrangement, after a promoter notifies the concerned company of the intent to sell shares, the company must publish the notice through the Nepal Stock Exchange as soon as possible.
The validity period of such a share sale notice has been set at three months. This provision was also present in the previous directive.
Notification required even if shares are repurchased without selling
The board has introduced another new provision requiring promoters who have announced an intent to sell shares to also notify if they repurchase shares of the same company.
According to the amended directive, if a promoter who has published a notice of intent to sell does not sell the shares or fails to sell them fully, and then repurchases shares of the same company, they must notify the concerned company as soon as possible after the transaction is completed.
Such notification must clearly state the price and quantity of the shares purchased. The concerned listed company must publish the received details through the Nepal Stock Exchange.