IPO MANAGEMENT AND CAPITAL MARKET

By

Bal Kumar Dhimal

Ace Institute of Management
(P.U. Redg. No.2007-2-03-0185)
Roll Number 831462

A Summer Project Report

Submitted to:
Ace Institute of Management
Faculty of Management

Pokhara University

In partial fulfillment of the requirements for the degree of

Bachelor of Business Administration (BBA)

Kathmandu, Nepal
2009
 ACKNOWLEDGEMENT

I acknowledge the cooperation and assistance received from our respected Professors, lecturers
and friends during my summer project period. First of all, I would like to express my profound
sense of gratitude to the project supervisor Mr. Prakash C. Bhattarai. I acknowledge the
cooperation and assistance received from my respected Mr. ShantaBhattarai, NirmalUprety and
SitaramBartaula whose individual guidance and supervision made the project work complete in
the time. We would like thanks to member of Ace institute of Management.

At last but not least, I expressed thanks to Librarians of SEBON, Mr. Nemal Man Shakya
Librarian of Ace institute of Management and Mr. Ramesh Bartaula for giving support during
this research period.

Mr.Bal Kumar Dhimal

Researcher

December 2009
 Table of Content
Subject Page No
Acknowledgement .........................................................................................i
Lists of Table .................................................................................................ii
Lists of Figures ..............................................................................................iii
List of Acronyms ...........................................................................................iv
Executive Summary .......................................................................................v

Chapter I ___________________________________________________1-6
1. INTRODUCTION....................................................................................1
1.1 Background of study .....................................................................1
1.2 Statement of problem ....................................................................3
1.3 Objective of study .........................................................................4
1.4 Importance of study .......................................................................5
1.5 limitation of study .........................................................................6
Chapter II __________________________________________________7-18
2. LITERATURE OF REVIEW ...............................................................7
2.1. Concept of IPO ...........................................................................7
2.1.1. Introduction of IPO ......................................................7
2.1.2 Reason behind issuing IPOs..........................................7
2.1.3 Advantage and disadvantage of IPOs ...........................7
2.2.1 Review of thesis ........................................................................8
2.2.2 Brief introduction of capital market’s component ....................9
2.3.1Brokerage for equity ..................................................................12
2.3.2 Regulation of securities market ................................................12
2.3.3 Listing and listing requirement .................................................13
2.3.4 Types of listing .........................................................................14
2.4.1 Conceptual framework ..............................................................16
 2.4.2 Hypotheses ................................................................................18
CHAPTER III ______________________________________________19-25
3. RESEARCH METHODOLOGY ..........................................................19
3.1 Research Method .........................................................................19
3.1.1 Research area ............................................................................19
3.1.2 Research Design........................................................................20
3.1.3 Nature and resource of data ......................................................20
3.1.4 Data collection techniques ........................................................21
3.1.5 Data Analysis tools ...................................................................22
3.1.5.1 Statistical tools ...........................................................22
3.1.5.2 Financial tools ............................................................24
3.1.6 Population and sample ..............................................................25

CHAPTER IV _______________________________________________ 26-33

4. DATA PRESENTATION AND ANALYSIS .......................................26
4.1 Data Presentation& analysis of capital market ............................26
4.1.1Amount of public issues offered ....................................26
4.1.2 Comparison of growth the IPO and Capital market .....28
4.1.3 Capital market structure and Capital.............................30
4.1.4 Sector wise Listed Companies ......................................31
4.2 Major finding of the study ...........................................................33

CHAPTER V _______________________________________________35-39
5. SUMMARY, CONCLUSION AND RECOMMENDATION ............35
5.1 Summary ......................................................................................35
5.2 Conclusion ...................................................................................37
5.3 Recommendation .........................................................................38
Bibliography ...............................................................................................39
Appendix __________________________________________________40-72
List of Tables
Table 1.1Capital and flotation cost……………………………………………...15
Table 1.2: Amount of Public Issues Offered…………………………….………27
Table 1.3: Comparison of Growth between the IPO and Capital Market………29

Table 1.4: Capital market Structure and capital…………………………..…….30

Table 1.5: Sector wise Listed Companies……………………………………….31
 List of Figures

Chart1.1: Amount of Public Issues Offered………………………………………28

chart1.2: Comparison of Growth between the IPO and Capital Market….………30

chart1.3: Capital market Structure and capital……………………….…………..31

Chart 1.4: Sector wise Listed Companies…………………………….………….32
 List of Acronyms

1. AMEX American Stock Exchange

2. BSE Bombay Stock Exchange
3. GDP Gross Domestic Production
4. MOF Ministry Of Finance
5. NEPSE Nepal Stock Exchange
6. NRB Nepal Rastra Bank
7. NYSE New York Stock Exchange
8. OTC Over The Counter
9. RD Research Design
10. ROA Return On Equity.
11. SEBON Security Board Of Nepal
12. SEBO Security Board
13. BVS Book Value per Share
14. CBS Central Bureau of Statistics
15. Co. Company
16. EBIT Earnings Before Interest and Tax
17. EBT Earning Before Tax
18. EAT Earning After Tax
19. EPS Earning Per Share
20. FY Fiscal Year
21. GDP Gross Domestic Product
22. HMG His Majesty’s Government
23. Ltd. Limited
24. SHE Shareholders Equity
25. NI : Net Income
26. NOI : Net Operating Income
 EXECUTIVE SUMMARY

This report analyses different aspects of IPOs and Capital Market management of Nepal and
presents recommendations to be implemented for their proper management.

The sample size is 33 [using formula {(σ2 *α2)/t2}], 4 samples from commercial banks, 7
samples from Development banks, 17 From the Finance companies and 5 from the insurance
companies. In the research data collated from different source like expert, brokers etc. IPOs
growth plays a significant role in the growth of Capital Market; however there is no direct
relationship between them.

Amount of public issue offering has a decreasing rate at the initial phase which is -28.82. After
that, from the fiscal year 1995/96 to FY 1197/98 the growth rate has increased. Similarly, the
growth of capital market and IPOs both have decreased in the FY 1994/95 but in the Fiscal Year
1998/99 growth of capital market increased but the growth of IPOs has decreased.It shows that
they do not have direct relationship. The trend of capital growth is in an average increase but for
IPOs it is fluctuating.

Number of Issuer Companies and Financial Intermediaries is increasing along with the public
issue in the later years which have played a positive role in the growth of IPOs and the Capital
Market.

Public issue in 1993/94 was 2.444 billion. It was increased by 106.682 percent in the year
2007/08. In the same way the number of issuer companies also increased to 64 in number from
16. Similarly, financial intermediaries such as brokers, issue manager, underwriter, dealer,
investment bankers are increasing. Many report, journals, and researches show that financial
intermediaries are essential component of capital market and from the data collected by this
research have shown that their increase has a positive effect in the growth of IPOs and Capital
Market.
Strong Regulation Body is required for the proper management and promotion of IPOs and the
Capital Market.

Numbers of listed companies are rapidly increasing in the SEBON. Due to the lack of strong
regulation body of Security Board of Nepal and central bank, large amount of public capital has
the risk of going under loss. Nowadays many joint stock companies are losing their performance
as well as the market position. Some corporations are bearing loss and probable solvency. The
result of bad performance of corporations is indicating that a huge amount of public investment
is under risk. Negligence of monitoring body of capital market or SEBON and Nepal Rastra bank
(central bank) and their inappropriate procedure are responsible for all the risks in the capital
market. Many financial institutions have borne loss and some were even dissolved. Securities
Act is not effective and appropriate in accordance with the present situation. It directly affects
the increasing capital market and initial public offerings (IPOs). There is no any provision for
non-listed company and de-listed companies. The major problem of capital market is the poor
management and the lack of appropriate investment policy. In the current situation, investors out
of the valley (Kathmandu) are unable to take the benefit of capital market. Capital market is
losing huge amount of investors due to the lack of appropriate information, appropriate technical
resources and branches in different place of the country. Hence, an appropriate and strong
regulating body with effective management is the one of the major requirement of the Nepalese
Capital Market.
 CHAPTER I

INTRODUCTION

1.1Background of study

Many factors play significant role in the development of business. To run business in the initial
phase or smoothly at existing period, money is needed. Money can be facilitated either by money
from the capital market or the money of promoters. Money market provides capital for short term
period but business needs long term asset. For improvement of long-term asset capital market
provides fund for various companies. Hence capital market is an essential market for business.
Initial public offering (IPOs) is a part of primary market mechanism. When an institution raises
capital to be collected from public through issuance of its securities for the first time, then its
issue to the public is termed as initial public offering. Studies also show that overall Nepalese
capital market is a best alternative for the investment in the Nepalese businesses, in the other part
of world, capital market is an old concept but in Nepal capital market is an emerging market.
Stock market helps to develop financial structure of country. Historical record of Nepalese
capital market began with by issuing share of BIRATNAGAR JUTE MILL. Secondary market
was established in 2050-02-13 B.S. Nepal stock exchange was established with 25brokers and 5
market makers. During the period of 2064 B.S. the broker and market maker become 31and 6 by
adding 6 brokers and one market maker respectively. 152 companies are listed in the security
board of Nepal on May, 2009; which includes; 17 Commercial banks, 23development banks, 58
finance companies, 18insurance companies, 21 manufacturing and processing companies, 5
trading companies, 4 Hotels and 6 other companies .Security board of Nepal (SEBON) was
established in 2050-02-25.The capital market experienced an impressive growth in the last two
years. Improvement in the peace and security situation, the central bank policy to increase the
paid-up capital of banks and financial institution, market reforms, institutional and infrastructural
developments related to the capital market has contributed to this growth. The activities of both
the primary and secondary markets have done a lot for this improvement in the Nepalese Capital
Market which could be explained in detail as follows:

Primary Market:- In the FY2007/08 the Security Board of Nepal(SEBON) granted permission to
71 companies for mobilization of NPR11.56 billion while 33 companies got approval to mobilize
NPR 2.75 billion in the preceding year. The number of capital mobilization has been raised by
1312.25 percent and 320.36 percent respectively. Secondary market:- The Nepalese stock market
continued to expand in the FY2007/08 too. With the restoration of peace and a subsequent boost
in investors’ confidence, major indicators of the share market grew tremendously. Almost all the
major indicators of the secondary market like a amount of share traded, number of listed share,
the number of transactions, annual turnover, total market capitalization of listed shares, market
capitalization and GDP Ratio, capitalization turnover and the GDP ratios all increased in the
review period. Nepal is experiencing an increase in the capital market along with the
considerable issue in the initial public offering.

derivative market

1.2 Statement of Problem

Nepal has an infant capital market as compared to the other capital markets. By the way, it is
good indicator for the financial sector as well as Nepalese economy. Those companies can get
listed in the security board of Nepal (SEBON), which have good financial structure and sound
financial position. They are listed under the Company Act, 1997 and Security Exchange Act,
1983. The issuer companies and issue manager perform their public issue and issue management
activities. Nepal stock market is suffering from unstable political conditions, lack of rational
investors, corporate governance to name the few, hence IPOs, an important mechanism of stock
market, is bound to be under influence. More specifically the study has sought answer to the
following research question.

i) Are capital instruments sophisticating IPOs management in the Nepalese capital

market?
ii) Is sophisticated market structure more effective in IPOs management in theNepalese
capital market?
iii) Are improved financial intermediaries enhancing the IPOs management in the
Nepalese capital market?
iv) What are the challenging issues in the IPOs management in the Nepalese capital
market?
1.3Objective of the study

Capital market of Nepal is still in its early days. Likewise, its other mechanisms, IPOs practices
are also very limited. The objectives can be categorized into two parts, they are as follows:

1.3.1 General Objective

The main objective of this research is to identify the effect of increasing stock and initial public
offering (IPOs) in the capital market of Nepal. This study is also carried out to fulfill the degree
of BBA.

1.3.2 Specific Objectives

a) To identify how the capital instruments sophisticates the IPOs management in the capital
market.
b) To investigate the relation of market structure and IPOs management in the capital
market.
c) To identify how the financial intermediaries enhance the IPOs management in the capital
market.
d) To find out challenging issues of the capital market and how it opposes the IPOs
management.
1.4) Importance of Study

Capital market has many mechanisms, IPOs and its practices are very much limited in Nepal.
Under this perspective this study is expected to provide some insights into different aspects of
IPOs and how is it being practiced in Nepal. It also makes background to investors to invest in
securities market in a better place.

We know that the Nepalese capital market is in its infant period; hence, there is lack of huge
capital. Without capital infrastructure, country cannot develop financial structure, lack of capital
structure leads to poor performance of manufacturing company and financial institution and
other important companies. In the global era sole trading concern and partnership firm are
outdated so corporation or joint stock companies are becoming more effective. Without the
development of joint stock companies financial position of a country can’t be strengthened.
Therefore, development of Joint Stock Company is necessary for the financial development of
company.

The main purpose of this research is to identify the effect of increasing stock (common shares,
preference shares, treasury bills, bonds, debentures etc.) in the capital market and the procedure
and management of initial public offering. This research not only focuses on the study of effect
of increasing stock, however, it also focuses on other problem such as why the share market is
not being effective out of the valley (Kathmandu) or other part of the country. This research will
also find out why capital market is being unable to address those investors who live in the other
parts of the country and why NEPSE is unable to make any branches in the other parts of the
country. This research also tries to explore why Nepalese government is unable to make an
appropriate system or market for the non- listed and restricted companies. It also tries to find out
the effects in the capital market after making new market for non-listed companies. This research
plays a significant role to take an appropriate decision regarding the present capital market
problem. Why investors are only interested in investing on common shares rather than investing
in treasury bills, debentures, bonds where common stocks are more risky than others. The
research has been made with a hope that it is able to find out all causes of ineffective Nepalese
Capital Market and to make recommendation to the relevant sector as like Nepal Stock Exchange
(NEPSE), Security Board of Nepal (SEBON) and Nepal Rastra Bank (NRB) which is important
for both the existing and new investors.
This research addresses different issues of capital market and tries to investigate different rules,
regulations and procedures of Nepal Rastra Bank, Security Board of Nepal and Nepal Stock
Exchange. The research will address the issues of primary market. Due to the above reasons this
research plays a significant role in the Nepalese Capital Market.

1.5. Limitation of Study

This research tries to address many factors but it is unable to address some specific issues due to
lack of sufficient resources, technical problems, lack of data and other factors which are as
follows:

a) Insufficient resource

For this research, no organizations has provided the fund, this research has been conducted under
the academic course requirement of Pokhara University. Therefore, there is chance for the
shortage of resource.

b) Access and reliability of data

This research requires secondary data, primary data only is not sufficient to define objective of
the research. Restriction is availing of relevant data from respected sectors too limits the scope of
the research.

c) Time frame of study

The time frame bound by the University that it must be completed within University academic
schedule has affected the research.

d) Difficult to decide on without the proper basis of comparison

It uses various statistical tools for analyzing data, outcomes of which is not final and it needs
further investigation.
 CHAPTER II

LITERATURE REVIEW

2.1 Concept of IPO

2.1.1 Introduction of IPO

Initial public offering (IPOs) is a part of primary market mechanism. When an institution raises
capital form public through issuance of its securities for the first time, then its issue to the public
is termed as initial public offering.

2.1.2Reason behind issuing IPOs

Every business organization requires fund to run in the initial phase and to run smoothly in the
existing period. It means IPOs are issued to accumulate capital but it is not only the single goal.
According to the nature of the organizational structure some businesses are more risky and some
are less risky, hence, the companies try to diversify their risks. IPO is a better mechanism to
diversify the risk of a company. A good organization needs sufficient liquidity, to maintain
liquidity organization issues IPOs. Companies always try to gain high leverage from non-
financing sources; therefore, IPOs are the only one best source to make high leverage from non-
financing.

2.1.3 Advantages and disadvantages of IPOs

Initial public offering (IPOs) enhances liquidity of the organization. It also provides sufficient
fund for capital extension of the companies. Issuing the IPOs in the capital market heightens the
prestige and recognition of the company among the suppliers and prospective customers. Some
drawbacks do exist in IPOs as it is made by the limited decision power of the management. After
the issue of IPOs the data is provided up to date, hence, information flow cost increases. The
company must adopt legal provisions like auditing and underwriting fees which increases the
direct cost. Management also spends more time and effort to manage IPOs, therefore indirect
cost also increases.

2.2.1Review of Thesis

Gurung (1999) carried out the research study entitle “Share price Behavior of Listed companies
in Nepal” with the basic objectives of analyzing the price movement of the shares of listed
companies in Nepal. The study was based on historical price data covering the period of five
years from Jan. 1994 to dec.1998. The study as per its nature was large based on secondary data.

The study concluded that, the performance of banking group is highly attractive and liquid as
signified by their trading turnover. The performances of listed companies have been
deteriorating. This implies the uncertainty and instability in stock market. Similarly, the market
was bullish during the initial period of the study but due to political instability, immature
liberalization and privatization policy of then HMG.

Shrestha (1996) has conducted a research study on “public response to primary issue of shares in
Nepal. The main objective of the study was to evaluate the primary market of shares, analyze the
pattern of public response to the shares and to identify the problems of primary and secondary
market in Nepal. He has used both primary and secondary data from 12 selected companies for
the period of 3 years from January 1993 to January 1996. He has employed average chi-square
test and correlation coefficient for deduction.

The study conducted that the public response to the issue of shares of banks, finance and
insurance companies were better than that of manufacturing and processing, trading, hotel and
others group of companies. The success of response to the public issues largely depends on the
response from within Kathmandu valley and to some extent, the issues of share seem to attract
from outside the valley.

Bhattarai(2006) has performed a study on “public response to initial public offering in Nepal”
with the basic objective of assessing public response to the initial public offering. However, the
study also focused on the dealing process and pace of the IPO. The study has used both primary
and secondary data. Primary data were mainly collected through direct questionnaire provided to
 the general investor while secondary data were collected from various publication of SEBON,
NEPSE and various other institutions.

The study conducted there most of the general investor in Nepal do no have significant
information regarding the primary market but still they very much interested to invest money in
the primary market. It also found that almost each sector was getting good response from public.
Especially financial institutions and insurance companies were becoming more preferable for
public than the other non-financial sector.

Adhikari (2005) has conducted a research survey on ‘an analysis of determinants of IPO under
pricing in Nepal’ the basic objectives of the study was to analyze the under pricing of IPOs in the
context of Nepal. Beside the study also examined the trends of public offering market and
process of going public in Nepal. For the process of study data of the periods of 4 years form
fiscal year 1999/2000 to 2003/04 were used.

The researcher concluded that under pricing does not occur among Nepalese firms. The
researcher also added that the result is not consistent with the theory and differences finding of
empirical studies conducted in different countries. IPOs market in Nepal does not enjoy only
right to set the price of countries. IPOs markets in Nepal do not enjoy any right to set the price of
their own issue. The price setting process is totally controlled by the regularly body because of
this reason, Nepalese merchant banker could not play any role to influence the offer price of
IPOs.

2.2.2 Brief introduction of capital market’s components

a) Security Market: Security market is that market where various securities like common stocks,
debentures, bonds, treasury bills etc. are traded. Securities are sources of capital for any
business organization or Company, issuance of such instrument of capital is done to raise fund
in the capital market. A securities market can be defined as a place for bringing the buyers and
sellers of financial assets together in order to facilitate trading. Securities markets are primary
market and secondary markets. Market indexes are the indicators of performance of the market.
For example either the market is moving upward, downward or is stagnant. Mainly there are
two types of secondary markets.
 b) Primary market: a primary market is the place where corporation and government issue new
securities. All securities, whether is money or capital markets, are initially in the primary
market. This is the only market in which the company or government is directly involved in the
transition and receive directs benefits from an issue that is the company actually receives the
proceeds from the sale of securities. Once the securities begin to trade among individuals,
businesses, governments or financial institution, savers and investors, they become parts of
secondary markets. The term ‘Primary Market’ is a market where original sale of securities by
an issuer to the public. The issuer receives cash, which may be invested in productive assets or
retirements of debts.

a) Investment Banking: The efficient functioning of a financial market require a number of

financial institution. One of these institutions is an investment banking firm. The firm acts as a
middleman in the distribution of new securities to the public and creates a primary market.
Therefore, the people or institutions are responsible for finding out investor for the initial public
offering (IPOs) of securities sold in the primary market are called investments bankers. The
principal function of the bank is to buy the securities from the issuing company and then resell
them to investors. For acting the role of mediator, the investment banker received the difference,
or spread, between the prices they pay for the securities are resold to the public. The process of
issuing securities to the public is called underwriting and in this sense, the investment bank is
also called an underwriter. The group of underwriters is called an underwriting syndicate. The
underwriting takes place in two ways. The first is typical underwriting. In this arrangement, the
investment banker purchase the securities from the company and re-sales them to the public.
The other type of arrangement is best effort basic, instead of underwriting the securities issued
by the company. Under this arrangement, the investment bankers agree only to sell as many
securities as they can at on established price. They have no responsibility for securities that are
unsold. They bear no risk.

b) Secondary markets: The securities market in which securities are traded secondly. The organized
stock exchanges are the examples of secondary market. Organized securities exchange are the
 physical locations where trading of securities is done under a set of rules and regulation.
Investors usually purchases securities in the secondary market by calling securities brokers. In
the secondary market investors buy and sell securities themselves, the issuer never get any cash
flow from the traders. Nepal Stock exchange (NEPSE) is an example of organized stock
exchange and this is the only stock exchange in Nepal similarly, the New York stock exchange
(NYSE), Tokyo Stock Exchange, American stock exchange(AMEX), Bombay Stock
Exchange(BSE) are the examples of organized Stock Exchange.

c) NEPSE: The securities exchange center was established with an objective of facilitating and
promoting the growth of the capital market. Before its conversion into stock exchange, it was
only the capital market institution undertaking the job of brokering, underwriting, managing,
public issue market making for government bonds and other financial services. in 1933, the
center was converted into Nepal stock exchange(NEPSE) with the basis objectives of imparting
free market ability and providing liquidity to the government and corporate securities by
facilitating transaction in its trading floor through market intermediaries, such as brokers,
market makers etc. and it is a non- profit organization, operating under securities Exchange
Act,1983. NEPSE opened its trading floor on 13 January 1974 through licensed members. His
majesty’s government, Nepal Rastra bank, Nepal Industrials Development Corporation and
licensed members are the shareholders of the NEPSE.

d) Brokers: A broker act as a middleman who matches buying and selling orders, thereby securing
both the buyers and sellers depend with brokers. A broker does not take title to the securities
involved in traction the transition. A commission is charged by the broker for his assistance in
the consummating the transaction. A stockbrokers, as a member of stock exchange and sub
broker as any persons who acts on behalf of a stock broker as an agent or otherwise, assist in
buying, selling or dealing in securities.

2.3.1 Brokerage for equity

S.No. Trading Amount Brokerage %

A Up to 50,000 1

B > 50,000 &< 5,00,000 0.9

 C > 5,00,000 &< 10,00,000 0.8

D > 10,00,000 0.7

2. Brokerage for Government Bond

S.No. Trading Amount Brokerage %

A Up to 5,00,000 0.20

B > 5,00,000 &< 50,00,000 0.10

C > 50,00,000 0.05

3. Brokerage for all other stocks which is not listed in 1 and 2.

S.No. Trading Amount Brokerage %

A Up to 50,000 0.75

B > 50,000 &< 50,00,000 0.60

C > 50,00,000 0.40

e)

2.3.2Regulation of securities market

Securities markets are the mechanism for the trading of securities and it should be strictly
regulated to stop the malpractices and develop efficiently. Securities Broads (SEBO) Nepal is the
supreme body to regulate the Nepalese securities markets. It was established on 26 may, 1993
under the provision of the Securities Exchange ordinance, 2005. The objectives of the board are
to promote and protect the interest of investors by regulating securities market. Not only these, to
regulate, monitor, direct control and coordinate the entire capital market is also the objective of
SEBO. SEBO works under the ministry of finance (MOF).

SEBON: regulate primary market different acts and laws have been passed. The public issue
activities through the primary market are regulated by the Securities Exchange ordinance, 2005.
The related regulation and guidelines are Securities exchange regulation 1993, Securities
registration and issue approval guidelines, 2002 and securities allotment guidelines, 1997.
Similarly, to regulate the public issue it has made it mandatory to take services of an issue
manager by the issuing companies. To regulate secondary market as well as members, different
 acts like members of stock exchange and transaction byelaws 1998, and securities listed byelaws
1996 have passed. SEBO also monitors whether the activities carried out by NEPSE are in
accordance with the above laws or not. Similarly, SEBON regulates all the members of the
secondary market like issue manager, stock brokers, dealers, market marketers and corporations.

2.3.3 Listing And listing requirement

Listing means the registration of issued securities with the stock exchange to make them eligible
for trading. Corporate- sectors generally raise the required fund through the market either by
issuing the common stocks or preferred stocks or debt instrument as like bond and debenture, if
the features of marketability and liquidity are not added nobody will be interested to invest the
hard earned saving in these instrument. This is simply because the investors are in need of fund
and the invested securities are essential. Securities Exchange act, 1983 also prohibits the trading
of unlisted securities. It has a provision for listing. It means all the public companies must enlist
their securities. In order to enlist securities with the stock Exchange, the company must submit
an application form in the prescribed format along with required documents and listing and
annual fee. These document are essential to the analyze the profitability of the company to be
assured that the proposed securities to enlist will be traded frequency in the trading floor. The
major document that are to be submitted are listed below

a) Names and addresses of the shareholders, directors and their holding.

b) Names and Addresses of the shareholders holding more than 5 percent of the issued
shares.
c) Names and addresses of the Managing Directors, chief executive officers, accountants,
auditors, company secretary and their holding , if any.
d) In case of an existing company, the last three years’ audited balance sheet and profit and
loss accounting and in case of a newly established company, projected balance sheet and
profit and loss accounts for next three years.
e) Shareholders’ list.
f) Documents that reveal the name and address of the company and the date of business
commencement.
g) Specimen of a share certificate.
 h) Tax registration certificate.
i) Approval latter from SEBON for public issue (only if the listing is required after going to
the public) and a letter from the NRB, the central bank.
j) Investment details of the company and promoters and directors, if associated with any
other organization.
k) The name and address of associated organization.
l) Resolution passed by the board of the directors of listing.
m) Memorandum and articles of associated and prospectus.
n) If the organization is established under a special act, a copy of such act.

2.3.4Types of listing

Securities Exchange byelaw, 1996, has categorized the listing of securities into two types:
temporary listing and permanent listing.

1. Temporary listing: Temporary listing should be made for redeemable preferred stocks or
debentures. The listing will be valid till 15 days before the maturity.

2. Permanent listing: Common stocks; irredeemable preferred stocks, debentures, closed end
fund will be listed permanently.
Pre-requisites for listing

It enlists the securities of any company, the following conditions need to be met, and
otherwise no company can be enlisted with the NEPSE.

a) If the shares to be listed are common stocks.

b) The minimum paid up capital must be RS 25 million.
c) The minimum number of shareholders should be 500, but if the company has not floated
at the time of submitting the application form for listing, then listing can be done with the
condition that the required number of shareholders should be attained within two years.
d) The face value of the shares should be either Rs 10 or RS 100
e) The flotation of the shares needs to be based on the basis of the issued \capital. It is given
below
Capital as per the decision of NEPSE with the pre-approval of SEBON. The percentage
stated above should be issued and allotted to the general public. Once a company has met
the requirement for listing, it must meet additional requirements established by the
exchange and SEBON in order for its securities to be traded. For example, the listed firm
must publish quarterly earnings reports, and fully disclose its financial information
annually etc.
Table 1.1
Capital Flotation %
25%
Up to Rs 10 million

20%
Above Rs 10million to Rs 5 million

15%
Above Rs 50 million to Rs100 Million

As per the decision of NEPSE with the pre-

Above Rs 100 million
approval of SEBON
2.4.1Conceptual framework

Conceptual map of share market is a clear concept of share market. It also identifies the variables
of capital market and their relationship. It also helps in the further investigation and research to
make it more effective and usable.

Common stock
SEBON
Com
Bonds/Debenture
NEPSE mon
Structure of
Financial stock
Preference share capital market
instrument Central Bank s,
bond
Treasury bill Financial s &
institution
Effect of increasing debe
Independent variable
IPOs in capital market
Moderate variable nture

Dependent s,
Unsophisticated
capital market variable prefe
Brokers
rence
Challenging Financial
Ineffective share
issues intermediaries
information Issue Dealer s and
treas
No facilitated ure
of OTC Market maker
bills
Lack of trading are
floor Issue manager the
Intervening Variables finan
cial
instrument of capital market; the sophisticated capital instruments are contributing a lot to the
capital market by making huge capital fund available for manufacturing and service sectors. The
increasing capital instrument enhances the capital market. Hence, capital market is dependent
variable and capital instruments are independent variables. Some factors perform their jobs like
moderating variable; SEBON creates platform to make capital instrument and NEPSE provides
secondary market for those capital instrument, financial institutions convert small scale saving
into huge investment and at last central bank controls the money market and facilitates the
capital market. Financial intermediaries (brokers issue dealer, market maker and issue manager)
also play the role of moderating variable for the IPOs management & capital market. For the
capital market there are some challenges that influence its growth and performance like the
ineffective information, no facilitated OTC, lack of trading floor and many more. Such factors
affecting the performance of capital market are also called the intervening variables. The overall
explanation concludes that IPOs management in capital market is a dependent variable and there
are other factors that contribute either for a positive or negative effect in the capital market.
2.4.2Hypotheses

Hypothesis is the backbone of research. It is the starting point of investigation. Researchers use
different types of hypothesis according to nature of research. In this research, mainly research
hypothesis and null hypothesis are used. Research hypothesis is an assumption that is close with
research objectives and null hypothesis is an assumption that reflects for “no effect” or “no
difference”. The hypotheses related with research are as follows.

Ho=the null hypothesis

HA= the alternative hypothesis

I. Ho: There is no relationship between IPOs management in capital market and financial
instruments
HA: If capital instruments increases, the IPOs management in capital market is more
sophisticated.
II. Ho: There is no relationship between IPOs management in capital market and structure of
capital market.
HA: if the market structure becomes more sophisticated, then the IPOs management in
capital market becomes more effective.
III. Ho: There is no relationship between IPOs management in capital market and financial
intermediaries.
HA: if financial intermediaries are improved, then the IPOs management in capital market
is also improved.
IV. Ho: There is no relationship between IPOs management in capital market and challenging
issues.
HA: if challenging issues are increased, then IPOs management in capital market becomes
more complicated.
 CHAPTER III

RESEARCH METHODOLOGY

3.1 Research method

3.1.1 Research Area

This research has been conducted to analyze IPOs management and capital market hence it data
has been gathered from Nepal Stock exchange (NEPSE), Securities Board of Nepal (SEBON),
Nepal Rastra Bank (NRB). It investigates and measures the attitudes and activities of investors,
brokers and NEPSE’s employees.

Nepal stock exchange (NEPSE) is a nonprofit organization, operating under security Exchange
Act, 1983. It was established in 2050A.D. the official building is located atRamShah Path near
the Singha durbar. The basic objective of NEPSE is to impart free marketable and liquidity to
the government and corporate securities by facilitating transaction in its trading floor through
member, market intermediaries, such as brokers, market makers etc.

Security board of Nepal (SEBON) is located at Gaushala near the Pasupatinath Temple. The
main objective of SEBON is to facilitate an organized company to increase its production
capacity and fixed assets. It also helps in the investigation, development and promotion of the
products.

Nepal Rastra Bank: Nepal Rastra Bank (NRB), the central bank of Nepal is located in Baluwatar,
Kathmandu. The main objective of NRB is to regulate, control and develop the monetary
systems. It also promotes, regulates and develops the national capital. It develops rules,
regulations and procedures related with national capital market.

This research also covers the investors and stock experts. It includes the behavior, attitude and
contribution of investors and stock experts in the capital market.
3.1.2Research Design

Research Design (RD) is a plan for the collection and analysis of the data. It presents a series of
guide posts to enable to researcher to progress in the right direction in order to achieve the goal.
The design may be a specific presentation of the various steps in the research process. These
steps include the selection of a research problem, presentation of problem, formulation of
hypothesis, conceptual clarity, and methodology, survey of literature and documentation,
bibliography, data collection, testing of the hypothesis, interpretation, presentation and report
writing.

A research design is the specification of methods and procedure for acquiring the information
needed. It is the overall operational pattern of framework of the project that stipulates what
information is to be collected from it will ensure that the information obtained is relevant to the
research questions and that it was collected by objectives and economical procedure. To obtain
the correct answers for existing problem; the researcher has used Historical and Explanatory
research method in this research.

Historical research is concerned with past phenomena. It is a process of collecting, evaluating,

verifying past evidence with systematically and objectively to reach a conclusion. Accuracy of
the gathered information is the main ingredient of success in historical research. There are two
main sources from where past evidences can be found. One is the primary source, where
researcher was the direct observer of the recorded event and another is secondary source. In this
research both the methods has been used for the data collection.

The basic objective of this study is to find out effect of increasing IPOs in capital market to
obtain this goal Historical Research has been used as a systematic research method. The study is
based on primary and secondary data; information obtained from SEBON, NEPSE, NRB,
investors as well as experts.

3.1.3Nature and Resource of data

Data are collected from two sources. They are primary sources and secondary sources

The primary data are collection through questionnaire. In this research mainly two type
questionnaire tools used: self-administrative and interviewee administrative. Online
 questionnaire, mail questionnaire, delivery and collection questionnaire are Self-administrative
questionnaire. Telephonic questionnaire and interview schedules are also used to collection
primary data. Observation, interview as well as group discussion also include to collection
primary data.

Secondary data source

Secondary data collected through different source. This research mainly depend on secondary
data because the information related stock can gathered through primary tools hardly possible
hence it used secondary data related with share market, SEBON,NEPSE, Central bank. The
project used subjective sectors the following sources of data have also been used in the course of
study.

a. Journal of SEBON, NEPSE and central bank.

b. Economic magazine, newspapers, and journal.
c. Periodic return submitted by SEBON, NEPSE and central bank.
d. Various articles public’s in the newspaper.
e. Various publications dealing in the subject matter of the study.

3.1.4Data collection techniques

For the gathering different facts, information secondary data and primary data are used in the
report to understanding the history of stock market and emerging challenge of it. The tools and
techniques to collection of primary data are as follows.

a. Online questionnaire: It is electronic data collection tool, which allows researchers to

collect information through internet, website, or email in a format that can be directly
read and analyzed. In this research only used form online questionnaire
 b. Mail questionnaire: In this mail questionnaire, the researchers allow to send
questionnaire direct to respondent. It is most effective tools to collect primary data if
the respondent and researcher have positive relationship.

c. Delivery and collection questionnaire: The researcher allows sending question

through postal and collected them after certain time. It is most appropriate where high
technology (telephone, email, internet, mobile etc.) is restricted as like Humla, Jumla
place.

d. Telephonic questionnaire: It is most effective tools to collection of data. It also help

to measure attitude, concept and reliability of data due to it observe pitch of sound,
data flow speed and confidence of respondent.

3.1.5 Data Analysis tools

For the purpose of analysis, two tool used. They are as following

a) Statistical tools
b) Financial tools

3.1.5.1Statistical Tools: Some important statistical tools are used to achieve the objective of the study.
In this study statistical tool such as mean, standard deviation, co-efficient variation and co-
efficient of standard deviation are used. The above statistical tools are broadly categorized in to
two sectors; Descriptive Statistic and Inferential Statistic.

A) Descriptive Statistics: Statistics, which describes the data that have been gathered, are
called descriptive statistic. Such data are often in form of raw, unorganized numerical
values. These statistics focus on two aspects of the distribution: the central tendency and
dispersion.

i) Mean: A mean is average value or the sum of all observations divided by the
number of observation and it is denoted and given by the formula; x= mean of
the value, N= Number of the observation. During the analysis of data, mean is
 calculated by using the statistical formula “Average” on excel data sheet on
computer.
ii) Standard Deviation: The standard deviation measures the absolute dispersion.
It is said that the value of standard deviation the higher the variability and
vice-versa. Karl Pierson introduced the concept of the standard deviation in
1823 A.D. and this is denoted by the small Greek letter σ called Sigma;σ = √
Σ x2/N
Where X = (x-x mean), during the analysis of data, standard deviation is
calculated by the statistical formula (SIDEV) on excel data sheet on computer.
iii) Coefficient of variation: the standard deviation calculation from above
formulated given as absolute measure of dispersion. The coefficient of
variation measure the relation, measure of dispersion hence it also measure
their variability. The coefficient of variation is given by the formula and
coefficient of variations
C.V= standard deviation/mean *100

B) Inferential statistics: they are defining as statistics that help to establish relationship
among the variables, from which conclusion can be drown.
I) Correlation coefficient (p): It measures the relationship between two variables.
Where one variable is dependent or its value depend on another variable. And
another is independent which value not depend on another variable. The value of
correlation consist any values from 0 to 1. If the value is 0 the correlation
perfectly uncorrelated or there is no relationship exists. If the value 0<p>0.5 this
means less relative correlated. If p=0.5 relatively correlated and 1 is perfectly
correlated.
II) Regression coefficient(β): regression analysis is used to measure the strength of
the relationship between two or more variables. Regression analysis is used to
predict or estimate the value of one dependent or response or endogenous
variables based on the known values of independent or explanatory variables. The
unknown variable which we have to estimate or predict is called dependent
variables.
 III) Coefficient of determination (r2): the coefficient of determination measures the
strength or extant of the association that exists between dependent variable (y)
and independent variable(x). It measures the proportion of variation in the
dependent variable(y) that is explained by the regression line. In other word,
coefficient of variation measures the total variations in the dependent variable due
to independent variable and it’s denoted by r2.
3.1.5.2Financial Tools:
a. Return on Assets (ROA): It measures the productivity of the assets. It is measured in
terms of relationship between net profit and assets. This ratio judge the effectiveness in
using the total supplied by the owners and creditors. Higher ratio shows the higher
return on assets used in business there by indicating effective use of resources available
and vice-versa. It is calculated by EAT divided by total assets.

b. PE Ratio: The price/earnings (P/E) ratio how much investors are willing to pay per Rs. of
reported profits. To compute the P/E Ratio, we need to know the firm’s earning per share.
The ratio of the price per share to earnings per share shows the Rs. Amount investors will
pay for Rs. 1 of current earning, this suggests that the company is regarded as being
somewhat riskier than most, as having poorer know unloved has above average risk. It is
calculated by MPS divided by EPS; clearly earnings yield and price-earnings ratio are
simply two ways to measure the something. In practice, earnings yield are less commonly
stated and used, P/E Ratio.
3.1.6 Population and Sample
This research has been conducted on topic “IPOs Management in Capital Market”. It takes
population of research from listed companies in NEPSE. Out of 150 listed companies with the
listing of 13 new companies with the merging of NB finance and leasing company with bank
and de-listing of 5 companies, the total number of listed companies remains to 142 during the
fiscal year2007/08. In this research we take only four sectors as population as Commercial
banks, Development banks, Finances and Insurance companies. Where 114 companies’ IPOs
from 142 companies taking as population from FY 1993/94 to 2007/08, rest of the 4 sectors
restricted from population. Similarly, even though IPOs could be debt, preference share and
common equity. The studies only focus on IPOs of common equity. It also analyzesthe existing
state of IPOs in Nepal. The offers (amount and number of issue) from collected scheme like
mutual fund and citizen investment have not been considered. Sampling method selected
stratified random. It represents different section of the population in study. The population
divided as strata (capital fund) and simple random sample is taken from each such sub group. A
variant of simple stratified sampling is called proportionate sampling. The sample size is 33
[using formula {(σ2 *α2)/t2}], 4 samples from commercial banks, 7 samples from Development
banks, 17 From the Finance companies and 5 from the insurance companies (calculation part at
appendix).
 CHAPTER IV
PRESENTATION AND ANALYSIS OF THE DATA

The chapter includes presentation and analysis of data collected through secondary and primary
source. it reveals existing state of IPOs in Nepal, analyzes IPOs and its relevant sectors and
finally presents relation of IPOs management in capital market and its challenges. All the
analyses are based on simple statistical and financial tools.

4.1 Data Presentation & Analysis of capital market

4.1.1 Amount of public issues offered.

Securities act, 2063 provisioned that any company which goes for IPOs must get issue approval
from Security Board of Nepal (SEBON) prior to make their offer to public. Since first year of
SEBON is operation on FY 1993/04, it has given issue approval from security260issues,
amounting Rs 22561.4 million till FY 2007/08. As securities regulation also provisioned that the
company, which got issue approval, may commit their offer any time within two months from
the data date of issue approval (Security Registration and Issue Approval Guideline, 2002)
Table 1.2: Amount of Public Issues Offered

Fiscal Amount of public Growth in Capital

Year issue Market
(in Billion)
1993/94 2.444 -
1994/95 1.7396 -28.82
1995/96 2.9374 68.85
1996/97 3.322 13.09
1997/98 4.6236 39.18
1998/99 2.58 -44.19
1999/00 3.2686 26.68
2000/01 4.1049 25.58
2001/02 14.4133 251.12
2002/03 5.5654 -61.38
2003/04 10.275 84.62
2004/05 16.2682 58.32
2005/06 24.4328 50.18
2006/07 22.955 -6.048
2007/08 106.682 364.74

From the past data, amount of public issue was 2.444 billion in 1993/94. In 1994/95 it was
1.7396billion which was decreased by 28.82%. After 1995, capital market is increased by
68.85%, 13.09%and 39.18% in the year 1996, 1997 and 1998 respectively. But, in 1998/99
capital market decreased by 44.19%, which was 2.58 billion. In fiscal year 2006/07 capital
market was decline and after the year it was unexpectedly increased by 364.74%.
 Chart
art 1.1: Amount of Public Issues Offered.

4.1.2 Comparison of Growth between the IPO and Capital Market

Growth of capital market represents the strength of capital market and growth of IPOs show the
increasing tendency of public companies. Hence the relationship of market and IPOs helps to
predict picture of economic growth
growth.
 Table 1.3: Comparison of Growth between the IPO and Capital Market

Fiscal Year Amount of IPO Growth in IPO Growth in Capital

(in Million) Market
1993/94 227.90 - -
1994/95 173.96 -23.67 -28.82
1995/96 226.74 30.34 68.85
1996/97 57.00 -74.86 13.09
1997/98 119.40 109.47 39.18
1998/99 148.00 23.95 -44.19
1999/00 202.26 36.66 26.68
2000/01 278.70 37.79 25.58
2001/02 319.46 14.63 251.12
2002/03 394.30 23.43 -61.38
2003/04 657.50 66.75 84.62
2004/05 377.48 -42.59 58.32
2005/06 579.83 53.61 50.18
2006/07 380.30 -34.41 -6.048
2007/08 924.00 142.97 364.74

The above table shows comparison analysis of capital growth and IPOs growth. In fiscal Year
1994/95 IPOs and capital market both decreased by 23.67% and 28.82% respectively. But in
1995/96 both increased by 30.34% and 68.85% and amount of IPOs reach to 226.74 million. In
the following year the IPOs and capital market increased in

same trend. In 2006/07 IPOs decreased by34.41% in result the growth in capital market was -
6.048%. But it was unexpectedly increased by 142.97% in IPOs and 364.74% in Capital Market.
 Chart1.2: Comparison of Growth between the IPO and Capital Market

400
350
300
250
200 Growth in IPO
150
100 Growth in Capital
Market -
50
0
1994/95
1995/96
1996/97
1997/98
1998/99
1999/00
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
-50
-100

4.1.3 Capital Market Structure and Capital

Capital structure incudes financial institutions, security board and stock exchange and central
bank. It takes only financial institution and capital market for IPOs management. The trend of
data does not show any significant relationship between issues companies and capital market.
Table 1.4: Capital market Structure and capital

Fiscal Year Amount of public issue Number of Issuer

(in Billion) Company
1993/94 2.444 16
1994/95 1.7396 10
1995/96 2.9374 12
1996/97 3.322 5
1997/98 4.6236 12
1998/99 2.58 5
1999/00 3.2686 6
2000/01 4.1049 9
2001/02 14.4133 12
2002/03 5.5654 18
2003/04 10.275 14
2004/05 16.2682 14
2005/06 24.4328 29
2006/07 22.955 34
2007/08 106.682 64
 Public issue in 1993/94 was 2.444 billion. It was increased by 106.682 in year 2007/08. In the
same way the number of issuer companies also increased to 64 companies from 16 companies.
But there was no relation between amount of public issue and number of issuer companies. The
amount of public issue was very low whether the number of issuer company was higher 18
companies.

Chart 1.3: Capital Market Structure and capital

120

100

80

60 Amount of public
issue (in Billion)
40
Number of Issuer
Company
20

0
1993/94
1994/95
1995/96
1996/97
1997/98
1998/99
1999/00
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08

4.1.4 Sector wise Listed Companies

The listed companies were categories in eight sectors according to their nature and capital
structure. The rapidly increasing sector is finance companies and other companies also
significantly growing.

Table 1.5: Sector wise Listed Companies

Sector Number of Listed Companies Percent

Commercial Banks 17 11.97
Development Banks 23 16.20
Finance Companies 55 38.73
Insurance Companies 17 11.97
Hotels 4 2.82
Manufacturing & Processing
Companies 18 12.68
Trading Companies 4 2.82
Other Companies 4 2.82
From the above table, the number of listed companies leads by finance companies, which is
38.73%. Secondly, the development bank has more coverage with 16.20%. And other companies
like commercial bank, insurance companies and manufacturing and processing companies have
average coverage with 11.97%, 11.97% and 12.68% respectively. Lastly, hotels, trading
companies and other companies have very little contribution with 2.82% for each.
Chart 1.4: Sector wise Listed Companies

Listed Companies
Commercial Banks

Development Banks

Finance Companies

Insurance Companies

Hotels

Manufacturing &
Processing
Trading Companies

Other Companies
 4.2 Major Finding of the Study

The study was set out to analyze different aspect of IPO in Nepal. The data, which were obtained
through secondary & primary sources, were analyzed using different statistical tools and modes
which resulted in following findings:

4.2.1 Amount of public issued offering has a decreasing rate at the initial phase which is -28.82. After
that, from the fiscal year 1995/96 to FY 1197/98 the growth rate has increased. The data shows
that the capital market has an average growth. Hence, it supports the alternative hypothesis that if
capital instrument increases, the IPOs management in capital market is more sophisticated.

4.2.2IPOs growth plays a significant role in the growth of capital market. The data shows that there is no
direct relationship between them. The growth of capital market and IPOs both have decreases in
the FY 1994/95 but in the Fiscal Year 1998/99 growth of capital increased but the growth of
IPOs has decreased. It shows that they do not have direct relationship. The trend of capital
growth is in an average increase but for IPOs it is fluctuating.

4.2.3Public issue in 1993/94 was 2.444 billion. It was increased by 106.682 in year 2007/08. In the same
way the number of issuer companies also increased to 64 in number from 16. The number of
institutions can play a significant role in capital market but the information show that they do not
have any direct relationship.

4.2.4 Financial intermediaries such as brokers, issue manager, underwriter, dealer, investment bankers
play a significant role in the growth of IPOs and capital in the capital market. Many report,
journals, and researches show that financial intermediaries are essential component of capital
market. Hence, it supports the alternative hypothesis i.e. if financial intermediaries are improved
then the IPOs management in capital market also improves.

4.2.5Numbers of listed companies are rapidly increasing in the SEBON. Due to the lack of strong
regulation body of Security Board of Nepal and central bank, large amount of public capital is
under loss. Nowadays many joint stock companies are losing their performance as well as the
market position. Some corporations are bearing loss and probable solvency. The result of bad
performance of corporations is indicating that a huge amount of public investment is under risk.
Negligence of monitoring body of capital market or SEBON and Nepal Rastra bank (central
bank) and their inappropriate procedure are responsible for all the risksin the capital market.
Many financial institutions have borne loss like Nepal Bangladesh Bank, Lumbini Bank etc. and
some were even dissolved, like Nepal Development Bank. Securities Act is not effective and
appropriate in accordance with the present situation. It directly affects the increasing capital
market and initial public offerings (IPOs). There is no any provision for non-listed company and
restricted companies. The major problem of capital market is the poor management and the lack
of appropriate investment policy. In the current situation,investors out of the valley (Kathmandu)
are unable to take the benefit of capital market. Capital market lost huge amount of investors due
to the lack of appropriate information, appropriate technical resources and branches in different
place of the country. It supports the alternative hypothesis i.e. if challenging issues are increased
then IPOs management in capital market becomes more complicated.
 CHAPTER V

SUMMARY, CONCLUSION AND RECOMMENDATION

This chapter covers three parts of the study: summary, conclusion & recommendation. The first
part goes over with summarization of the whole study, the second part depicts the conclusion and
the final part presents the recommendation in the light of its finding.

5.1 Summary

Money can facilitate by either money market of capital market. Money market provide for short
term but business need long term assert. For improvement of long-term assert capital market
provide fund. Hence capital market is essential market for business. Initial public offering (IPOs)
is a part of primary market mechanism. When an institution raises capital form public through
issuance of its securities for the first time, then its issue to the public is termed as initial public
offering. It also study overall Nepalese capital market capital market is a best alternative for the
investment, in the other part of world capital market is old concept but in Nepal capital market is
new emerging market. Stock market helps to development of financial structure of country.
Historical backgrounds of Nepalese capital market begin issuing share of BIRATNAGAR JUTE
MILL. Secondary market established in 2050-02-13 BS. Nepal stock exchange established with
25 brokers and 5 market makers. During the period 2064the broker and market maker become 31
and 6 by adding 6 brokers and one market maker respectively. The 152 companies are listed in
the security board of Nepal at may, 2009, 17 Commercial bank , and 23 development banks, 55
finance companies, 17insurance companies, 18 manufacturing and processing companies m5
trading companies, 4Horel and 6 other companies .

Initial public offering (IPOs) is a part of primary market mechanism. When an institution raises
capital form public through issuance of its securities for the first time, then its issue to the public
is termed as initial public offering. Initial public offering (IPOs) enhanced liquidity of
organization. It also provide sufficient fund for capital extend of companies. Issuing the IPOs in
the capital market heightens the prestige and recognition of company among suppliers and
prospective customers. Some drawbacks exist in IPOs. It made of limited decision power of
management. After issue IPOs the data are providing up to date hence information flow cost
increase. The company must be adopt legal provision as like auditing and underwriting fees
hence direct cost increases. Management also spent many time and effort to manage IPOs,
therefore indirect cost also increase.

The securities exchange center was established with an objective of facilitating and promoting
the growth of the capital market. Before its conversion into stock exchange, it was only the
capital market institution undertaking the job of brokering, underwriting, managing, public issue
market making for government bonds and other financial services. in 1933, the center was
converted into Nepal stock exchange(NEPSE) with the basis objectives of imparting free market
ability and providing liquidity to the government and corporate securities by facilitating
transaction in its trading floor through market intermediaries, such as brokers, market makers etc.
The public issue activities through the primary market are regulated by the Securities Exchange
ordinance, 2005. The related regulation and guidelines are Securities exchange regulation 1993,
Securities registration and issue approval guidelines, 2002 and securities allotment guidelines,
1997.

The main objective of research is to identify the effect of increasing stock and initial public
offering (IPOs) in the capital market of Nepal. In this research we take only four sectors as
population as Commercial banks, Development banks, Finances and Insurance companies. The
114 companies’ IPOs from 142 companies are taking as population from FY 1993/94 to 2007/08.
The simple size is 33 [using formula {(σ 2 *α2)/t2}]. Sample taking from commercial banks, 7
sample from Development banks, 17 From the Finance companies and 5 from the insurance
companies .Presentation and analysis of data collected through secondary and primary source,
reveals the existing state of IPOs in Nepal, analyzes IPOs and its relevant sectors and finally
presents relation of IPOs management in capital market and its challenges. All the analyses are
based on simple statistical and financial tools.
5.2. Conclusion
5.2.1 In the Nepalese capital market, the capital instrument is increasing and IPOs management
in capital market is becoming more sophisticated. The capital market has an average growth.

5.2.2 Growth of capital market and IPOs have significant relationship but not direct. Capital
market is in developing phase but IPO (primary market) is not so much sophisticated. Hence, the
structure of primary market is not so much developing.

5.2.3 Capital market structure influences the capital market but they haven’t direct relationship.
In Nepal, financial market structure is growing gradually and capital market is also being
sophisticated.

5.2.4 NEPSE make plans to improve financial intermediaries, according to their plan they have
added more brokers, merchant banks and issue managers. The increasing numbers of
intermediaries plays a significant role in the development of capital market of Nepal.

5.2.5 Under regulation of SEBON many listed companies are under risk due to weak monitoring
bodies and inappropriate rules and regulations. For example; Nepal Development Bank was
dissolved, however, just before it was dissolved, Nepal Development Bank received approval to
issue right shares due to the poor management of central bank (NRB) and SEBON.
5.3 Recommendation

5.3.1 The Nepalese public has huge money that must be utilized by the capital market to develop
capital infrastructure and long term project. It plays a significant role to develop the economic
system. It also helps to improve the GDP.

5.3.2 Primary market is not so sophisticated hence government should develop basic
infrastructures for the primary market. And capital market should be familiar with modern
technology.

5.3.3 Capital market structures as like NEPSE, SEBON, and Financial institution is not mature
and sophisticated. Hence it must be developed by giving authorities as well as responsibilities.
They should provide off the job training and on the job training for human resources.

5.3.4 SEBON should make proper plans for the improvement of intermediaries such as brokers,
investment banker and dealer. Now capital market has only one dealer which is not sufficient for
the market. Hence NEPSE should develop more dealers.

5.3.5 Government should make the authorities and responsibilities of central bank, SEBON and
NEPSE clear. Government should control the regulation body of SEBON, NEPSE and central
bank.
 Questionnaire
Dear respondent this questionnaire is to get the data for my research conducted to know the IPO
management in capital market. So it will helpful if you fill this questionnaire to obtain data for my
research.

For Investors:

Age: ……………………… Address: ………………………………………………………

1. Why are public interested to invest in stocks?

a) To get more profit margin.

b) Few investment options.

c) Just following the public trend.

d) Others. ………………………………………………………………………

2. Are public interested to invest in IPO?

a) Yes b) No

If yes/no
………………………………………………………………………………………
………………………………………………………………………………………

3. Why do people invest on stock rather than bond?

a) High return on stock.

b) Stock facilitated market.

c) Other factors.
……………………………………………………………………………………

4. Is Nepalese capital market risk free?

a) Yes b) No

5. Can Nepalese market cope with the global economy?

a) Yes b) No

6. How can a small investor diversify their risk?

a) Creating a stock portfolio b) Creating bond portfolio c) Creating Stock & Bond
7. Which type stock do you prefer?

a) Banking Companies b) Manufacturing Companies c) Hotels

d) Others

8. Do you know about Nepal Stock Exchange?

a) Yes b) No

9. Which type of institutions do you prefer to purchase their IPOs?

a) Financial Institutions.

b) Hydropower Projects.

c) Trading and Manufacturing Companies.

d) Hotel and Services.

10. Why are people interested to invest on financial sectors?

a) High return with low risk.

b) Strong supervision by central bank.

c) Because everybody invest.

d) Others
………………………………………………………………………………

11. Does stock that pays special dividend always go down by the amount of the dividend?

a) Yes b) No

12. How do you value a common stock?

…………………………………………………………………………………

…………………………………………………………………………………

13. Which of the following best describes the stock brokers?

a) Market Maker.

b) Commission Taker.

c) Advisors.

d) None of the above.

Questionnaire
Dear respondent this questionnaire is to get the data for my research conducted to know the IPO
management in capital market. So it will helpful if you fill this questionnaire to obtain data for my
research.

For Stock Experts:

1. What determines a stock’s price?

a) Wealth of organization
b) Profit margin of company
c) Company management
d) Cash flow of company
e) Political situation
f) All of them
g) None of the above

2. How does the stock market work?

………………………………………………………………………………………………………
…………………………………………………………………………………

3. If you are looking at many companies with equal risks which ones will have the highest stock price?

a) Company with highest dividend paid.

b) By creating a portfolio.

c) Cash flow of investors.

d) Others.
…………………………………………………………………………………………

4. Is Nepalese Capital Market capable enough to cope with the global economy?

a) Yes b) No

5. How can small investors diversify their risk?

a) Creating a Portfolio.

b) Investing on one company.

6. What is stock repurchase?

a) Purchasing own stocks by the company itself.

b) Purchasing of stock sold in the market by investors themselves.

7. How and why do the stock prices fluctuate even after the stock exchanges close trading for the day?
 a) Changes in the policies of stock market.

b) Political Changes.

c) Investors Expectations.

d) Availability of stocks.

8. Why would a company issue a stock dividend instead of cash dividend?

a) To maintain the company’s liquidity.

b) To fulfill the capital requirement.

c) To increase the involvement of investors in the company.

d) Others.
…………………………………………………………………………………………

9. What are the challenges and opportunities of Nepalese Capital market?

Challenges Opportunities

………………….. ……………………….

……………… …………………………

10. What are the capital market instruments?

a). ……………………… d). ………………..

b). …………………… e). ………………….

c). …………………… f)…………………….

12. What is the reason behind the increment of capital realization in the primary market in fiscal year
2007/08 A.D.?

a) Outcome of successful People’s Movement 2062/063 B.S.

b) Matured Financial Institutions.
c) Public Awareness and interest in the Share Market
 Bibliography

1. Bhattarai, R.(2006). Stock market in Nepal. Kathmandu: Buddha Academic

2. Brau, J. C. & Fawcett S. E.(2007). Initial Public Offerings: An analysis of theory and
practices. The journal of finance 61:399-436. Available
http://www.blackwell_synergy.com[2009,November,18]
3. Guring, Jas B.(1999). Share price behavior of listed companies in Nepal. master diss.,
Tribhuvan University.
4. Nepal Stock Exchange.(2007/08).Annual report. Kathmandu: Author.
5. Nepal Stock Exchange[online] (cited2009). : http://www.nepalstock.com
[2009,November,22]
6. Security Board of Nepal.(2007/08). Annual report. Kathmandu: Author.
7. Security Board of Nepal[online] (cited 2009). Available:
http://www.sebonp.com[2009,November,18]
8. Shrestha, Raju(2007). An Analysis of Different Aspect of IPO and Its practices in Nepal.
Master diss, Tribhuvan University.
9. Shrestha, Suraj K.(1996). A Study on the Public Response to Primary Issue of Share in
Nepal. Master diss. Tribhuvan University.
Appendix1 SEBON

1.1 Introduction Security Board of Nepal (SEBON)

Securities Board of Nepal (SEBON) was established by the Government of Nepal on June 7,
1993 as an apex regulator of Securities Markets in Nepal. It has been regulating the market under
the Securities Act, 2006. The functions, duties and powers of SEBON as per the Act are as
follows.
To offer advice to Government on matters connected with the development of the capital
market.
• To register the securities of corporate bodies established with the authority to make a
public issue of its securities.
• To regulate and systematize the issue, transfer, sale and exchange of registered securities.
• To give permission to operate a stock exchange to any corporate body desirous of doing
so, subject to this Act or the rules and bye-rules framed under this Act.
• To supervise and monitor the functions and activities of stock exchange.
• To inspect whether or not any stock exchange is executing its functions and activities in
accordance with this Act or the rules and bye-rules framed under this Act, and to suspend
or cancel the license of any stock exchange which is not found to be doing so.
• To issue licenses to conduct the business of dealing in securities, subject to this Act, or
the rules and the bye-rules framed under this Act, to companies or institutions desirous of
conducting the business of dealing in securities.
• To supervise and monitor the functions and activities of securities-dealers.
• To grant permission to operate collective investment schemes and investment fund
programs, and to supervise and monitor them.
• To approve the bye-rules concerning transactions in securities framed by stock exchanges
and institutions engaged in the business of dealing in securities, and, for the purpose of
making necessary provisions concerning the development of the capital market and
protecting the interests of investors investing in securities, issue orders to have necessary
alterations made in such bye-rules of stock exchange and institutions engaged in the
business of dealing in securities.
• To systematize the task of clearing accounts related to transactions in securities.
 • To supervise whether or not security dealers are behaving in the manner prescribed in this
Act, or the rules and the bye-rules framed under this Act, while conducting business of
dealing in securities, and suspend the license to conduct the business of dealing in
securities in case any securities dealer is not found to be behaving accordingly.
• To make or ensure necessary arrangements to regulate the volume of securities transacted
and the procedure of conducting such transactions in order to ensure the promotion,
development and clean operation of stock exchanges.
• To make necessary arrangements to prevent insider trading or any other offenses relating
to transactions in securities in order to protect the interest of investors in securities.
• To review or make arrangement for reviewing the financial statements submitted by the
corporate bodies issuing securities and security dealers, and issue directives deemed
necessary in that connection to the concerned corporate body.
• To systematize and make transparent the act of acquiring the ownership of a company or
gaining control over its management by purchasing its shares in a single lot or in different
lots.
• To establish coordination and exchange cooperation with the appropriate agencies in
order to supervise and regulate matters concerning securities or companies.
• To discharge or make arrangements for discharging such other functions as are necessary
for the development of securities and the capital market.

The Governing Board of SEBON is composed of seven members including one full time
chairman appointed by the Government for tenure of four years. Other members of the Board
include joint secretary of Ministry of Finance, joint secretary of Ministry of Law, Justice and
Parliamentary Affairs, representative from Nepal Rastra Bank, representative from Institute of
Chartered Accountants of Nepal, representative from Federation of Nepalese Chambers of
Commerce and Industries, and one member appointed by the Government from amongst
the experts pertaining to management of securities market, development of capital market,
financial or economic sector.

There are seven departments and sixteen sections in the organization of SEBON. Under the
Management Department, there are two divisions namely Human Resources Section and
Finance Section. There are also four sections under the Planning and Development Department
namely Research Section, Training Section, Information Technology Section and International
Affairs Section. There are also two sections under the Corporate Finance Department namely,
Public Issue Section and Collective Investment Scheme Section. Likewise, Under the Regulation
Department, there are two sections namely, Stock Exchange Regulation Section and Market
Intermediaries Regulation Section. There are also four sections under the Surveillance
Department namely, Stock Exchange Surveillance Section, Market Intermediaries Surveillance
Section, Trading Surveillance Section and Corporate Surveillance Section. Finally, under Legal
Department, there are two sections Research and Investigation Section and Enforcement Section.

The major financial sources of SEBON are the government grant, transaction fee from the stock
exchange and registration fee of corporate securities. Other financing sources include registration
and renewal of stock exchange and market intermediaries and the income from mobilization of
its revolving fund.
 Appendix 2 Public Issue Approval
(Fiscal Year 1993/94)
S. N. Name of Issuing Company Types of Amount of Issue Permission Issue
securities Approved (Rs. in Date Manager/
million) Fund Manager
1 Nepal Med Ltd. Ordinary Share 2.70 28/07/1993 CIT
2 NIDC Capital Markets Ltd. Mutual Fund 100.00 28/07/1993 NCML
3 Nepal Share Markets Co. Ltd. Ordinary Share 4.00 21/09/1993 NCML
4 Himalayan General Insurance Co. Ltd. Ordinary Share 12.00 28/09/1993 NCML
5 Harisiddhi Brick & Tiles Factory Ltd. Ordinary Share 53.20 12/12/1993 NCML
6 Nimrod Pharmaceuticals Ltd. Ordinary Share 18.00 16/12/1993 CIT
7 Nepal Lever Ltd. Ordinary Share 13.80 30/12/1993 NCML
8 Necon Air Ltd. Ordinary Share 16.50 10/01/1994 CIT
9 Necon Air Ltd. Preference Share 14.00 10/01/1994 CIT
10* United Insurance Co. (Nepal) Ltd. Ordinary Share 24.00 30/01/1994 NCML
#
11* Nepal SBI Bank Ltd. # Ordinary Share 36.00 22/02/1994 CIT
12* Peoples Finance Ltd. Ordinary Share 9.80 08/05/1994 CIT
13* Annapurna Finance Ltd. Ordinary Share 2.00 10/05/1994 NSML
#
14 Nepal Film Development Co. Ltd. Ordinary Share 21.90 05/06/1994 NCML
15 Agro Nepal Ltd. Ordinary Share 9.00 12/06/1994 CIT
16 Birat Shoe Ltd. Ordinary Share 5.00 21/06/1994 NCML
17 Birat Shoe Ltd. Preference Share 2.50 21/06/1994 NCML

Total 344.40

(Fiscal Year 1994/1995)

S. N. Name of Issuing Company Types of Amount of Issue Permission Issue Manager/
securities Approved Date Fund Manager
(Rs. in million)
1* Premier Insurance Co. Ltd. # Ordinary Share 12.00 18/08/1994 NCML
2 Ace Laboratries (Nepal) Ltd. Ordinary Share 12.26 04//09/1994 NFCL
3* Nepal Bangaladesh Bank Ltd. Ordinary Share 36.00 29/09/1994 NCML
4* Everest Insurance Co. Ltd. Ordinary Share 12.00 03/10/1994 NCML
5 Himgiri Textile Industries Ltd. Ordinary Share 19.20 08/11/1994 CIT
6 Balaju Textile Industries Ltd. Ordinary Share 7.50 24/11/1994 NSML
7* Kathmandu Finance Co. Ltd. # Ordinary Share 8.00 29/01/1995 NCML
LeatherageBansbari Tannery &
8 Ordinary Share 15.00 14/03/1995 NCML
Shoe Factory Ltd.
9* Citizen Investment Trust Ordinary Share 16.00 10/04/1995 NFCL
10* Everest Bank Ltd. Ordinary Share 36.00 26/04/1995 NCML
11 KoshByabasthapan Co. Ltd. Ordinary Share 30.25 14/06/1995 NFCL
12 Citizen Investment Trust Unit Scheme 50.00 29/06/1995 CIT

Total 254.21
 (Fiscal Year 1995/1996)
S. N. Name of Issuing Company Types of Amount of Issue Permission Issue Manager/
securities Approved Date Fund Manager
(Rs. in million)
1* Nepal Abbas BikashBitta Co. Ltd. Ordinary Share 20.00 01/08/1995 RBB
2* Narayani Finance Co. Ltd. # Ordinary Share 4.00 11/09/1995 NFCL
3 Nepal Finance & Saving Co. Ltd. Rights Share 2.00 22/10/1995

4 Shree Brikuti Pulp & Paper Nepal Ltd. Ordinary Share 105.00 05/12/1995 CIT
5* Yeti Finance Co. Ltd. # Ordinary Share 8.00 05/02/1996 NCML
6 Color Scan Nepal Ltd. Ordinary Share 14.34 25/03/1996 CIT
7* HISEF Finance Ltd. Ordinary Share 24.00 25/03/1996 NCML
8* Universal Finance and Capital Markets Ordinary Share 15.00 04/04/1996 CIT
Ltd.
9 Fleur Himalayan Co. Ltd. Ordinary Share 12.28 07/04/1996 NCML
10* Ace Finance Co. Ltd. # Ordinary Share 12.00 14/04/1996 NSML
11* Samjhana Finance Ltd. Ordinary Share 10.12 06/06/1996 RBB
12 Seti Cigarette Factory Ltd. Rights Share 67.00 02/07/1996

Total 293.74

(Fiscal Year 1996/1997)

S. N. Name of Issuing Company Types of Amount of Issue Permission Issue
securities Approved Date Manager/
(Rs. in million) Fund
Manager
1* Nepal Housing & Merchant Finance Ltd. # Ordinary Share 12.00 26/07/1996 NSML
2* Bank of Kathmandu Ltd. Ordinary Share 45.00 03/10/1996 NCML
3 Himalyan General Insurance Co. Ltd. # Rights Share 30.00 03/04/1997 AFCL
4 Bottlers Nepal Ltd. Rights Share 225.20 03/04/1997 CIT
5 Nepal Share Markets Co. Ltd. Rights Share 20.00 13/05/1997 AFCL

Total 332.20

(Fiscal Year 1997/1998)

S. N. Name of Issuing Company Types of Amount of Issue Permission Issue Manager/

securities Approved Date Fund Manager
(Rs. in million)
1* General Finance Co. Ltd. # Ordinary Share 8.00 17/08/1997 NSML
2 Nepal Bitumin& Barrel Udyog Ltd. Ordinary Share 7.40 17/08/1997 NSML
3 Shreeram Sugar Mills Ltd. Ordinary Share 46.50 23/10/1997 NCML
4 Shreeram Sugar Mills Ltd. Debenture 93.00 23/10/1997 NCML
5* Neco Insurance Ltd. Ordinary Share 20.00 26/10/1997 CIT & RBB
6 Nepal United Co. Ltd. Rights Share 3.01 16/11/1997 NFCL
7 Nepal Bank Ltd. Rights Share 241.95 27/11/1997 CIT
 8* Mahalaxmi Finance Co. Ltd. Ordinary Share 10.00 15/12/1997 NFCL
9* Paschimanchal Finance Co. Ltd. # Ordinary Share 8.00 05/01/1998 NSML
10 Annapurna Finance Co. Ltd. Rights Share 5.00 25/01/1998 NFCL
11* Lalitpur Finance Co. Ltd. Ordinary Share 9.50 02/04/1998 NCML
12* Goodwill Finance & Investment Co. # Ordinary Share 10.00 27/05/1998 NCML
(Nepal) Ltd.

Total 462.36

(Fiscal Year 1998/1999)

S. N. Name of Issuing Company Types of Amount of Issue Permission Issue
securities Approved Date Manager/
(Rs. in million) Fund
Manager

1* Alliance Insurance Co. Ltd. Ordinary Share 20.00 12/08/1998 CIT

2 Taragaon Regency Hotels Ltd. Ordinary Share 120.00 16/12/1998 NCML, NMB
3 Taragaon Regency Hotels Ltd. Preference Share 80.00 16/12/1998 NCML, NMB
4* Pokhara Finance Co. Ltd. # Ordinary Share 8.00 22/03/1999 CIT
5 Nepal Share Markets Co. Ltd. Rights Share 30.00 25/05/1999 AFCL

Total 258.00

(Fiscal Year 1999/2000)

S. N. Name of Issuing Company Types of Amount of Issue Permission Issue

securities Approved Date Manager/
(Rs. in million) Fund
Manager
1* Universal Finance & Capital Market Ltd. Ordinary 3.26 13/09/1999 CIT
Share
2* Nepal Industrial & Commercial Bank Ltd. Ordinary 175.00 15/11/1999 NCML&
Share NMB
3* Nepal Merchant Banking & Finance Ltd. Ordinary 50.00 30/12/1999 NCML
Share (not
issued)
4 Necon Air Ltd. Rights Share 89.60 21/01/2000 CIT
5* Lumbini Finance & Leasing Co. Ltd. Ordinary 24.00 01/02/2000 NSML
Share
6 Paschimanchal Finance Co. Ltd. # Rights Share 20.00 14/02/2000 NSML
7 Ace Finance Co. Ltd. Rights Share 15.00 29/03/2000 NSML
8* Sagarmatha Insurance Co. Ltd. Ordinary 10.20 14/06/2000 NCML
Share
9 Oriental Hotels Ltd. Ordinary 150.00 27/06/2000 NCML
Share
Citizen Unit Scheme Additional 93.25*
Sale

Total 630.31
 Public Issue Approval
(Fiscal Year 2000/2001)
S. Name of Issuing Company Types of Amount of Issue Permission Issue
N. securities Approved Date Manager/
(Rs. in million) Fund
Manager
1* Siddartha Finance Ltd. Ordinary 8.00 07/11/2000 NMB
Share
2* Nepal Merchant Banking & Finance Ordinary 50.00 30/11/2000 NCML
Ltd. Share
3* Alpic Everest Finance Ltd. Ordinary 5.00 12/12/2000 NEFINSCO
Share
4* Nepal Bangladesh Finance & Leasing Ordinary 7.50 19/01/2001 NSML,NSMBL
Co. Ltd. Share
5 Narayani Finance Ltd. Rights Share 12.58 12/03/2001 NSML
6* Nepal Bank of Ceylon Ltd. Ordinary 150.00 13/04/2001 NCML,NSMBL,
Share CIT
(not issued)
7 Everest Bank Ltd. Rights Share 119.21 30/05/2001 CIT
8* Nepal Development Bank Ltd. Ordinary 48.00 18/06/2001 CIT, NMB
Share
9 Bank of Kathmandu Ltd. Rights Share 234.00 13/07/2001 NCML
Citizen Unit Scheme Additional 82.91*
Sale

Total 717.20

Public Issue Approval

(Fiscal Year 2001/2002)
S. N. Name of Issuing Company Types of Amount of Issue Permission Issue Manager/
securities Approved Date Fund Manager
(Rs. in million)
1 Himalayan Distillery Ltd. Ordinary Share 173.46 10/08/2001 NCML
2 Nepal Housing & Merchant Finance Ltd. Rights Share 15.00 20/11/2001 NSML
3* Union Finance Co. Ltd. Ordinary Share 24.00 20/12/2001 NCML
4* Development Credit Bank Ltd Ordinary Share 48.00 02/01/2002 NMB
5 Ace Finance Ltd. Rights Share 45.00 02/01/2002 NSML
6 Nepal SBI Bank Ltd. Rights Share 287.87 15/01/2002 NMB
7 NIDC Capital Markets Ltd. Rights Share 40.00 18/03/2002 CIT
8* Nepal Bank Of Ceylon Ltd. Ordinary 150.00 25/03/2002 NCML, CIT,
Share (Not issued) NSMB
9* United Finance Ltd. Ordinary Share 24.00 08/05/2002 NMB
10 Himalayan Bank Ltd. Debenture 360.00 04/06/2002 NMB
11* Nepal Life Insurance Co. Ltd. Ordinary Share 50.00 07/06/2002 NMB
12* NirdhanUtthan Bank Ltd. Ordinary Share 3.30 14/06/2002 CIT
13 Everest Bank Ltd. Pref. Share 140.00 18/06/2002 NSML
14* International Leasing & Finance Co. Ltd.# Ordinary Share 30.00 26/06/2002 NMB
15* Gorkha Finance Ltd. Ordinary Share 10.00 05/07/2002 NSML
16* Shree Investment & Finance Co. Ltd.# Ordinary Share 16.00 16/07/2002 CIT
Citizen Unit Scheme Additional Sale 138.48*

Total 1555.11

(Fiscal Year 2003/2004)

S. Name of Issuing Company Types of Amount of Issue Permission Issue
N. securities Approved Date Manager/
(Rs. in million) Fund
Manager
1 Alpic Everest Finance Ltd. Rights Share 20.00 21/08/2003 NEFINSCO

2 Nepal Investment Bank Ltd. Debenture 300.00 14/10/2003 AFCL

3* Cosmic Merchant Banking & Finance Ltd.# Ordinary Share 24.00 21/10/2003 NMB

4 Kumari Bank Ltd. Ordinary Share 150.00 12/11/2003 NCML, CIT

5 Siddhartha Finance Ltd. Rights Share 20.00 14/11/2003 NEFINSCO

6* Fewa Finance Co. Ltd. Ordinary Share 8.00 06/02/2004 NMB

7* Nepal Credit & Commerce Bank Ltd. Ordinary Share 210.00 13/02/2004 NCML, CIT

8 Prudential Insurance Co. Ltd. Ordinary Share 20.00 22/04/2004 NMB

9 NB Finance & Leasing Co. Ltd. Rights Share 30.00 10/05/2004 NSMBL

10* Pashchimanchal Development Bank Ltd. Ordinary Share 6.00 24/05/2004 NCML

11* Chhimake Development Bank Ltd. Ordinary Share 3.00 24/05/2004 NMB

12* Lumbini Bank Ltd. Ordinary Share 150.00 02/06/2004 CIT

13* Kist Merchant Banking & Finance Ltd. Ordinary Share 20.00 08/06/2004 NMB

14 NB Bank Ltd. Rights Share 359.92 17/06/2004 NSMBL

15* World Merchant Banking & Finance Ltd. Ordinary Share 24.00 08/07/2004 NMB

16 National Hydro Power Co. Ltd. Ordinary Share 140.00 15/07/2004 NCML,
NSMBL

Citizen Unit Scheme Additional Sale 62.87*

Total 1547.79

(Fiscal Year 2004/2005)

S. N. Name of Issuing Company Types of Amt of Issue Permission Date Issue
securities Approved Manager/
(Rs. in million) Fund
Manager
1 Annapurna Finance Company Ltd. Rights Share 20.00 07/10/2004 NCML
2* Birgunj Finance Ltd. Ordinary Share 24.00 05/11/2004 NMB

3* DiproscBikash Bank Ltd. Ordinary Share 3.48 12/01/2005 NMB

4 NirdhanUdthan Bank Ltd. Rights Share 15.00 28/03/2005 NMB

5 Everest Bank Ltd. Debenture 300.00 30/03/2005 CIT

6 Nepal SBI Bank Ltd. Rights Shares 215.93 6/04/2005 NMB

7* Everest Finance Ltd. Ordinary Share 8.00 02/05/2005 NMB

8 Nepal Investment Bank Ltd. Rights Shares 295.29 02/05/2005 AFCL

9* Capital Merchant Banking & Finance Ordinary Share 28.00 24/05/2005 CIT

10 National Finance Ltd. (BittiyaSamsthan) Rights Shares 43.20 02/06/2005 NCML

11 Development Credit Bank Ltd. Rights Shares 80.00 14/07/2005 NMB

12 Chilime Hydropower Limited Ordinary Share 237.41 14/07/2005 CIT

(for staffs including retired, director, ex-director of Nepal
BidhutPradhikarn and staffs of the issuing companies)

Total 1270.31

(Fiscal Year 2005/2006)

S. Name of Issuing Company Types of Amt of Issue Permission Issue

securities Approved Date Manager/
N. (Rs. in million) Fund Manager

1* Siddhartha Bank Limited Ordinary Share 150.00 03/08/2005 NCML & NMB
(2062/4/19)
2* Srijana Finance Limited (BittiyaSansthan) Ordinary Share 4.00 03/08/2005 NCML
(2062/4/19)
3* Prudential Financial Institute Limited Ordinary Share 24.50 17/08/2005 NCML
(2062/5/1)
4 Bank of Kathmandu Limited Debenture 200.00 07/09/2005 NMB
(2062/5/22)
5* Merchant Finance Company Limited Ordinary Share 12.00 20/09/2005 NEFINSCO
(2062/6/4)
6 Kumari Bank Ltd. Rights Share 125.00 23/11/2005 NCML
(2062/8/6)
7 Nepal Development Bank Rights Share 160.00 26/12/2005 NCML
(2062/9/11)
8 Fewa Finance Company Ltd. Rights Share 30.00 26/12/2005 NMB
(2062/9/11)
9 Om Finance Ltd. Rights Share 30.00 26/12/2005 NMB
(2062/9/11)
10* Gandaki Financial Institution Limited Ordinary Share 15.00 28/12/2005 NMB
(2062/9/13)
11 Goodwill Finance Co. Ltd. Rights Share 25.00 03/01/2006 NCML
(2062/9/19)
12* Business Financial Institution Limited Ordinary Share 12.00 05/01/2006 NCML
(2062/9/21)
13* Royal Merchant Banking & Finance Ltd. Ordinary Share 17.50 25/01/2006 CIT
(2062/10/12)
14* Bajuratna Finance & Saving Co. Ltd. Ordinary Share 10.50 31/01/2006 NCML
(2062/10/18)
15 Central Finance Ltd. (BittiyaSansthan) Rights Share 12.00 02/02/2006 NCML
(2062/10/20)
16 Taragaon Regency Hotels Ltd. Rights Share 446.45 07/02/2006 NCML
(2062/10/25)
17 Janaki Finance Co. Ltd. (BittiyaSansthan) Rights Share 10.00 21/02/2006 NEFINSCO
(2062/11/9)
18* Guheshwori Merchant & Banking Ltd. Ordinary Share 20.00 21/03/2006 NCML
(2062/12/8)
19 Siddhartha Bikash Bank Ltd. (B. S.) Ordinary Share 20.00 27/03/2006 NMB
(2062/12/14)
20* Shikhar Insurance Co. Ltd. Ordinary Share 25.00 19/04/2006 NMB
(2063/1/6)
21* IME Financial Institution Limited. # Ordinary Share 17.50 26/04/2006 NMB
(2063/1/13)
22 Machhapuchchre Bank Ltd. Rights Share 165.00 01/05/2006 NMB
(2063/1/18)
23* BhrikutiBikash Bank Ltd. (B.S.) Ordinary Share 6.42 02/05/2006 NCML
(2063/1/19)
24 Nepal Share Markets & Finance Ltd. (B.S.) Rights Share 40.00 10/05/2006 CIT
(2063/1/27)
25 Kist Merchant Banking & Finance (B.S.) Rights Share 50.00 11/05/2006 NMB
(2063/1/28)
26 Patan Finance Limited (B.S.) Ordinary Share 20.00 29/05/2006 NEFINSCO
(2063/2/15)
27 Nepal Investment Bank Ltd. Debenture 250.00 30/05/2006 ACE
(2063/2/16)
28 Nepal Industrial and Commercial Bank Ltd. Debenture 200.00 31/05/2006 ACE
(2063/2/17)
29 Nepal SBI Bank Ltd. Debenture 200.00 25/06/2006 CIT
(2063/3/11)
30* NarayaniAudhogikBikash Bank Ltd. (B.S) Ordinary Share 6.00 29/06/2006 NEFINSCO
(2063/3/15)
31 Pokhara Finance Ltd. (B.S.) Rights Share 20.00 29/06/2006 NCML
(2063/3/15)
32* SanimaBikashBittiyaSanstha Ltd. Ordinary Share 96.00 04/07/2006 NMB
(2063/3/20)
33 PaschimanchalBikash Bank Ltd (BS) Rights Share 28.00 09/07/2006 NCML
(2063/3/25)
34 Lumbini Bank Limited Rights Share 100.00 13/07/2006 NCML
(2063/3/29)

Total 2547.87

(Fiscal Year 2006/2007)

S. N. Name of Issuing Company Types of Amt of Issue Permission Date Issue Manager
securities Approved
(Rs. in million)
1* BageshworiBikash Bank Ltd.(B.S) Ordinary Share 9.00 18/07/2006 NMB
(2063/4/2)
2 Peoples Finance Ltd. (B.S.) Rights Share 40.00 03/08/2006 NCML
(2063/4/18)
3 ChhimekBikash Bank Ltd. (B.S.) Rights Share 20.00 01/09/2006 NMB
(2063/5/16)
4* SahayogiBikash Bank Ltd. (B.S.) Ordinary 6.00 03/09/2006 NCML
Share (2063/5/18)
5 Alpic Everest Finance Ltd. (B.S.) Rights Share 20.00 07/09/2006 NMB
(2063/5/22)
6 Nepal Development Bank Ltd. (B.S.) Rights Share 160.00 30/10/2006 NCML
(2063/7/13)
7 Navadurga Finance Co. Ltd. (B.S.) Rights Share 11.00 12/12/2006 NEFINSCO
(2063/8/26)
8* Gorkha Development Bank Ltd. Ordinary 96.00 31/12/2006 NMB &
Share (2063/9/16) NCML
9 Ace Finance Co. Ltd. (B.S.) Rights Share 194.00 12/01/2007 NCML
(2063/9/28)
10 Annapurna Finance Co. Ltd. (B.S.) Rights Share 80.00 15/01/2007 NCML
(2063/10/1)
11* SwabalambanBikash Bank Ltd. (B.S.) Ordinary 6.00 26/01/2007 NMB
Share (2063/10/14)
12* HimchuliBikash Bank Ltd. Ordinary 12.00 04/02/2007 NCML
Share (2063/10/21)
13* Imperial Financial Institution Ltd. Ordinary 19.50 06/02/2007 NMB
Share (2063/10/23)
14* Annapurna Bikash Bank Ltd. (B.S.) # Ordinary 29.40 21/02/2007 NEFINSCO
Share (2063/11/9)
15 Yeti Finance Ltd. (B.S.) Rights Share 6.25 05/03/2007 NCML
(2063/11/21)
 16* ICFC BittiyaSanstha Ltd. Ordinary 24.354 08/03/2007 NMB
Share (2063/11/24)
17* Civil Merchant BittiyaSanstha Ltd. Ordinary 20.00 15/03/2007 NEFINSCO
Share (2063/12/1)
18 Capital Merchant Banking & Rights Share 84.00 28/03/2007 CIT
Finance Ltd. (2063/12/14)
19 Laxmi Bank Limited Rights Share 122.00 04/04/2007 NMB
(2063/12/21)
20 Business Development Bank Ltd. Rights Share 30.00 18/04/2007 ACE
(2064/1/5)
21* Nepal Express Finance Limited # Ordinary 15.00 23/04/2007 NCML
Share (2064/1/10)
22 Kist Merchant Banking & Finance Ltd. Rights Share 100.00 04/05/2007 NCML
(2064/1/21)
23 Siddhartha Bank Ltd. Rights Share 100.00 16/05/2007 ACE
(2064/2/2)
24* Excel Development Bank Ltd. Ordinary 6.00 17/05/2007 NMB
Share (2064/2/3)
25* Biratlaxmi Development Bank Ltd. Ordinary 20.00 18/05/2007 NCML
Share (2064/2/4)
26* Malika Development Bank Ltd. # Ordinary 15.00 27/05/2007 NMB
Share (2064/2/13)
27 Lumbini Bank Ltd. Rights Share 150.00 29/05/2007 ACE
(2064/2/15)
28 Nepal Investment Bank Ltd. Debenture 250.00 30/05/2007 ACE
(2064/2/16)
29 Nepal Credit & Commerce Bank Ltd. Rights Share 700.00 06/06/2007 CIT
(2064/2/23)
30 Everest Bank Ltd. Preference 400.00 26/06/2007 CIT
Share (with Rs. 100 (2064/3/12)
premium)
31* Merchant Finance Co. Ltd. Ordinary 12.00 15/07/2007 NEFINSCO
Share (2064/3/31)

Total 2757.504

Issue Approval
(Fiscal Year 2007/2008)
Update on 14 July, 2008

S. Name of Issuing Company Type of Securities Amount of Permission Date of Issue Issue
N. Issue Approved Date Manag
er

1* Lumbini General Insurance Co. Ltd. Ordinary Share 25.00 29/07/2007 24/08/2007 (2064/5/7) NMB
(2064/4/13)

2 Central Finance Company Ltd. Rights Share 24.00 03/08/2007 11/09/2007 (2064/5/25) NCML
(2:1) (2064/4/18)
3* Siddhartha Insurance Ltd. Ordinary Share 25.00 12/08/2007 02/09/2007 (2064/5/16) NMB
(2064/4/27)
4* SetiBittiyaSansthan Limited Ordinary Share 4.90 23/09/2007 Not Issued NCML
(2064/6/6)
5 NirdhanUttan Bank Limited Rights Share 39.52 26/09/2007 16/11/2007 (2064/7/30) NCML
(1:1.20) (2064/6/9)
6 Nepal Share Markets & Finance Ltd. Rights Share 240.00 28/09/2007 19/11/2007 (2064/8/3) CIT
(1:1.5) (2064/6/11)
7* Infrastructure Development Bank Ltd. .. Ordinary Share 24.00 03/10/2007 30/10/2007 (2064/7/13) NMB
# (2064/6/16)
8* Agriculture Development Bank Ltd. Ordinary Share (for 125.00 04/10/2007 30/11/2007 (2064/8/14) ACE
its existing (2064/6/17)
shareholder of Group
B)
9* Kuber Merchant Banking & Finance Ltd. Ordinary Share 22.50 09/10/2007 14/11/2007 (2064/7/28) NMB
(2064/6/22)
10* Prabhu Finance Company Limited Ordinary Share 48.00 14/10/2007 22/11/2007 (2064/8/6) NMB
(2064/6/27)
11 IME Financial Institution Ltd. Rights Share 50.00 31/10/2007 02/12/2007 (2064/8/16) NMB
(1:1) (2064/7/14)
12 Paschimanchal Development Bank Ltd. Rights Share 47.50 04/11/2007 02/12/2007 (2064/8/16) ACE
. # (1:0.9) (2064/7/18)
13 BhrikutiBikash Bank Ltd. Rights Share 30.03 12/11/2007 10/12/2007 (2064/8/24) NCML
(1:1.25) (2064/7/26)
14 Capital Merchant Banking & Finance Ltd. Rights Share 161.00 12/11/2007 09/12/2007 (2064/8/23) ACE
(1:1) (2064/7/26)
15 Premier Finance Company Ltd. Rights Share 14.40 28/11/2007 28/12/2007 (2064/9/13) NCML
(2:1) (2064/8/12)
16 Development Credit Bank Ltd. Rights Share (1:3) 806.40 13/12/2007 03/01/2008 (2064/9/19) NMB
(2064/8/27)
17 Nepal Merchant Banking & Finance Ltd. . Rights Share 800.00 13/12/2007 08/01/2008 (2064/9/24) NFL
(1:4) (2064/8/27)
18 Nepal Investment Bank Ltd. Rights Share 201.28 09/01/2008 29/01/2008 ACE
(5:1) (2064/9/25) (2064/10/15)
19 Sagarmatha Insurance Company Ltd. Rights Share 23.56 14/01/2008 02/20/2008 ACE
(10:3) (2064/9/30) (2064/11/8)
20 Siddhartha Development Bank Ltd. Rights Share 50.00 16/01/2008 02/10/2008 ACE
(1:1) (2064/10/2) (2064/10/27)
21 Prudential BittiyaSanstha Ltd. Rights Share 50.00 16/01/2008 03/14/2008 ACE
(1:1) (2064/10/2) (2064/12/1)
22 Nepal Electricity Authority Debenture 1500.00 25/01/2008 02/14/2008 NMB
(2064/10/11) (2064/11/2)
23* Nepal Development & Employment Bank Ordinary 128.00 06/02/2008 11/03/2008 ACE
# (2064/10/23) (2064/11/28)
24 Siddhartha Bank Ltd. Rights Share 138.00 06/02/2008 02/25/2008 NMB
(5:1) (2064/10/23) (2064/11/13)
25 NIC Bank Ltd. Rights Share 158.40 15/02/2008 03/14/2008 NCML
(5:1) (2064/11/3) (2064/12/1)
26 Lumbini Bank Ltd. Rights Share 250.00 10/03/2008 03/31/2008 ACE
(3:1) (2064/11/27) (2064/12/18)
27 Kumari Bank Ltd. Rights Share 180.00 24/03/2008 04/24/2008 NCML
(5:1) (2064/12/11) (2065/1/12)
28 Laxmi Bank Ltd. Rights Share 183.00 03/04/2008 05/02/2008 NMB
(4:1) (2064/12/21) (2065/1/20)
29 SanimaBikash Bank Ltd. Rights Shares 64.00 03/04/2008 05/07/2008 NCML
(5:1) (2064/12/21) (2065/1/25)
30 Paschimanchal Finance Co. Ltd. Rights Share 27.83 04/04/2008 05/19/2008 NFL
 (2:1) (2064/12/22) (2065/2/6)
31 Kumari Bank Ltd. Debenture 400.00 04/24/2008 05/15/2008 NMB
(2065/1/12) (2065/2/2)
32 Kist Merchant Banking and Finance Rights Share 600.00 04/24/2008 05/16/2008 ACE
(1:3) (2065/1/12) (2065/2/3)
33 Ace Development Bank Ltd. Rights Share 96.00 05/04/2008 05/25/2008 NCML
(10:3) (2065/1/22) (2065/2/12)
34 Goodwill Finance Ltd. Rights Share 50.00 05/04/2008 05/25/2008 ACE
(1:1) (2065/1/22) (2065/2/12)
35 Gorkha Development Bank Rights Share 160.00 05/06/2008 05/26/2008 CIT
(2:1) (2065/1/24) (2065/2/13)
36 Business Development Bank Rights Share 150.00 05/08/2008 05/29/2008 ACE
(1:2.5) (2065/1/26) (2065/2/16)
37 HimchuliBikash Bank Ltd. Rights Share 60.00 05/08/2008 05/30/2008 NCML
(1:2) (2065/1/26) (2065/2/17)
38 United Finance Ltd. Rights Share 75.00 05/08/2008 05/30/2008 NCML
(1:1) (2065/1/26) (2065/2/17)
39 Nepal Express Finance Ltd. Rights Share 30.00 05/12/2008 06/02/2008 NCML
(5:3) (2065/1/30) (2065/2/20)
40 Royal Merchant Banking & Finance Rights Share 60.14 05/12/2008 06/01/2008 ACE
(1:1) (2065/1/30) (2065/2/19)
41 ICFC BittiyaSanstha Rights Share 224.81 05/13/2008 06/10/2008 NMB
(1:3) (2065/1/31 (2065/2/28)
42* Kaski Finance Ltd. Ordinary 20.00 05/18/2008 06/27/2008 NMB
(2065/2/5) (2065/3/13)
43* ShikharBittiyaSansthan Ltd. Ordinary 20.00 05/18/2008 06/21/2008 NEFIN
(2065/2/5) (2065/3/8) SCO
44 International Leasing and Finance Ltd. Rights Share 504.00 05/18/2008 06/09/2008 NCML
(1:3.5) (2065/2/5) (2065/2/27)
45 Annapurna Bikash Bank Ltd. Rights Share 150.00 05/18/2008 06/10/2008 NEFIN
(1:2.5) (2065/2/5) (2065/2/28) SCO
46* Clean Energy Development Bank Ordinary 96.00 05/23/2008 06/19/2008 NMB
(2065/2/10) (2065/3/5)
47* Reliable Investment BittiyaSanstha# Ordinary 24.75 05/26/2008 07/07/2008 NMB
(2065/2/13) (2065/3/23) &
NCML
48* Lord Buddha Financial Institution Ordinary 22.50 05/26/2008 06/29/2008 ACE
(2065/2/13) (2065/3/15)
49 Nepal Housing & Merchant Finance Rights Share 80.44 05/26/2008 06/25/2008 ACE
(1:1) (2065/2/13) (2065/3/11)
50 SahayogiBikash Bank Rights Share 10.00 05/26/2008 06/17/2008 NCML
(2:1) (2065/2/13) (2065/3/3)
51* SubechchhaBikash Bank Ordinary 12.00 05/27/2008 06/25/2008 ACE
(2065/2/14) (2065/3/11)
52 Sagarmatha Merchant and Finance Ordinary 20.00 05/27/2008 07/06/2008 CIT
(2065/2/14) (2065/3/22)
53* TriveniBikash Bank Ordinary 15.00 06/01/2008 07/17/2008 ACE
(2065/2/19) (2065/4/2)
54 Himalayan Bank Ltd. Debenture 500.00 06/01/2008 06/22/2008 ACE
(2065/2/19) (2065/3/8)
55 Shree Investment Finance Ltd. Rights Share 16.80 06/01/2008 06/23/2008 NMB
Source:
(4:1) (2065/2/19) (2065/3/9)
56 Premier Insurance Co Ltd. Rights Share 39.00 06/01/2008 06/26/2008 ACE official
(1:1.3) (2065/2/19) (2065/3/12)
website
57 Standard Finance Ltd. Rights Share 72.60 06/03/2008 06/30/2008 NCML
(1:1) (2065/2/21) (2065/3/16) of
58 Guheshwori Merchant Banking & Finance Rights Share 37.01 05/06/2008 07/15/2008 NCML
(5:3) (2065/2/23) (2065/3/31) NEPSE
59 Narayani Finance Ltd. Rights Share 150.07 05/06/2008 07/31/2008 NMB
and
(1:2.25) (2065/2/23) (2065/4/16)
60 Himalayan General Insurance Rights Share 37.80 06/06/2008 07/07/2008 ACE SEBON
(5:3) (2065/2/24) (2065/3/23)
61 Nepal Investment Bank Debenture 250.00 06/16/2008 06/26/2008 ACE
*Populati
(2065/3/2) (2065/3/12) on of
62 Gorkha Finance Ltd. Rights Share 30.00 06/22/2008 07/13/2008 CIT
(1:1) (2065/3/8) (2065/3/29) study
63 Nepal AwasBikashBitta Company Rights Share 70.49 06/24/2008 07/15/2008 NFL
# Sample
(1:1) (2065/3/10) (2065/3/31)
64 Kathmandu Finance Limited Rights Share 37.95 06/25/2008 07/30/2008 ACE of study
(1:1) (2065/3/11) (2065/4/15)
65 Nabil Bank Ltd. Debenture 300.00 06/29/2008 06/13/2008 NCML
(2065/3/15) (2065/3/30)
66 Neco Insurance Company Ltd. Rights Share 55.00 06/30/2008 CIT
(1:1) (2065/3/16) Appen
67* Global Bank Ltd. Ordinary 300.00 07/01/2008 07/09/2008 NCML
(2065/3/17) (2065/3/25) dix 3
68 National Hydro Power Company Ltd. Rights Share 694.94 07/01/2008 07/28/2008 NCML
(1:1) (2065/3/17) (2065/4/13) Listed
69 Machhapuchchhre Bank Ltd. Rights Share 492.99 07/02/2008 07/29/2008 NMB
(10:6) (2065/3/18) (2065/4/14) compa
70 Yeti Finance Ltd. Rights Share 31.25 07/02/2008 ACE
(1:1) (2065/3/18) nies
71 GandakiBikash Bank Ltd. Rights Share 50.00 07/07/2008 07/29/2008 NMB
(1:1) (2065/3/23) (2065/4/14)
sector
72* Pasupati Development Bank Ltd. Ordinary 80.00 07/13/2008 NEFIN
(2065/3/29) SCO &
wise
NCML

Total 11567.86

Commercial Banks
1 Nabil Bank Ltd. NABIL 9,657,470 100 965,747,000

2 Nepal Investment Bank Ltd. NIB 24,070,689 100 2,407,068,900

3 Standard Chartered Bank Ltd. SCB 9,319,664 100 931,966,400

4 Himalayan Bank Ltd. HBL 12,162,150 100 1,216,215,000

5 Nepal SBI Bank Limited SBI 8,734,791 100 873,479,100

6 Nepal Bangladesh Bank Ltd. NBB 18,603,890 100 1,860,389,000

 7 Everest Bank Ltd EBL 6,388,200 100 638,820,000

8 Bank of Kathmandu BOK 8,443,979 100 844,397,900

9 Nepal Industrial And Co.Bank NICB 11,404,800 100 1,140,480,000

10 Machhachapuchhre Bank Ltd MBL 13,146,420 100 1,314,642,000

11 Laxmi Bank Limited LBL 10,980,861 100 1,098,086,100

12 Kumari Bank Ltd KBL 11,858,374 100 1,185,837,400

13 Lumbini Bank Ltd. LUBL 10,000,000 100 1,000,000,000

14 Nepal Credit And Com. Bank NCCB 13,908,900 100 1,390,890,000

15 Siddhartha Bank Limited SBL 9,522,000 100 952,200,000

16 NMB Bank Ltd. NMB 14,246,413 100 1,424,641,300

17 Bank of Asia Nepal Limited BOAN 10,000,000 100 1,000,000,000

Citizens Bank International

18 CZBIL 10,000,000 100 1,000,000,000
Limited
19 KIST Bank Limited KIST 20,000,000 100 2,000,000,000

20 DCBL Bank Ltd. DCBL 16,611,840 100 1,661,184,000

21 Global Bank Limited GBL 10,000,000 100 1,000,000,000

22 Prime Commercial Bank Limited PCBL 10,000,000 100 1,000,000,000

23 Sunrise Bank Limited SRBL 12,500,000 100 1,250,000,000

Total ####### 2,300 28,156,044,100

Finance

24 Nepal Finance and Saving Co.Ltd. NFS 300,000 100 30,000,000

25 NIDC Capital Markets Ltd. NCM 1,012,500 100 101,250,000

26 National Finance Co. Ltd. NFC 2,174,071 100 217,407,100

27 Nepal Share Markets Ltd. NSM 4,320,000 100 432,000,000

Annapurna Finance Company

28 AFC 2,620,800 100 262,080,000
Limited
29 Kathmandu Finance Limited. KFL 759,000 100 75,900,000

30 Peoples Finance Limited. PFCL 2,021,038 100 202,103,800

31 Union Finance Ltd. UFCL 1,590,025 100 159,002,500

32 Citizen Investment Trust CIT 800,000 100 80,000,000

33 Nepal AawasBikasBeeta Co. Ltd. NABB 1,523,681 100 152,368,100

34 Narayani Finance Limited NFL 2,136,517 100 213,651,700

35 Yeti Finance Company Ltd. YFL 625,000 100 62,500,000

36 Gorkha Finance Ltd. GFLK 595,000 100 59,500,000

37 Samjhana Finance Co. Ltd. SFC 225,000 100 22,500,000

38 Universal Finance Ltd. UFLK 602,184 100 60,218,400

39 Nepal Housing And Merchant Fin. NHMF 1,607,387 100 160,738,700

40 General Finance Ltd. GFL 242,434 100 24,243,400

41 MahaLaxmi Finance Ltd. MFL 960,000 100 96,000,000

42 Lalitpur Finance Ltd. LFC 1,138,604 100 113,860,400

43 Goodwill Finance Co. Ltd. GFCL 1,154,741 100 115,474,100

44 Paschimanchal Finance Co. Ltd PFC 556,600 100 55,660,000

45 Pokhara Finance Ltd. PFL 2,387,280 100 238,728,000

46 Lumbini Finance Ltd. LFLC 900,000 100 90,000,000

47 Siddhartha Finance Limited SFL 869,322 100 86,932,200

Alpic Everest Finance Company

48 AEFL 780,000 100 78,000,000
Limited
49 United Finance Ltd UFL 1,650,000 100 165,000,000

50 International Leasing And Fin. Co. ILFC 6,480,000 100 648,000,000

51 Shree Investment Finance Co. Ltd SIFC 1,008,000 100 100,800,000

52 Central Finance Co. Ltd. CFCL 1,015,493 100 101,549,300

53 Nepal Shree Lanka Merchant Bank NSLMB 1,000,000 100 100,000,000

54 Premier Finance Co. Ltd PFCLL 555,984 100 55,598,400

55 Nava Durga Finance Co.Ltd. NDFL 455,948 100 45,594,800

56 Butwal Finance Ltd BFL 826,330 100 82,633,000

57 Janaki Finance Ltd. JFL 400,000 100 40,000,000

58 Standard Finance Ltd. STFL 10,018,041 100 1,001,804,100

59 Om Finance Ltd. OFL 1,049,569 100 104,956,900

60 Cosmic Mer.Bank And Fin. CMBF 750,510 100 75,051,000

61 Fewa Finance Co. Ltd. FFCL 910,000 100 91,000,000

62 World Merchant Bank Ltd WMBF 720,000 100 72,000,000

63 Birgunj Finance Ltd BJFL 852,983 100 85,298,300

64 Capital Mer. Bank And Fin CMB 3,740,278 100 374,027,800

65 Everest Finance Ltd, EFL 200,000 100 20,000,000

66 Prudential Bittiya Sans PFIL 1,000,000 100 100,000,000

 67 Shrijana Finance(Bittiya Sa SFFIL 280,000 100 28,000,000

68 Royal Mer. Bank. And Fin RMBFI 1,342,544 100 134,254,400

69 Guheyshwori Mer. Bank. Fin GMFIL 986,901 100 98,690,100

70 IME Financial Institution IMEFI 2,494,602 100 249,460,200

71 BhajuratnaFin.AndSav. Co. Ltd. BFIL 385,000 100 38,500,000

72 Patan Finance Ltd. PFLBS 500,000 100 50,000,000

73 Imperial Financial Inst. Ltd. IFIL 500,000 100 50,000,000

74 Civil Merchant bittyasanstha CMBSL 500,000 100 50,000,000

75 ICFC BittyaSanstha Ltd. ICFC 3,293,837 100 329,383,700

Lord Buddha Financial

76 LBFIL 750,000 100 75,000,000
Institutional Limited
Sagarmatha Merchant Banking
77 SMBF 500,000 100 50,000,000
And Finance Limited
78 Kaski Finance Limited KAFIL 500,000 100 50,000,000

Merchant Finance Company

79 MFCL 300,000 100 30,000,000
Limited
80 Reliable Finance Limited RIBSL 825,000 100 82,500,000

81 ShikharBittiyaSanstha Limited SBSL 500,000 100 50,000,000

82 Nepal Express Finance Limited NEFL 1,040,000 100 104,000,000

83 Kuber Merchant Finance Limited KMBSL 500,000 100 50,000,000

84 Prabhu Finance Company Limited PRFL 1,600,000 100 160,000,000

85 Api Finance Limtied AFL 600,000 100 60,000,000

86 Crystal Finance Limited CFL 700,000 100 70,000,000

Total 82,632,204 6,300 8,263,220,400

Hotels

87 Yak and Yeti Hotel Ltd.(Ord.) YHL 2,209,208 100 220,920,800

88 Soaltee Hotel Ltd. SHL 9,566,815 10 95,668,150

89 Taragaon Regency Hotel TRH 7,449,875 100 744,987,500

90 Oriental Hotel Ltd. OHL 5,000,000 100 500,000,000

Total 24,225,898 310 1,561,576,450

Manufacturing & Processing

91 Bottlers Nepal Ltd.(Balaju) BNL 1,948,887 100 194,888,700

92 Nepal Lube Oil Ltd. NLO 203,936 100 20,393,600

93 Nepal Vanaspati Ghee Udhyog Ltd NVG 101,250 100 10,125,000

94 Raghupati Jute Mills Ltd. RJM 1,806,966 100 180,696,600

95 Butwal Spinning Mills Ltd. BSM 1,306,693 100 130,669,300

96 Gorakhakali Rubber Udhyog Ltd. GRU 3,833,400 75 287,505,000

97 Jyoti Spinning Mills Ltd (ord.) JSM 1,270,288 100 127,028,800

98 ArunVanaspatiUdhyog Limited AVU 550,343 100 55,034,300

99 Bottlers Nepal (Terai)Ltd. BNT 1,210,000 100 121,000,000

100 Harisiddhi Brick and Tile Fac.Ltd. HBT 18,650,000 10 186,500,000

101 Birat Shoe Ltd.(Ord.) BSL 165,000 100 16,500,000

102 Uniliver Nepal Ltd. UNL 920,700 100 92,070,000

103 Nepal KhadyaUdhyog Ltd. NKU 90,000 100 9,000,000

104 Shree Bhrikuti Pulp And Paper Ltd SBPP 3,500,000 100 350,000,000

105 Fluer Himalayan Limited FHL 262,102 75 19,657,650

106 Shree Ram Sugar Mills Ltd SRS 3,045,990 100 304,599,000

107 Nepal Bitumin and Barrel Udyog NBBU 210,680 100 21,068,000

108 Himalayan Distillery Ltd. HDL 4,130,000 100 413,000,000

Total 43,206,235 1,660 2,539,735,950

Others

109 Nepal Film Dev.Co. Ltd. NFD 491,285 100 49,128,500

Nepal Doorsanchar Company

110 NTC ####### 100 15,000,000,000
Limited
Total ####### 200 15,049,128,500

HydroPower

111 National Hydro Power Co. NHPC 13,851,862 100 1,385,186,200

112 Butwal Power Co. Ltd. BPCL 8,390,577 100 839,057,700

113 Chilime Hydro power Co. CHCL 7,296,000 100 729,600,000

Arun Valley Hydropower

114 AHPC 1,715,000 100 171,500,000
Development Company Limited
Total 31,253,439 400 3,125,343,900

Tradings

115 Salt Trading Corporation STC 247,777 100 24,777,700

116 Bishal Bazar Co. Ltd. BBC 491,400 100 49,140,000

117 Nepal Trading Ltd. NTL 50,000 50 2,500,000

118 Nepal Welfare Company Ltd. NWC 41,000 50 2,050,000

Total 830,177 300 78,467,700

Insurance

119 Nepal Insurance Co.Ltd. NICL 1,026,984 100 102,698,400

120 RastriyaBeemaSansthan RBS 995,138 100 99,513,800

121 National LifeInsu. Co.Ltd. NLICL 1,320,000 100 132,000,000

122 Himalayan Gen.Insu. Co.Ltd. HGI 1,008,000 100 100,800,000

123 United Insurance Co.(Nepal)Ltd. UIC 600,000 100 60,000,000

124 Everest Insurance Co. Ltd. EIC 1,012,500 100 101,250,000

125 Premier Insurance co. Ltd. PIC 1,020,000 100 102,000,000

126 Neco Insurance Co. NIL 1,100,000 100 110,000,000

Alliance Insurance Company

127 AIC 599,862 100 59,986,200
Limited
128 Sagarmatha Insurance Co.Ltd SIC 1,021,020 100 102,102,000

129 NB Insurance Co. Ltd. NBIL 1,000,000 100 100,000,000

130 Nepal Life Insurance Co. Ltd. NLIC 3,000,000 100 300,000,000

131 Life Insurance Co. Nepal LICN 2,500,000 100 250,000,000

132 Prudential Insurance Co. PICL 1,000,000 100 100,000,000

133 Lumbini General Insurance LGIL 1,250,000 100 125,000,000

134 Shikhar Insurance Co. Ltd. SICL 1,250,000 100 125,000,000

135 Siddhartha Insurance Limited SIL 1,000,000 100 100,000,000

Total 20,703,504 1,700 2,070,350,400

Development Banks

136 Nepal Industrial Dev. Corp. NIDC 2,978,784 100 297,878,400

137 Nepal Development Bank NDB 3,200,000 100 320,000,000

138 NirdhanUtthan Bank Ltd. NUBL 790,721 100 79,072,100

139 ChhimekVikash Bank Ltd. CBBL 510,000 100 51,000,000

140 PaschimanchalBikash Bank PDBL 1,000,000 100 100,000,000

Infrastructure Development Bank

141 IDBL 3,200,000 100 320,000,000
Limited
142 Diprox Development Bank DDBL 226,200 100 22,620,000

143 GandakiBikas Bank Limited GDBL 1,000,000 100 100,000,000

144 Business Development Bank Ltd. BDBL 2,100,000 100 210,000,000

145 BhrikutiVikash Bank Limited BBBL 704,947 100 70,494,700

146 SanimaVikash Bank Ltd. SBBL 7,680,000 100 768,000,000

147 Narayani Development Bank Ltd. NABBC 250,000 100 25,000,000

Clean Energy Development Bank

148 CEDBL 3,200,000 100 320,000,000
Limited
149 TriveniBikas Bank Limited TBBL 500,000 100 50,000,000

PurwanchalGrameenBikash Bank
150 PGBL 600,000 100 60,000,000
Limited
Pashupati Development Bank
151 PSDBL 2,000,000 100 200,000,000
Limited
152 BageshoworiDev.Bank BBBLN 495,000 100 49,500,000

153 SahayogiVikas Bank SBBLJ 360,000 100 36,000,000

154 Gurkha Development Bank GDBNL 4,800,000 100 480,000,000

155 Annapurna Bikash Bank Limited ABBL 2,100,000 100 210,000,000

156 SwabalamwanBikash Bank SWBBL 630,607 100 63,060,700

157 Ace Development Bank Limited ACEDBL 7,504,619 100 750,461,900

158 HimchuliBikash Bank Ltd. HBBL 900,000 100 90,000,000

159 MalikaBikash Bank Limited MDBL 500,000 100 50,000,000

Siddhartha Development Bank

160 SDBL 6,450,000 100 645,000,000
Limited
161 BiratlaxmiBikash Bank Limited BLDBL 500,000 100 50,000,000

162 Excel Development Bank Ltd. EDBL 200,000 100 20,000,000

Nepal Development And

163 NDEP 4,765,970 100 476,597,000
Employment Promotion Bank
 Limited
164 SubhechhaBikas Bank Limited SUBBL 400,000 100 40,000,000

165 ViborBikas Bank Limited VBBL 6,800,000 100 680,000,000

Total 66,346,848 3,000 6,634,684,800

Government Bond

166 BikashRinpatra 2067 NRBBR2067 5,000,000 1,000 5,000,000,000

167 BikashRinpatra 2067 Ka NRBBR2067ka 10,000,000 1,000 10,000,000,000

168 BikashRinpatra 2067 Kha NRBBR2067kha 7,500,000 1,000 7,500,000,000

169 BikashRinpatra 2067 Ga NRBBR2067ga 7,500,000 1,000 7,500,000,000

170 BikashRinpatra 2072 NRBBR2072 7,500,000 1,000 7,500,000,000

171 BikashRinpatra 2075 NRBBR2075 12,000,000 1,000 12,000,000,000

172 BikashRinpatra 2075 Ka NRBBR2075ka 21,000,000 1,000 21,000,000,000

173 BikashRinpatra 2076 NRBBR2076 22,000,000 1,000 22,000,000,000

174 BikashRinpatra 2076 Ka NRBBR2076ka 9,000,000 1,000 9,000,000,000

175 BikashRinpatra 2076 Kha NRBBR2076Kha 10,400,000 1,000 10,400,000,000

176 BikashRinpatra 2076 Ga NRBBR2076Ga 4,600,000 1,000 4,600,000,000

177 BikashRinpatra 2072 Ka NRBBR2072ka 15,000,000 1,000 15,000,000,000

178 BikashRinpatra 2071 Ka NRBBR2071ka 20,000,000 1,000 20,000,000,000

179 BikashRinpatra 2071 Kha NRBBR2071Kha 30,000,000 1,000 30,000,000,000

180 BikashRinpatra 2073 Ka NRBBR2073 KA 27,500,000 1,000 27,500,000,000

Total ####### 15,000 209,000,000,000

Corporate Debenture

Nepal Investment Bank Limited

181 NIBB2067 300,000 1,000 300,000,000
Bond 2067
Everest Bank Limited Rinpatra
182 EBLB2061 300,000 1,000 300,000,000
2061
183 Bank of Kathmandu Rinpatra 2069 BOKB2069 200,000 1,000 200,000,000

Nepal Investment Bank Limited

184 NIBB2070 250,000 1,000 250,000,000
Bond 2070
185 Nepal Industrial and Commercial NICBB2070 200,000 1,000 200,000,000
 Bank Limited Bond 2070
186 Nepal SBI Bank Rinpatra 2070 SBIB2070 200,000 1,000 200,000,000

187 Nepal Investment Bank Bond 2071 NIBB2071 225,000 1,000 225,000,000

Nepal BidhutPradhikaranRinpatra
188 NEAB2069 1,500,000 1,000 1,500,000,000
2069
Himalayan Bank Limited Rinpatra
189 HBLB2072 500,000 1,000 500,000,000
2072
190 Nabil Bank Limited Bond 2075 NABILB2075 300,000 1,000 300,000,000

Laxmi Bank Limited Debenture

191 LBLB2072 350,000 1,000 350,000,000
2072
Nepal Investment Bank Limited
192 NIBB2072 250,000 1,000 250,000,000
Bond 2072
193 Kumari Bank Limited BOND 2070 KBLB2070 400,000 1,000 400,000,000

Total 4,975,000 13,000 4,975,000,000

Preferred Stock

Everest Bank Limited Convertible

194 EBLCP 2,000,000 100 200,000,000
Preference
Total 2,000,000 100 200,000,000

Mutual Fund

195 NCM Mutual Fund NCMMF 10,000,000 10 100,000,000

Total 10,000,000 10 100,000,000

Promotor Share

KIST Bank Limited Promoter

196 KISTPO 1,200,000 100 120,000,000
Share
Capital Merchant Banking And
197 CMBFLP 500,000 100 50,000,000
Finance Limited Promotor Share
Nepal SBI Bank Ltd. Promoter
198 SBIPO 6,114,353 100 611,435,300
Share
199 United Finance Limited Promoter UFLPO 900,000 100 90,000,000
 Share
Gorkha Finance Ltd. Promoter
200 GFLKPO 357,300 0 0
Share
Cosmic Merchant Bank And Fin.
201 CMBFPO 450,306 100 45,030,600
Co. Ltd. Promoter Share
Laxmi Bank Limited Promotor
202 LBLPO 300,000 100 30,000,000
Share
Royal Merchant Bank And Finance
203 RMBFPO 357,500 100 35,750,000
Co. Ltd. Promoter Share
Nepal Share Markets Limited
204 NSMPO 100,000 100 10,000,000
Promoter Share
SwabalambanBikas Bank Limited
205 SWBBLP 175,000 100 17,500,000
Promoter Share
Kathmandu Finance Limited
206 KFLPO 198,000 100 19,800,000
Promoter Share
Nepal Housing And Merchant Co.
207 NHMFPO 482,642 100 48,264,200
Ltd. Promoter Share
Fewa Finance Co. Ltd. Promoter
208 FFCLPO 420,000 100 42,000,000
Share
Nepal Credit And Commercial
209 NCCBPO 6,880,104 100 688,010,400
Bank Ltd. Promoter Share
Lalitpur Finance Co. Ltd. Promoter
210 LFCPO 417,656 100 41,765,600
Share
Malika Development Bank
211 MDBLPO 350,000 100 35,000,000
Limited promoter Share
Janaki Finance Limited Promoter
212 JFLPO 240,000 100 24,000,000
Share
ACE Development Bank Limited
213 ACEDPO 1,920,000 100 192,000,000
Promoter Share
Patan Finance Limited Promoter
214 PFLBSP 300,000 100 30,000,000
Share
Annapurna Finance Co. Ltd.
215 AFCPO 1,008,000 100 100,800,000
Promoter Share
 Everest Finance Limited Promoter
216 EFLPO 120,000 100 12,000,000
Share
General Finance Co. Ltd. Promoter
217 GFLPO 145,460 100 14,546,000
Share
PaschimanchalBikash Bank Ltd.
218 PDBLPO 600,000 100 60,000,000
Promoter Share
Bank of Kathmandu Promotor
219 BOKPO 5,000,000 100 500,000,000
Share
Nepal Development Bank Limited
220 NDBPO 1,120,000 100 112,000,000
Promoter Share
NABIL Bank Limited Promotor
221 NABILP 4,811,751 100 481,175,100
Share
Machhachapuchhre Bank Limited
222 MBLPO 5,751,559 100 575,155,900
Promotor Share
Kumari Bank Limited Promotor
223 KBLPO 5,250,000 100 525,000,000
Share
Alpic Everest Finance Company
224 AEFLPO 585,000 100 58,500,000
Limited Promotor Share
Lumbini Bank Limited Promotor
225 LUBLPO 5,250,000 100 525,000,000
Share
World Merchant Bank And
226 WMBFPO 360,000 100 36,000,000
Finance Limited Promoter Share
Samjhana Finance Co. Ltd.
227 SFCPO 123,750 100 12,375,000
Promoter Share
Siddhartha Development Bank
228 SDBLPO 300,000 100 30,000,000
Limited Promoter Share
Yeti Finance Co. Ltd. Promoter
229 YFLPO 375,000 100 37,500,000
Share
Peoples Finance Co. Ltd Promoter
230 PFCLPO 338,610 100 33,861,000
Share
Nepal Industrial And Co.Bank
231 NICBPO 6,211,141 100 621,114,100
Promoter Share
232 Development Credit Bank Ltd. DCBLPO 1,680,000 100 168,000,000
 Promoter Share
Shrijana Finance Ltd. Promoter
233 SFFILP 84,000 100 8,400,000
Share
Merchant Finance Company
234 MFCLPO 180,000 100 18,000,000
Limited Promoter Share
Goodwill Finance Co. Ltd.
235 GFCLPO 461,896 100 46,189,600
Promoter Share
Total 61,419,028 3,900 6,106,172,800

Appendix4 Brokers list

S. No Firm Name Code Tel. No. Address

1 Kumari Securities Pvt. Limited 1 01-4418036 DilliBazar,Kathmandu

2 Arun Securities Pvt. Limited 3 01-6916470 Putalisadak,Kathmandu

3 Opal Securities Investment Pvt. Limited 4 01-4421648 RamshahPath,Kathmandu

Market Securities Exchange Company Pvt.

4 5 01-4248973 KichhaPokhari,Kathmandu
Limited

ShankardevMarga,
5 Agrawal Securities Pvt. Limited 6 01-4229739
Putalisadak,Kathmandu

6 J.F. Securities Company Pvt. Limited 7 01-4223089 Putalisadak,Kathmandu

Ashutosh Brokerage & Securities Pvt.

7 8 01-4220276 KichhaPokhari,Kathmandu
Limited

8 Pragyan Securities Pvt. Limited 10 01-4498234 Putalisadak,Kathmandu

Malla&Malla Stock Broking Company Pvt.

9 11 01-4414263 Dillibazar,Kathmandu
Limited

10 Annapurna Securities Service Pvt. Limited 13 01-4419051 Putalisadak,Kathmandu

11 Nepal Stock House Pvt. Limited 14 01-4255732 Anamnagar,Kathmandu

ShankardevMarga,
12 Primo Securities Pvt. Limited 16 01-4239214
Putalisadak,Kathmandu

13 ABC Securities Pvt. Limited 17 01-4230787 Indrachowk,Kathmandu

14 Sagarmatha Securities Pvt. Limited 18 01-4242548 Putalisadak,Kathmandu

 Nepal Investment & Securities Trading Pvt.
15 19 01-4495450 Old Baneshowar,Kathmandu
Limited

16 Sipla Securities Pvt. Limited 20 01-4255782 NewRoad,Kathmandu

17 Midas Stock Broking Company Pvt. Limited 21 01-4416050 Dillibazar,Kathmandu

18 Siprabi Securities Pvt. Limited 22 01-5530701 Kupondol,Lalitpur

19 Sweta Securities Pvt. Limited 25 01-4444791 Putalisadak,Kathmandu

20 Asian Securities Pvt. Limited 26 01-4240609 Viharmarga,Kathmandu

21 Shree Krishna Securities Pvt. Limited 28 01-4224262 NewRoad,Kathmandu

22 Trishul Securities Pvt. Limited 29 01-4440709 Putalisadak,Kathmandu

Putalisadak,Kathmandu
23 Premier Securites Pvt. Limited 32 01-4231339

Appendix5 Nepal Stock Exchange

Introduction

Nepal Stock Exchange, in short NEPSE, is established under the company act, operating under
Securities Exchange Act, 1983. The basic objective of NEPSE is to impart free marketability and
liquidity to the government and corporate securities by facilitating transactions in its trading
floor through member, market intermediaries, such as broker, market makers etc. NEPSE opened
its trading floor on 13th January 1994. Government of Nepal, Nepal Rastra
Bank, Nepal Industrial Development Corporation and members are the shareholders of NEPSE.
.
History
The history of securities market began with the floatation of shares by Biratnagar Jute Mills Ltd.
and Nepal Bank Ltd. in 1937. Introduction of the Company Act in 1964, the first issuance of
Government Bond in 1964 and the establishment of Securities Exchange Center Ltd. in 1976
were other significant development relating to capital markets.
Securities Exchange Center was established with an objective of facilitating and promoting the
growth of capital markets. Before conversion into stock exchange it was the only capital markets
institution undertaking the job of brokering, underwriting, managing public issue, market making
for government bonds and other financial services. Nepal Government, under a program initiated
to reform capital markets converted Securities Exchange Center into Nepal Stock Exchange in
1993.

Members
Members of NEPSE are permitted to act as intermediaries in buying and selling of government
bonds and listed corporate securities. At present, there are 23 member brokers and 2 market
makers, who operate on the trading floor as per the Securities Exchange Act, 1983, rules and
bye-laws. .
Besides this, NEPSE has also granted membership to issue and sales manager securities trader
(Dealer). Issue and sales manager works as manager to the issue and underwriter for public issue
of securities whereas securities trader (Dealer) works as individual portfolio manager.
.

At present there are 11 sales and issue manager and 2 dealers (Secondary market). Click here to
get information of NEPSE members. .
The tenure of the membership is one year. The license should be renewed within 3 months after
the closure of the fiscal year. If not, it can be done within another three months by paying 25%
penalty.

Trading: NEPSE the only Stock Exchange in Nepal introduced fully automated screen based
trading since 24th August, 2007. The NEPSE trading system is called ‘NEPSE Automated
Trading System ‘(NATS) is a fully automated screen based trading system, which adopts the
principle of an order driven market.

Market Timings: Trading on equities takes place on all days of week (except Saturdays and
holidays declared by exchange in advance). On Friday only odd lot trading is done.

The market timings of the equities are:-

Market Open: - 12:00 Hours
Market Close: - 15:00 Hours

Odd Lot Trading is done on Fridays. For Odd Lot Trading Market Timings are

Market Open: - 12:00 Hours

Market Close: - 13:00 Hours

Note:- The exchange may however close the market on days other than schedule holidays or may
open the market on days originally declared as holidays. The exchange may also extend, advance
or reduce trading hours when it deems fit necessary.

Trading Holidays for Calendar year (2065/66) i.e 2009-04-14 to 2010-03-24

Securities Available for Trading: NEPSE facilitates trading in the following instruments

A. Shares
• Equity Shares
• Preference Shares
B. Debentures
C. Government Bonds
D. Mutual Funds

Circuit Breakers

NEPSE has implemented index-based circuit breakers with effect from 2064/6/4 (21 September
2007). In addition to the circuit breakers, price range is also applicable on individual securities.

Index-based Circuit Breakers

The index-based circuit breaker system applies at 3 stages of the NEPSE index movement of 3%,
4% and 5%, . These circuit breakers when triggered bring about a trading halt in all equity.

• In case of 3% movement either way, there would be a market halt for 15 minutes if the
movement takes place during first hour of trading i.e. 13:00 hours. In case this movement takes
after 13:00 hours there will be no trading halt at this level and market shall continue trading.
• In case of 4% movement either way, there would be a market halt for half an hour if the
movement takes place before 14:00 hours. In case this movement takes after 14:00 hours there
will be no trading halt at this level and market shall continue trading.

• In case of 5% movement in either way, trading shall be halted for the remainder of the day.

Price Range

Price Range is applicable on individual securities. The trading of the individual securities are not
halted but allowed to trade within the price range.

• The price band is 10% of previous close on either way. *

* During the ATO session the range is 5% on either way of Previous Close Price. After the band
is 2% on either way of the Last traded price till it reaches to 10% of the previous close.

Trading Location: The trading can be done either from NEPSE’s trading floor or from the
broker’s office. NEPSE uses sophisticated technology through brokers can trade remotely from
their office located inside the Kathmandu valley. This remote trading facility was started from 1
November 2007.

Trading System: NEPSE operates on the ‘NEPSE Automated Trading System ‘(NATS), a fully
screen based automated trading system, which adopts the principle of an order driven market.

Order Matching Rules

The system adopts principle of order driven market. The best buy order is matched with the best
sell order. An order may match partially with another order producing multiple trades. For order
matching the best buy order is the one with the highest price and the best sell order is the one
with the lowest price. This is because the system views all buy orders available from the point of
view of the sellers and all sell orders from the point of view of the buyers in the market. So, of
all buy orders available in the market at any point of time, a seller would obviously like to sell at
the highest possible buy price that is offered. Hence, the best buy order is the order with the
highest price and the best sell order is the order with the lowest price.
Settlement

NEPSE has adopted a T+3 settlement system. Settlement will be carried out on the basis of paper
verses payment. The trading is done at "T" and at T+1; the buying brokers have to submit bank
vouchers for settlement with covering letter. At T+2, the selling brokers must submit share
certificate with covering letter. At T+3, NEPSE prepares billing for payment and this will be
forwarded to the bank. .
Once the settlement is done the buying brokers with the consultation of the clients must decide
and present the purchased shares if they want to record it as blank transfer. This must be
completed within T+5.

Blank Transfer

Under this mechanism an opportunities to derive the market benefit is provided. But presently,
the buying brokers must complete the BT process within T+5. The transactions that are executed
can be recorded in different way and NEPSE has considered all possible retention. The
followings are the major key points to be considered.
1. This is related only with buy of the securities.
2. The buyer may decide to have market benefit either to have capital gains or to minimize the
loss.
3. In order to do this s/he may partly send for name transfer or may register it in blank transfer.
4. If s/he register total purchase in blank transfer and can put for sale and if only the part of the
shares are subscribed then s/he can handover the part and the part can be forwarded for name
transfer to the concerned company. In order to do this s/he has to cancel the blank transfer for
that portion.