Stock Brokers Get 9-Month Extension to Raise Paid-Up Capital in Nepal

The Securities Board of Nepal (SEBON) has proposed extending the deadline for broker companies to meet their required paid-up capital. With the previous deadline ending in Asar, SEBON now plans to give nine more months, extending the timeline until Chaitra-end of the current fiscal year.

New Capital Requirement and Delay in Guidelines

According to SEBON’s spokesperson, Niranjay Ghimire, the delay in issuing the Broker Merger Guidelines is the main reason for the extension. Though the capital deadline was set earlier, the official merger framework was only introduced last Chaitra. This made it hard for brokers planning to merge to meet the target on time.

Capital Requirement for Brokers

SEBON has categorized broker companies based on their services:

New broker companies have met these capital requirements. However, many older brokers still need to raise their capital. Out of 90 total brokers (including 40 new ones), nearly two dozen older companies have yet to meet the target.

Challenges in Meeting the Capital

In the past, brokers only needed NPR 20 million (limited) or NPR 200 million (full-service). Due to the sharp increase, companies were expected to either issue rights or bonus shares or go for mergers.

But since the merger guidelines came late, many firms could not hold their Annual General Meetings (AGMs) in time to decide on mergers.

Sagar Dhakal, president of the Stock Broker Association of Nepal, said that expecting companies to meet the capital target within a short time after the guideline release was impractical. He believes most companies will be able to comply by the new Chaitra deadline.

Mergers and the 6-Month Completion Rule

If a broker company enters a merger or acquisition deal, it must be completed within six months, according to SEBON’s merger directives. The extension now gives brokers more time to go through the process properly.

Capital Expansion Alone Is Not Enough

While capital increase is important, business expansion and operational support are equally necessary. Some new companies that have met the capital requirement are struggling with operating costs.

Dhakal points out that brokers currently cannot offer services like margin lending, advisory, or portfolio management, which limits their business potential.

Demand for More Rights and Services

Brokers argue that merchant banks with only NPR 50 million capital are allowed to offer portfolio management services, while brokers with NPR 200 million are not. This restriction is forcing clients to seek services from merchant banks instead.

“We are not asking for new rights. We just want to do what brokers in global markets already do,” said Dhakal.

Conclusion

The extension of the deadline to Chaitra-end provides a much-needed relief to broker companies. However, the focus should not only be on capital. SEBON and the government must also work to support business expansion, allow new services, and ensure that brokers can play a stronger role in Nepal’s growing capital market.