New Company Bill Mandates NEPSE and Brokerage Firms to Convert into Public Limited Companies
A groundbreaking provision in the draft of the proposed Company Act, 2083 requires Nepal's stock exchange and all private broker companies to transform into public limited companies to boost transparency, though an immediate IPO remains optional under company law.
The Nepalese capital market is on the verge of a major structural shift with the introduction of the "Bill to Amend and Consolidate Company Law, 2082." Drafted by the Ministry of Industry, Commerce, and Supplies, Section 18(1) of the new bill clears up past regulatory ambiguities by strictly mandating that both stock market operators and securities brokerages function exclusively as public limited companies. Currently, the state-owned Nepal Stock Exchange (NEPSE) and the vast majority of Nepal’s 92 active brokerage firms operate under private ownership models controlled by a limited number of investors. While this new legal mandate requires these private entities to restructure with at least seven promoters and meet specified capital thresholds, it clarifies a major point of confusion for investors: becoming a public company does not legally obligate them to immediately issue public shares (IPOs). They can continue to run as unlisted public companies. Nonetheless, this transition successfully establishes a transparent legal framework, leaving the door wide open for the Securities Board of Nepal (SEBON) to enforce future IPO deadlines under its own regulatory guidelines.