Listing in Nepal: IPO and FPO Requirements and Process

Start with the arithmetic, because it reframes the question. In FY 2081/82 (2024/25) SEBON approved 144 securities issues. Fifteen of those were initial or further public offerings, and between them they raised about NPR 3.93 billion. Seventeen rights issues raised about NPR 15.41 billion, and ten mutual fund schemes raised about NPR 15.88 billion. Measured by money raised, Nepal’s primary equity market is principally a mechanism for existing shareholders to put in more capital, with the IPO channel a distant third.

That is the context in which the listing rules should be read. They are not the binding constraint on a large pipeline of flotations. They are the reason the pipeline is the shape it is.

Registration and prospectus approval

Section 27 of the Securities Act 2063 (2007) requires a body corporate to register its securities with SEBON before issuing them. The prospectus for a public issue must then be separately approved by the Board and published. The two are distinct acts, and the second depends on the first.

Several categories fall outside prospectus approval: securities of Nepal Rastra Bank, securities guaranteed by the government, an issue to fifty or fewer persons, securities issued to employees, and anything the Board permits. That fifty-person line is the statutory basis for private placement in Nepal, and it does a great deal of work in the debenture and fund markets.

Listing on NEPSE is a third step, governed by the exchange’s own arrangements rather than by the Act, and it follows allotment. A body corporate that allots or sells registered securities must notify SEBON of the details within seven days.

Who is eligible

The Securities Registration and Issue Regulation 2073 sets the gate. The conditions we could read with confidence are these.

An applicant must have completed a full financial year of operation. A private company that has converted to public status needs a minimum of two years of operation, with its most recent annual accounts approved in general meeting. The applicant must have been in net profit for three consecutive years, reduced to two years where paid-up capital is NPR 1 billion or more. It must hold a credit rating of average grade or better from a rating agency licensed by SEBON.

The public offer itself must be not less than ten percent and not more than forty-nine percent of issued capital.

That band deserves attention, because it settles a question foreign readers often ask before they ask it. A Nepali IPO cannot transfer control. The promoter group retains at least 51 percent as a matter of regulation, and the free float of the market as a whole reflects it: on 26 August 2026 float capitalisation was roughly a third of total capitalisation. Nepal has no takeover market in listed equity, for the straightforward reason that control is not on sale.

In April 2026 SEBON added a further filter, issuing a standard for the review of financial statements submitted with an IPO application. The existence of a dedicated review standard in 2026 is itself a comment on what the Board had been finding in those filings.

How long approval takes

Where SEBON is satisfied with an application, the regulation gives it seven working days to issue the registration certificate, and seven working days to approve a prospectus. Approval stands unless something material changes, in which case the prospectus must be re-approved before sales begin.

Those are short periods. They are also the only part of the timetable that binds the regulator. Nothing in the seven-day rule constrains how long the Board may take to become satisfied, or how many rounds of queries precede that point. An issuer planning a listing should budget from the date its adviser files a complete application, and should treat the seven days as the last step rather than the process.

Once approved, the subscription window for a public issue must stay open for a minimum of four working days. A rights issue must be open for at least twenty-one days.

Reserved tranches

Nepali public issues are carved up before the general public sees them. Under the Securities Issuance and Allotment Directive 2074, up to five percent of the public portion may be reserved for the issuer’s own employees, excluding those on contract. Ten percent is reserved for Nepalis employed abroad, applied for through remittance accounts, ahead of the general public. Where an issue relates to a project with an affected local population, an allocation may be made to residents of that area before the general offer.

The foreign-employment reservation has been in place for years and has been persistently under-subscribed. That is the likely explanation for the change SEBON made with effect from 1 Shrawan 2082 (17 July 2025): the application window for that tranche was cut from fifteen days to a minimum of four working days, aligning it with the general offer. The same amendment allowed banks and financial institutions to issue irredeemable preference shares.

Pricing

Most Nepali IPOs have historically been sold at par. The Securities Registration and Issue Regulation added a book building route for issuers that meet a higher bar: three consecutive years of net profit, general meeting approval of the method, a net worth threshold expressed as a multiple of paid-up value per share, and a credit rating of average grade or better. Under book building, sixty percent of the issue goes to qualified institutional investors, whose bids set the price, and forty percent to the general public. Qualified institutional investors include listed entities, banks and financial institutions, mutual fund schemes, investment funds and merchant banks.

Shares allotted to qualified institutional investors under book building carry a short lock-in, materially shorter than the promoter lock-in described below.

SEBON’s Primary Capital Market Reform Policy 2083, issued on 12 August 2026, is described by the Board as oriented towards scientific and market-based pricing. What that will mean in operative rules is not yet published.

Allotment and lock-ins

Allotment and refund must be completed within a defined number of working days of the close of the offer, and the directive requires refunds to begin promptly after allotment. Applications are made through the centralised C-ASBA arrangement, which blocks the money in the applicant’s own bank account rather than collecting it, so an unsuccessful applicant is released rather than repaid. The mechanics of that, and of the demat account without which an application cannot be made, are set out in How NEPSE Trades and Settles.

The provision with the longest commercial reach is the promoter lock-in. Shares held by promoters cannot be sold or transferred for three years from allotment, with a narrow exception for transmission to family members on death or by inheritance.

For a founder, that is three years of illiquidity after the event that was supposed to create liquidity. For a private equity or venture investor holding pre-IPO shares classified in the promoter group, it converts a listing from an exit into a milestone. Fund managers structuring around this problem should read it alongside the fund-life constraints in Specialised Investment Funds, where a five to fifteen year fund life and a three-year post-listing lock-in interact badly if the listing is left late.

FPOs and rights issues

An FPO requires the issuer to have been listed for at least three years, to have been in net profit for three years, to have general meeting approval, to have a credit rating of average grade or better, and to satisfy a relationship between face value and book value per share.

A rights issue requires board and general meeting approval, must be put to the general meeting within a defined period of the board decision, and must stay open for at least twenty-one days. Where an issue is left unsold, the directive provides for a limited extension and for the disposal of the remainder.

The relative volumes reported above suggest which of these routes companies actually use. An adviser telling a Nepali board that the rights issue is the path of least resistance is describing the market accurately, not counselling timidity.

Sources

1. Securities Act, 2063 (2007) — English text

   Securities Board of Nepal · Authenticated 14 January 2007 · Tier 1 — Primary legal instrument

   Supports: Registration of securities before issue (section 27), prospectus approval and the exemptions from it (section 30), prospectus content (section 32), liability for the prospectus (section 33), and the seven-day allotment notice to SEBON (section 28).

   Accessed 26 August 2026

2. धितोपत्र दर्ता तथा निष्काशन नियमावली, २०७३ (Securities Registration and Issue Regulation 2073), as amended to the seventh amendment

   Securities Board of Nepal · 2073 (2016/17), consolidated text posted 24 September 2023; seventh amendment registered 32/082 · Tier 1 — Primary legal instrument

   Supports: Public issue eligibility including years of operation, three years of net profit and the two-year concession for companies with paid-up capital of NPR 1 billion or more, the credit rating requirement, the 10 to 49 percent public offer band, seven working day decision periods, the three-year promoter lock-in, FPO conditions, rights issue subscription periods and the reservation for Nepalis in foreign employment.

   Accessed 26 August 2026

3. धितोपत्र निष्काशन तथा बाँडफाँड निर्देशिका, २०७४ (Securities Issuance and Allotment Directive 2074), tenth amendment consolidation

   Securities Board of Nepal · 2074 (2017/18), consolidated text posted 7 April 2026, registration no. 65/082 · Tier 1 — Primary legal instrument

   Supports: Reservation of up to five percent of the public portion for employees, a ten percent reservation for Nepalis employed abroad ahead of the general public, an allocation to project-affected local residents, and the minimum four working day subscription window.

   Accessed 26 August 2026

4. वार्षिक प्रतिवेदन आ.व. २०८१/८२ (Annual Report FY 2081/82)

   Securities Board of Nepal · Published 31 December 2025 · Tier 2 — Official publication

   Supports: 144 issue approvals in FY 2081/82; 15 IPO and FPO issues raising about NPR 3.93 billion; 17 rights issues raising about NPR 15.41 billion; and the amendment effective 1 Shrawan 2082 shortening the foreign-employment reservation window to a minimum of four working days and permitting banks and financial institutions to issue irredeemable preference shares.

   Accessed 26 August 2026

5. प्रारम्भिक सार्वजनिक निष्काशनको लागि पेश भएका वित्तीय विवरण पुनरावलोकन सम्बन्धी मापदण्ड २०८२ (Standards for review of financial statements submitted for initial public offering, 2082)

   Securities Board of Nepal · 8 April 2026 · Tier 2 — Official publication

   Supports: That SEBON issued a dedicated standard in April 2026 for reviewing the financial statements filed with an IPO application.

   Accessed 26 August 2026