Securities Board Chairman Vows Action Against Illegal 'Pre-IPO' Activities

Kathmandu. Chairman of the Securities Board of Nepal (SEBON), Dr. Gopal Prasad Bhatta, has stated that action will be taken against companies involved in illegal transactions in the name of 'Pre-IPO'.

Responding to questions raised about 'Pre-IPO' in a meeting of the Finance Committee on Wednesday, he pledged to take action against companies or individuals involved in such activities. He stated that the state cannot legitimize illegal transactions.

Chairman Bhatta informed that the board is moving forward with various plans to expand financial access for eligible companies through the capital market. He clarified that arrangements are being developed for startups to medium and other eligible industries to enter the capital market.

According to him, companies coming for Initial Public Offering (IPO) must fulfill high transparency, strict standards, and governance according to international practices. He also stated that the price determination process will be made competitive and transparent to protect the interests of general investors. For this, the board is preparing to make the price determination process more effective by increasing the participation of institutional investors such as the Citizen Investment Trust and the Employees Provident Fund.

Clarifying the issue of 'Pre-IPO' in the meeting, Chairman Bhatta said, 'The issue of Pre-IPO has come up. It is heard that companies manipulate before the IPO comes. Pre-IPO is an illegal thing. We will take action if we find out about such things anywhere.' Clarifying that this is not money that has come through any legal procedure, he added, 'The state should not remain silent in such matters just because someone is manipulating.'

Mentioning that permission is given for IPOs for any eligible companies, Chairman Bhatta informed that three types of mechanisms have been created for the corporate sector. He stated that the board has brought plans to develop the trend of providing financing to startups and to provide access to the capital market for small and medium-sized industries. He said, 'We have now brought complete plans for any corporate to get funding from the capital market. This includes startups and we will also provide platforms for SMEs.'

Emphasizing that companies going for IPO should be eligible and transparent, he said, 'Since general investors will invest in them, we have planned to make them more transparent with higher standards and ensure sufficient competition in the prices they bring. Thirdly, we will also diversify the instruments.'

Chairman Bhatta stated that preparations are underway to expand Nepal's capital market beyond just share trading to include debt instruments, derivatives, and commodity futures. He stated that efforts are being made to move the capital market, which has been share-oriented, towards a debt-oriented market.