What’s in SEBON's white paper on primary capital market

The Securities Board of Nepal (SEBON) unveiled a comprehensive reform roadmap on August 7, aimed at making the country’s primary capital market more transparent, technology-driven, competitive and investor-friendly.

The White Paper on the Development of Nepal’s Primary Capital Market, 2083 sets out reforms covering IPOs, book building, valuation, investor participation, institutional oversight and digital infrastructure. SEBON says the broader objective is to channel domestic savings into productive sectors while strengthening investor protection and long-term capital formation.

The white paper sets a 2035 vision for a primary market aligned with international practices. It envisages greater participation by qualified institutional investors, mutual funds, insurers, retirement funds and eligible foreign investors, while retaining access for retail investors.

Three-phase reform plan

SEBON has proposed a three-stage implementation strategy.

The first phase, within one year, will focus on policy and legal reforms, including amendments to relevant laws and regulations, a review of the book-building system and revisions to IPO eligibility requirements. The board also plans new or revised guidelines covering hydropower companies, qualified institutional investors, anchor investors, IPO valuation and merchant bankers’ due diligence.

The second phase, over one to three years, will focus on institutional and technological upgrades. Proposed measures include a digital IPO platform, integrated portals, digital prospectuses, e-KYC and regulatory and supervisory technology, supported by real-time monitoring systems.

The third phase, over three to five years, will seek to strengthen market-based pricing and broaden participation by qualified institutional and eligible foreign investors.

Tighter oversight of public offerings

The white paper proposes clearer accountability for issue and sales managers, auditors and credit-rating agencies involved in public offerings. SEBON intends to strengthen due-diligence requirements and make the institutions involved in IPOs more accountable for the information and assessments they provide.

Merchant bankers would also take on a stronger gatekeeping role, with professional due-diligence standards designed to improve the quality and credibility of public issues.

SEBON plans to introduce industry-specific IPO valuation standards and an independent review mechanism, while requiring financial projections and supporting valuation documents to be retained for regulatory purposes.

Digital and coordinated market infrastructure

A key part of the plan is to make the IPO process fully digital, including paperless applications, automated allotment, e-KYC and digital audit trails.

The board has also proposed a Primary Market Coordination Committee involving SEBON, Nepal Stock Exchange, CDS and Clearing, merchant bankers and other relevant institutions. A secure platform for real-time information sharing and coordinated regulatory monitoring is also envisioned.

SEBON said the white paper is not limited to fixing the IPO process. It is intended to provide a long-term framework for improving market integrity, encouraging quality companies to raise capital, expanding institutional investment and supporting Nepal’s broader economic transformation.

The proposed reforms are expected to be implemented gradually following consultation with market stakeholders.