The Nepali share market has grown rapidly in recent years, attracting thousands of new investors. Initial Public Offerings (IPOs) remain one of the most popular entry points for individuals looking to participate in the capital market. However, investing in IPOs and trading shares requires a clear understanding of securities law in Nepal, regulatory bodies, and compliance rules.

This guide provides a complete overview of IPOs, securities law, and the share market in Nepal, helping investors make informed decisions in 2025.

Legal Framework for Securities in Nepal

The securities market in Nepal is regulated by:

• Securities Act 2063 (2006) – Governs issuance, trading, and regulation of securities.

• Company Act 2063 (2006) – Provides rules for company formation and public offerings.

• Securities Board of Nepal (SEBON) – The main regulatory authority overseeing IPOs and capital markets.

• Nepal Stock Exchange (NEPSE) – The only stock exchange in Nepal where shares are traded.

What Is an IPO?

An Initial Public Offering (IPO) is the process by which a company offers its shares to the public for the first time. It allows businesses to raise capital and gives investors an opportunity to become shareholders.

Key Features of IPOs in Nepal:

• Issued with SEBON approval.

• Allotment is usually done through lottery system if oversubscribed.

• Investors must apply via MeroShare platform or banks.

• Minimum investment is typically 10 units of shares.

IPO Application Process in Nepal

Step 1: Open a Demat Account

• Required for holding shares electronically.

• Available through banks and licensed Depository Participants (DPs).

Step 2: Register for MeroShare

• Online platform managed by CDS & Clearing Limited.

• Enables IPO application, share transfer, and portfolio management.

Step 3: Apply for IPO

• Log in to MeroShare during IPO issuance period.

• Select IPO, enter units, and confirm application.

Step 4: Allotment & Refund

• SEBON supervises allotment.

• If oversubscribed, shares are distributed via lottery.

• Refunds are processed automatically to bank accounts.

Securities Law Compliance for Companies

Companies issuing IPOs must:

• Obtain SEBON approval.

• Publish prospectus with financial details.

• Ensure transparent allotment process.

• Comply with disclosure and reporting requirements.

Failure to comply can result in penalties, suspension, or cancellation of IPO.

Benefits of IPO Investment

• Entry point for new investors.

• Potential for long-term capital gains.

• Opportunity to invest in growing industries.

• Transparent process regulated by SEBON.

Risks in IPO & Share Market

• Oversubscription leading to limited allotment.

• Market volatility affecting share prices.

• Lack of liquidity in certain stocks.

• Risk of fraudulent companies if due diligence is ignored.

Practical Tips for Investors

• Always read the IPO prospectus carefully.

• Invest only through authorized platforms like MeroShare.

• Diversify investments across sectors.

• Stay updated with SEBON and NEPSE notices.

• Avoid relying solely on rumors or social media hype.

Final Thoughts

The IPO & Securities Law in Nepal ensures transparency, investor protection, and fair market practices. For new investors, IPOs are an exciting way to enter the share market, but understanding the legal framework and risks is crucial. With SEBON’s oversight and digital platforms like MeroShare, investing in Nepal’s capital market has become more accessible and secure in 2025.