NEPSE Restructuring Report Recommends Capital Boost and Strategic Partner

A government-commissioned report on the restructuring of the Nepal Stock Exchange (NEPSE) has recommended major reforms in its capital and ownership structure to modernize the country’s capital market.

According to the report, NEPSE needs to increase its paid-up capital to at least NPR 3 billion, as required by existing securities regulations. To meet this target in the short term, issuing bonus shares has been suggested as a suitable option. For long-term growth and expansion—especially in technology, human resources, infrastructure, and new services—the report proposes issuing right shares or new shares.

However, the report emphasizes that any major capital expansion should be clearly linked to the entry of a strategic partner. It notes that NEPSE, in its current structure, may struggle to keep up with future market challenges and global competition.

To address this, the report recommends changes not only in management and technology but also in NEPSE’s ownership structure. Bringing in a strategic partner is seen as essential to enhance competitiveness and introduce advanced trading systems and services expected by investors.

Based on international practices, the report suggests offering 15 to 25 percent ownership to a strategic partner, with a minimum lock-in period of 10 years. The partner should be among the world’s top stock exchanges, have at least 20 years of operational experience, and possess strong expertise in modern trading technology.

While government divestment is one option, the report notes that this process could be lengthy and politically complex. As a more practical alternative, it recommends allowing non-government shareholders to sell part of their shares to facilitate faster entry of a strategic partner, following international valuation standards.