KATHMANDU: The process of public issuance of securities, which had been stalled for almost six months, has resumed after the amendment of the law allowing the official representing the Ministry of Finance in the Securities Board of Nepal to act as the board’s chairman.

The approval of the public issuance of securities was blocked for about six months due to the vacant post of SEBON chairman, as the chairman’s signature was mandatory.

Following the amendment to the Securities Act, 2063, a representative from the Ministry of Finance on the Board of Directors can now perform the duties of the chairman. Currently, Finance Ministry’s Joint Secretary Narendra Kumar Rana is leading the board. Under his leadership, the board granted permission for the issuance of 100 percent rights shares to Himalaya Energy Development Company on June 21.

It has now been decided to proceed with the initial public offering (IPO) at face value, including the public issuance process. Navraj Adhikari informed that the board will now give permission to companies that have requested to sell shares at face value through the IPO, provided there is no evidence against them.

Furthermore, the board will not immediately grant permission to companies with a net worth per share of less than Rs 90. The board has already permitted the issuance of rights shares. Previously, the Public Accounts Committee meeting of the House of Representatives on December 28 issued an 11-point instructions to related agencies to issue IPO permission only to companies whose actual net worth is more than Rs 90.

The parliamentary committee also recommended that the board adopt the book-building method, which determines the price through competition among investors in the market.

After the Act's amendment in March, representatives of the Ministry of Finance could proceed with the approval process for public issuances. However, Rana, representing the Ministry of Finance on the board, preferred to wait until a new chairman was appointed. Due to recent legal complications in the appointment process of the chairman, the Board of Directors decided not to delay public issuance any further.

Legal complications in the appointment process arose after three of the five shortlisted candidates for the chairman's position were absent from the presentation and interview. According to current legal provisions, the recommendation committee must recommend three candidates. The committee formed to recommend names for the chairman's appointment has sought advice from the Attorney General to resolve this problem.

The spokesman stated that the IPO permission for companies with a net worth of less than Rs 90 per share will be concluded after further discussions.

Currently, 35 companies have applied for issuance of IPO and are waiting for permission from the board. Among them, Reliance Spinning Mills Limited has sought permission to issue shares through the book-building method. The company filed an application to sell 1,155,960 shares to the general public at Rs 820.80 per share after distributing the IPO to qualified institutional investors.

On December 31, the company distributed shares to qualified institutional investors based on a cut-off price of Rs 912 per share.

There are currently four companies in the board's pipeline that wish to issue shares at a premium price. Jagdamba Steels, Maruti Cements, Shaurya Cement Industries, and Hospital for Advanced Medicine and Surgery Limited have sought permission from the board to sell shares at a premium price.

Jagdamba Steels has applied to issue 270,000 shares at a face value of Rs 100 per share. Maruti Cements has sought permission to issue 10.16 million shares at Rs 377 per share, with a premium of Rs 277 per share at a face value of Rs 100 per share.

Shaurya Cement submitted an application seeking permission to sell 15.98 million shares at Rs 264.51 per share, including a premium. Hospital for Advanced Medicine and Surgery Limited is preparing to sell 1.125 million shares at Rs 288 per share, including a premium.

Although 30 other companies have requested permission to issue shares at nominal value, currently only those with a net worth of more than Rs 90 and no outstanding equity issues will be allowed to proceed.