In a significant development, the Securities Board of Nepal has introduced new directives regarding mutual fund investments in public offerings of organized institutions. The directive, which came into effect on Kartik 21, 2079 , outlines specific restrictions on the sale of allocated shares to the general public.
According to the directive, mutual funds participating in organized institutions’ public offerings will not be permitted to sell their allotted 5% shares to the general public for a period of six months following the issuance. This move aims to promote stability and discourage speculative trading in the initial stages of a public offering.
The directive is in line with the provisions laid out in the Mutual Fund Regulation of 2067, which mandates a discount of at least five percent on debentures purchased by mutual funds for public offerings of organized institutions. This provision is scheduled to be implemented from the month of Kartik onwards.
Furthermore, the directive addresses scenarios in which the debentures purchased by mutual funds are not traded or transferred within the stipulated six-month period. In such cases, or in the event of the plan’s termination, the mutual fund will be granted the authority to sell and transfer the debentures within its ownership without encountering any obstacles.
The directive also emphasizes compliance with Section 87 of the Securities Act of 2063, under which this provision has been established to safeguard the interests of mutual funds and foster a conducive investment environment.
In order to ensure seamless implementation, the Securities Board of Nepal has issued instructions to CDSC (Central Depository and Clearing Limited) as well as all plan managers involved in the process.
This development is expected to have a positive impact on the investment landscape, providing a more secure and structured framework for mutual fund investments in organized institutions’ public offerings.
Investors, fund managers, and stakeholders in the financial market are urged to familiarize themselves with these new regulations to ensure compliance and to make informed investment decisions.
The Securities Board of Nepal remains committed to fostering a transparent, efficient, and investor-friendly environment for the capital market, and will continue to implement measures that contribute to its growth and stability.