November 16: The Supreme Court has directed the Securities Board of Nepal (SEBON) to produce original copies of documents pertaining to the decision for providing licenses to a new stock exchange company, commodity exchange and stock brokers.

Responding to a writ petition filed against the decision of SEBON to issue new licenses, a joint bench of justices Biswombhar Prasad Shrestha and Hari Prasad Phuyal has ordered the board to submit original copies of the decision for granting new licenses.

Issuing a notice on September 18, the SEBON had opened applications of new licenses for one stock exchange company, two commodity exchanges and stock brokers.

Advocate Dipak Bikram Mishra had filed the writ petition at the apex court against providing the new licenses on October 17. The writ petition had named the Office of the Prime Minister and Council of Ministers, Finance Ministry, Securities Board of Nepal and Nepal Stock Exchange as the defendants.

In a preliminary hearing on October 21, a single bench of justice Til Prasad Shrestha had issued an interim decree to stop the process of distributing licenses in this regard. 

Complying with the court order, SEBON had halted the process of receiving applications for licenses on November 1.

Though both sides were summoned to the court for discussion on November 8, the hearing was held on November 15 due to lack of time.

The board argues that there is no reason to stop the license distribution process as the Government of Nepal has full support for the same.

Securities Board of Nepal (SEBON) Chairman Ramesh Kumar Hamal made it clear that the plan to distribute licenses of stock exchange, stock brokers and commodity exchanges was not only of the board but also of the government.

“The government has incorporated new license distribution plan in the budget. We started the process of providing new licenses to make capital market competitive in accordance with the demand of the investors and the government’s policy,” Hamal said.

The board has received 45 applications for stock broker licenses. It had opened applications for three types of stock brokers licenses based on their capital structure.

The capital requirement for new broker license has been fixed between Rs 200 million to Rs 1.5 billion.

As per the new provision, the first kind of brokers providing limited services of stock market transaction require a minimum capital of Rs 200 million to acquire license. Likewise, the brokers providing services like share transaction, depository participant, investment consultancy, investment management and margin business need to have a minimum paid-up capital of Rs 600 million.

Similarly, the third type of license will be issued for stock dealers who must maintain a minimum capital of Rs 1.5 billion.

The minimum paid-up capital required for the new stock exchange company is Rs 3 billion.