The Patan High Court has cleared the way for Reliance Spinning Mills to proceed with its long-delayed initial public offering (IPO), which had been halted following controversy. On May 7, a joint bench of Judges Munendra Prasad Awasthi and Tikaram Acharya issued an interim order against the Securities Board of Nepal’s (SEBON) decision to stop the company’s IPO process.

Previously, Reliance had allocated shares to qualified institutional investors without disclosing a potential liability to the Nepal Electricity Authority. It then attempted to sell shares to the general public through the book building method, based on a high valuation derived from those institutional allocations. SEBON had not yet taken a final decision regarding the IPO, which was halted on July 10, 2024—just before shares were to be issued to Nepalis working abroad.

Four individuals, including Hari Bahadur KC, filed a writ petition on July 9, 2024, challenging Reliance’s IPO process. The following day, SEBON’s then-chairman Narendra Kumar Rana instructed the issue manager to suspend the share issuance. The board justified the move by citing the chairman’s decision.

On July 10, the Patan High Court issued an interim order stating that SEBON’s decision “did not appear to be legally valid from the outset,” and directed that actions be halted until the final verdict on the writ petition was issued. The court dismissed the petition on November 6, 2024, allowing the IPO process to move forward—provided that Reliance published a revised prospectus for the general public.

However, when SEBON still did not grant approval, Reliance filed another writ on May 24, 2025, requesting the court to allow the IPO process to begin without further delay. Reliance Spinning Mills claimed that the court again ruled in favor of the company, stating in an interim order that SEBON’s move to stop the IPO appeared to be made in bad faith. “The High Court has issued an interim order to proceed with the IPO process that has been stalled since last July,” Reliance said in a statement.

Reliance had planned to open applications for Nepalis working abroad starting July 11, 2025. Prior to that, on January 29, 2024, the company allotted 770,640 shares to qualified institutional investors at Rs 912 per share. Reliance intended to offer shares to the general public at a 10% lower price (Rs 820.80 per share).

“With the court’s order, it is now clear that SEBON acted in bad faith by halting the IPO process,” the company said, adding that its earnings per share in the third quarter of the current fiscal year exceed Rs 25. According to Reliance, it posted a net profit of Rs 1.285 billion by mid-April and earned Rs 865 million in the previous fiscal year, despite economic challenges.

The company claims its IPO was intentionally obstructed despite its consistent profitability. It alleged that various interest groups opposed the IPO after it received SEBON’s approval on June 28, 2024.

Reliance Spinning Mills, operating since September 4, 1995, produces yarn, exporting 70 to 75 percent of its products to countries like India, Turkey, Vietnam, and the UK. Chairman Pawan Golyan holds 89.860 percent of shares, with 4.0056 percent owned by qualified institutional investors and 6.0084 percent by Nepalis employed abroad and other general public.