The Securities Board of Nepal (SEBON) has proposed a nine-month extension for brokerage firms to meet the mandatory minimum paid-up capital requirement. The regulatory body has already submitted a draft amendment to the regulations to the Ministry of Finance for approval.

According to a senior SEBON official, the board has recommended extending the current deadline, originally set for mid-July 2025, to mid-April 2026. The extension is intended to give brokers additional time to raise their paid-up capital to meet the prescribed minimum requirement of Rs 200 million. The draft amendment also includes provisions allowing brokers to capitalize their profits from the ongoing fiscal year in order to meet the capital requirement.

The decision to seek an extension was approved at a recent meeting of SEBON’s board of directors. This provision will be implemented once it is approved by the Ministry of Finance.

Madan Paudel, Managing Director of NASA Securities and Treasurer of the Stock Brokers Association of Nepal, welcomed SEBON’s proposal. He noted that if brokers are allowed to meet the requirement by capitalizing profits from the current fiscal year, nearly all firms—except for one or two—would be able to comply. He added that NASA Securities has already met the new capital threshold. While mergers were considered a possible strategy for capital enhancement, Paudel said no brokerage firm has formally initiated a merger process so far. Most firms are expected to rely on profit capitalization, while those unable to do so may opt to issue rights shares.

SEBON had amended the Securities Businessperson Regulations, 2064 for the fifth time on September 14, 2022, introducing a capital-based classification system for three types of brokerage licenses. Under the revised structure, brokers operating with limited services are required to maintain a minimum paid-up capital of Rs 200 million. Those offering services including share trading, depository participant (DP) functions, investment advisory, investment management, and margin trading must maintain a minimum capital of Rs 600 million. For firms operating as full-fledged stock dealers, the requirement is set at Rs 1.5 billion.

As part of this reform, SEBON issued licenses to 42 new brokerage companies based on these capital tiers. The same regulatory amendment also allowed older brokers, some of which have been operating since 1993, to upgrade their capital and continue offering services.

Previously, these older firms were required to maintain a minimum of Rs 20 million in paid-up capital for limited services and Rs 50 million for margin trading. With the new framework in place, such firms now face the challenge of increasing their capital by as much as ten to twelve times to comply with the updated requirements.

A SEBON official said that old brokerage companies are required to increase their paid-up capital by as much as tenfold within a relatively short timeframe, prompting the board to propose a more flexible approach. SEBON is confident that all firms will be able to meet the requirement within the extended deadline.