FNCCI Vice President Hem Raj Dhakal Appointed to Securities Board Despite Conflict of Interest Concerns

Amid ongoing calls to remove private sector representation from the Securities Board of Nepal (SEBON) to prevent potential conflicts of interest, Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Vice President Hem Raj Dhakal has been appointed as a SEBON board member. He took the oath of office on August 13, administered by SEBON Chair Santosh Narayan Shrestha.

Dhakal’s appointment complies with the Securities Act 2006, which mandates FNCCI representation on the SEBON board. While the FNCCI seat is now filled, the Chartered Accountants’ seat remains vacant. However, stakeholders, including a high-level Economic Reform Recommendation Commission, have urged amending the law to remove representation from FNCCI, the Institute of Chartered Accountants of Nepal (ICAN), and the Ministry of Law, Justice, and Parliamentary Affairs. The commission has also recommended increasing the number of independent experts from one to two.

Former SEBON Chair Dr. Rewat Bahadur Karki has long argued that representatives from FNCCI and ICAN create inherent conflicts of interest, as companies applying for public share issuance often come from the private sector, and financial reporting overseen by chartered accountants can intersect with SEBON’s regulatory role. He cited instances during his tenure where such conflicts arose, stressing the need for immediate legislative reform.

A past controversy heightened these concerns. In 2021, FNCCI’s then-Vice President and SEBON board member Chandra Dhakal resigned following allegations that his brother purchased shares of Sarbottam Cement through the book-building process while he was on the board. The incident also led to the dismissal of then-SEBON Chair Bhishma Raj Dhungana. Since then, FNCCI’s board appointees have had short tenures.

The government’s pending Securities Bill (First Amendment), 2024, also proposes removing FNCCI and ICAN representation from the SEBON board.

Assuming his new role, Hem Raj Dhakal pledged to strengthen cooperation between the private sector and regulators, aiming to develop Nepal’s capital market as a sustainable source of national economic growth. He emphasized structural reforms, greater transparency, investor protection, expanded market access, and policies encouraging long-term investment.