- The new decision by CDSC has raised concerns among energy producers.

- IPPAN has warned that the proposal to separate promoter and public shares could have a negative impact.

- IPPAN claims that this proposal is likely to have a serious impact on Nepal’s capital market and foreign investment.

The Independent Power Producers’ Association, Nepal (IPPAN), has expressed serious concern over the recent decision made by the Board of Directors of CDS and Clearing Limited (CDSC) regarding the listing of company shares.

CDSC has extended the dematerialization process (converting physical shares into electronic form) for promoter shares of companies in the process of listing their shares in the securities market. Ultimately, it has submitted a proposal to the Securities Board of Nepal (SEBON) to issue separate International Securities Identification Numbers (ISIN) for the shares issued to promoters and the general public by all companies.

IPPAN claims that the proposal has created further confusion and frustration among promoter investors, the private sector, foreign investors, and general investors. Issuing a warning, IPPAN stated, “If this proposal is implemented, it will not only go against existing laws, international standards, and established ISIN practices, but will also have a long-term negative impact on Nepal’s capital market. It will create difficulties in domestic capital mobilization, investment through Non-Resident Nepalis, and direct foreign investment as well.”

The statement reads, “This has led to a loss of confidence among the private sector in their investments across various industries, and has also raised serious doubts among foreign investors about Nepal’s investment environment. The provision to separate promoter and public shares in this manner will create a situation where foreign investors may not be able to sell their shares and repatriate their investments, which will undoubtedly harm the government’s foreign investment promotion policy and the goal of strengthening the capital market.”

IPPAN has warned that this move will have a significant impact, particularly on the energy sector. It claims that even the government of Nepal’s target of producing 28,500 megawatts of electricity within 10 years will become unachievable. According to data from the Securities Board, the proposal will affect 870 million shares worth NPR 87 billion across 58 industries, including energy, media, and cement. Specifically in the energy sector, 530 million shares worth NPR 53 billion from 47 projects will be affected. In addition, the investments of 37 companies that have applied to issue shares worth NPR 41 billion will also be negatively impacted.

For this reason, IPPAN has urged the regulatory authority to immediately arrange for the dematerialization of all shares under a single ISIN number, as per the existing system. It has also called on the Securities Board and the Ministry of Finance to withdraw CDSC’s proposal for separate ISIN numbers and to refrain from moving forward with its implementation.

Source: Kantipur