The Securities Board of Nepal (SEBON) has warned the public against fraudulent schemes involving the sale of shares in the name of “pre-initial public offerings” (pre-IPO), stating that such transactions are illegal under existing laws.

SEBON said it has received numerous complaints about individuals and groups attempting to lure investors by offering shares of companies that have not yet issued their primary shares. These offers, often promising returns up to five times the investment, are being circulated through WhatsApp, Viber, Facebook, email, and SMS, according to the regulator.

“There is no legal provision for issuing pre-IPO shares in Nepal,” SEBON clarified in a public notice issued Monday. “If a company intends to sell its primary shares to more than 50 individuals, it must do so through a public offering as per the Securities Act 2007.”

The board also warned that announcing or promoting the purchase or sale of shares without SEBON’s approval is a punishable offense. It urged investors not to engage in such activities.

Scammers have been found luring potential investors by offering returns up to five times the subscribed amount of those companies which are yet to issue their primary shares in the market. Skyline Infra Company, Sarathi Cable Industries, Lumbini Palace Resort, Himalayan Energy Limited, Nepal Brewery, Shangrila Distillery and Bhagawati Composite Industries Limited are some examples of the companies that the scammers have been using as means to sell the shares in the name of pre-IPOs.