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Kathmandu Monday April 16, 2001 Baishakh 03, 2058.
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Security Board guidelines enforced
Post Report
KATHMANDU, April 15 - The newly formulated Securities Registration and Issue
Approval Guidelines, 2057 came into enforcement Saturday, but, however, will be effective
from Monday, when the market opens next.
The guidelines issued by the Securities Board, the regulatory body that
oversees the stock market, aims to further encourage the participation of corporate
institutions in the nascent domestic capital markets.
In addition to making the process of registration and issuance of securities
simple, transparent and more systematic, the directives also aims to create an environment
for ensuring easy access of information to the investors for the purpose of making
investment decisions.
The new guidelines lays down the conditions that corporate institutions would
require to meet prior to making stock issue and the various conditions that it has to
fulfill once it makes a public issue.
In addition, the guidelines, with the objective of making the stock market
more transparent, has laid great emphasis on information dissemination. In this regard,
the guidelines have made it mandatory for corporate institutions, wanting to make public
issues, to furnish full details on the profit/loss position, the state of liquidity and to
make public its balance sheets prior to doing so.
The focus of the directives has pertained not only on share issue but also on
debentures and bonds. Among other, with view to ensuring the safety of creditors, the
Securities Board has introduced provisions, which compel corporate institutions to mention
the activity where cash from debentures and bonds will be used.
Also, the guidelines makes it compulsory for corporate institutions to
explicitly lay down the maturity of the debenture, time, place and mode of paying interest
in its prospectus.
The guidelines has stressed upon the authenticity of the information relating
to financial, physical, managerial and transaction related matters contained in the
prospectus.
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