The Securities Board of Nepal (SEBON) is set to tighten the reins on companies entering the stock market by introducing rigorous eligibility criteria for Initial Public Offerings (IPOs). A new draft titled “General Eligibility Guidelines for Public Issuance 2083” has been formulated to ensure that only companies with high integrity and solid governance can raise capital from the general public. This move marks a departure from traditional listing requirements, placing a stronger emphasis on the quality of leadership.
A key feature of the proposed guidelines is the “Fit and Proper Test” designed specifically for company founders and directors. This screening process will evaluate the professional history, financial integrity, and ethical standing of the individuals steering the company. By implementing such a test, the regulator aims to prevent individuals with a history of financial defaults or unethical practices from managing public funds, thereby safeguarding the interests of small investors.
Beyond individual vetting, the guidelines are expected to streamline the entire public issuance process by setting clear benchmarks for corporate transparency. As the Nepali capital market continues to evolve, these measures are seen as essential for fostering long-term investor confidence. Once these rules are formally adopted, they will serve as a critical filter, ensuring that the stock exchange hosts only those entities that demonstrate a commitment to accountability and sound management practices.