IPO MANAGEMENT AND CAPITAL MARKET

By Bal Kumar Dhimal Ace Institute of Management (P.U. Redg. No.2007-2-03-0185) Roll Number 831462

A Summer Project Report

Submitted to:

Ace Institute of Management

Faculty of Management

Pokhara University

In partial fulfillment of the requirements for the degree of

Bachelor of Business Administration (BBA)
Kathmandu, Nepal 2009

ACKNOWLEDGEMENT

I acknowledge the cooperation and assistance received from our respected Professors, lecturers and friends during my summer project period. First of all, I would like to express my profound sense of gratitude to the project supervisor Mr. Prakash C. Bhattarai. I acknowledge the cooperation and assistance received from my respected Mr. ShantaBhattarai, NirmalUprety and SitaramBartaula whose individual guidance and supervision made the project work complete in the time. We would like thanks to member of Ace institute of Management. At last but not least, I expressed thanks to Librarians of SEBON, Mr. Nemal Man Shakya Librarian of Ace institute of Management and Mr. Ramesh Bartaula for giving support during this research period.

Mr.Bal Kumar Dhimal Researcher

December 2009

Table of Content
Subject Page No Acknowledgement .........................................................................................i Lists of Table .................................................................................................ii Lists of Figures ..............................................................................................iii List of Acronyms ...........................................................................................iv Executive Summary .......................................................................................v

Chapter I ___________________________________________________1-6 1. INTRODUCTION....................................................................................1 1.1 Background of study .....................................................................1 1.2 Statement of problem ....................................................................3 1.3 Objective of study .........................................................................4 1.4 Importance of study .......................................................................5 1.5 limitation of study .........................................................................6 Chapter II __________________________________________________7-18 2. LITERATURE OF REVIEW ...............................................................7 2.1. Concept of IPO ...........................................................................7 2.1.1. Introduction of IPO ......................................................7 2.1.2 Reason behind issuing IPOs..........................................7 2.1.3 Advantage and disadvantage of IPOs ...........................7 2.2.1 Review of thesis ........................................................................8 2.2.2 Brief introduction of capital markets component ....................9 2.3.1Brokerage for equity ..................................................................12 2.3.2 Regulation of securities market ................................................12 2.3.3 Listing and listing requirement .................................................13 2.3.4 Types of listing .........................................................................14 2.4.1 Conceptual framework ..............................................................16

2.4.2 Hypotheses ................................................................................18 CHAPTER III ______________________________________________19-25 3. RESEARCH METHODOLOGY ..........................................................19 3.1 Research Method .........................................................................19 3.1.1 Research area ............................................................................19 3.1.2 Research Design........................................................................20 3.1.3 Nature and resource of data ......................................................20 3.1.4 Data collection techniques ........................................................21 3.1.5 Data Analysis tools ...................................................................22 3.1.5.1 Statistical tools ...........................................................22 3.1.5.2 Financial tools ............................................................24 3.1.6 Population and sample ..............................................................25

CHAPTER IV _______________________________________________ 26-33 4. DATA PRESENTATION AND ANALYSIS .......................................26 4.1 Data Presentation& analysis of capital market ............................26 4.1.1Amount of public issues offered ....................................26 4.1.2 Comparison of growth the IPO and Capital market .....28 4.1.3 Capital market structure and Capital.............................30 4.1.4 Sector wise Listed Companies ......................................31 4.2 Major finding of the study ...........................................................33

CHAPTER V _______________________________________________35-39 5. SUMMARY, CONCLUSION AND RECOMMENDATION ............35 5.1 Summary ......................................................................................35 5.2 Conclusion ...................................................................................37 5.3 Recommendation .........................................................................38 Bibliography ...............................................................................................39 Appendix __________________________________________________40-72

List of Tables
Table 1.1Capital and flotation cost...15 Table 1.2: Amount of Public Issues Offered.27 Table 1.3: Comparison of Growth between the IPO and Capital Market29 Table 1.4: Capital market Structure and capital...30 Table 1.5: Sector wise Listed Companies.31

List of Figures

Chart1.1: Amount of Public Issues Offered28 chart1.2: Comparison of Growth between the IPO and Capital Market.30 chart1.3: Capital market Structure and capital...31 Chart 1.4: Sector wise Listed Companies..32

List of Acronyms

1. AMEX 2. BSE 3. GDP 4. MOF 5. NEPSE 6. NRB 7. NYSE 8. OTC 9. RD 10. ROA 11. SEBON 12. SEBO

American Stock Exchange Bombay Stock Exchange Gross Domestic Production Ministry Of Finance Nepal Stock Exchange Nepal Rastra Bank New York Stock Exchange Over The Counter Research Design Return On Equity. Security Board Of Nepal Security Board

13. BVS 14. CBS 15. Co. 16. EBIT 17. EBT 18. EAT 19. EPS 20. FY 21. GDP 22. HMG 23. Ltd. 24. SHE 25. NI : 26. NOI :

Book Value per Share Central Bureau of Statistics Company Earnings Before Interest and Tax Earning Before Tax Earning After Tax Earning Per Share Fiscal Year Gross Domestic Product His Majestys Government Limited Shareholders Equity Net Income Net Operating Income

EXECUTIVE SUMMARY

This report analyses different aspects of IPOs and Capital Market management of Nepal and presents recommendations to be implemented for their proper management. The sample size is 33 [using formula {(2 *2)/t2}], 4 samples from commercial banks, 7 samples from Development banks, 17 From the Finance companies and 5 from the insurance companies. In the research data collated from different source like expert, brokers etc. IPOs growth plays a significant role in the growth of Capital Market; however there is no direct relationship between them. Amount of public issue offering has a decreasing rate at the initial phase which is -28.82. After that, from the fiscal year 1995/96 to FY 1197/98 the growth rate has increased. Similarly, the growth of capital market and IPOs both have decreased in the FY 1994/95 but in the Fiscal Year 1998/99 growth of capital market increased but the growth of IPOs has decreased.It shows that they do not have direct relationship. The trend of capital growth is in an average increase but for IPOs it is fluctuating. Number of Issuer Companies and Financial Intermediaries is increasing along with the public issue in the later years which have played a positive role in the growth of IPOs and the Capital Market. Public issue in 1993/94 was 2.444 billion. It was increased by 106.682 percent in the year 2007/08. In the same way the number of issuer companies also increased to 64 in number from 16. Similarly, financial intermediaries such as brokers, issue manager, underwriter, dealer, investment bankers are increasing. Many report, journals, and researches show that financial intermediaries are essential component of capital market and from the data collected by this research have shown that their increase has a positive effect in the growth of IPOs and Capital Market.

Strong Regulation Body is required for the proper management and promotion of IPOs and the Capital Market. Numbers of listed companies are rapidly increasing in the SEBON. Due to the lack of strong regulation body of Security Board of Nepal and central bank, large amount of public capital has the risk of going under loss. Nowadays many joint stock companies are losing their performance as well as the market position. Some corporations are bearing loss and probable solvency. The result of bad performance of corporations is indicating that a huge amount of public investment is under risk. Negligence of monitoring body of capital market or SEBON and Nepal Rastra bank (central bank) and their inappropriate procedure are responsible for all the risks in the capital market. Many financial institutions have borne loss and some were even dissolved. Securities Act is not effective and appropriate in accordance with the present situation. It directly affects the increasing capital market and initial public offerings (IPOs). There is no any provision for non-listed company and de-listed companies. The major problem of capital market is the poor management and the lack of appropriate investment policy. In the current situation, investors out of the valley (Kathmandu) are unable to take the benefit of capital market. Capital market is losing huge amount of investors due to the lack of appropriate information, appropriate technical resources and branches in different place of the country. Hence, an appropriate and strong regulating body with effective management is the one of the major requirement of the Nepalese Capital Market.

CHAPTER I INTRODUCTION

1.1Background of study Many factors play significant role in the development of business. To run business in the initial phase or smoothly at existing period, money is needed. Money can be facilitated either by money from the capital market or the money of promoters. Money market provides capital for short term period but business needs long term asset. For improvement of long-term asset capital market provides fund for various companies. Hence capital market is an essential market for business. Initial public offering (IPOs) is a part of primary market mechanism. When an institution raises capital to be collected from public through issuance of its securities for the first time, then its issue to the public is termed as initial public offering. Studies also show that overall Nepalese capital market is a best alternative for the investment in the Nepalese businesses, in the other part of world, capital market is an old concept but in Nepal capital market is an emerging market. Stock market helps to develop financial structure of country. Historical record of Nepalese capital market began with by issuing share of BIRATNAGAR JUTE MILL. Secondary market was established in 2050-02-13 B.S. Nepal stock exchange was established with 25brokers and 5 market makers. During the period of 2064 B.S. the broker and market maker become 31and 6 by adding 6 brokers and one market maker respectively. 152 companies are listed in the security board of Nepal on May, 2009; which includes; 17 Commercial banks, 23development banks, 58 finance companies, 18insurance companies, 21 manufacturing and processing companies, 5 trading companies, 4 Hotels and 6 other companies .Security board of Nepal (SEBON) was established in 2050-02-25.The capital market experienced an impressive growth in the last two years. Improvement in the peace and security situation, the central bank policy to increase the paid-up capital of banks and financial institution, market reforms, institutional and infrastructural developments related to the capital market has contributed to this growth. The activities of both

the primary and secondary markets have done a lot for this improvement in the Nepalese Capital Market which could be explained in detail as follows: Primary Market:- In the FY2007/08 the Security Board of Nepal(SEBON) granted permission to 71 companies for mobilization of NPR11.56 billion while 33 companies got approval to mobilize NPR 2.75 billion in the preceding year. The number of capital mobilization has been raised by 1312.25 percent and 320.36 percent respectively. Secondary market:- The Nepalese stock market continued to expand in the FY2007/08 too. With the restoration of peace and a subsequent boost in investors confidence, major indicators of the share market grew tremendously. Almost all the major indicators of the secondary market like a amount of share traded, number of listed share, the number of transactions, annual turnover, total market capitalization of listed shares, market capitalization and GDP Ratio, capitalization turnover and the GDP ratios all increased in the review period. Nepal is experiencing an increase in the capital market along with the considerable issue in the initial public offering.
derivative market

1.2 Statement of Problem Nepal has an infant capital market as compared to the other capital markets. By the way, it is good indicator for the financial sector as well as Nepalese economy. Those companies can get listed in the security board of Nepal (SEBON), which have good financial structure and sound financial position. They are listed under the Company Act, 1997 and Security Exchange Act, 1983. The issuer companies and issue manager perform their public issue and issue management activities. Nepal stock market is suffering from unstable political conditions, lack of rational investors, corporate governance to name the few, hence IPOs, an important mechanism of stock market, is bound to be under influence. More specifically the study has sought answer to the following research question. i) Are capital instruments sophisticating IPOs management in the Nepalese capital market?

ii)

Is sophisticated market structure more effective in IPOs management in theNepalese capital market?

iii)

Are improved financial intermediaries enhancing the IPOs management in the Nepalese capital market?

iv)

What are the challenging issues in the IPOs management in the Nepalese capital market?

1.3Objective of the study Capital market of Nepal is still in its early days. Likewise, its other mechanisms, IPOs practices are also very limited. The objectives can be categorized into two parts, they are as follows: 1.3.1 General Objective The main objective of this research is to identify the effect of increasing stock and initial public offering (IPOs) in the capital market of Nepal. This study is also carried out to fulfill the degree of BBA. 1.3.2 Specific Objectives a) To identify how the capital instruments sophisticates the IPOs management in the capital market. b) To investigate the relation of market structure and IPOs management in the capital market. c) To identify how the financial intermediaries enhance the IPOs management in the capital market. d) To find out management. challenging issues of the capital market and how it opposes the IPOs

1.4) Importance of Study Capital market has many mechanisms, IPOs and its practices are very much limited in Nepal. Under this perspective this study is expected to provide some insights into different aspects of IPOs and how is it being practiced in Nepal. It also makes background to investors to invest in securities market in a better place. We know that the Nepalese capital market is in its infant period; hence, there is lack of huge capital. Without capital infrastructure, country cannot develop financial structure, lack of capital structure leads to poor performance of manufacturing company and financial institution and other important companies. In the global era sole trading concern and partnership firm are outdated so corporation or joint stock companies are becoming more effective. Without the development of joint stock companies financial position of a country cant be strengthened. Therefore, development of Joint Stock Company is necessary for the financial development of company. The main purpose of this research is to identify the effect of increasing stock (common shares, preference shares, treasury bills, bonds, debentures etc.) in the capital market and the procedure and management of initial public offering. This research not only focuses on the study of effect of increasing stock, however, it also focuses on other problem such as why the share market is not being effective out of the valley (Kathmandu) or other part of the country. This research will also find out why capital market is being unable to address those investors who live in the other parts of the country and why NEPSE is unable to make any branches in the other parts of the country. This research also tries to explore why Nepalese government is unable to make an appropriate system or market for the non- listed and restricted companies. It also tries to find out the effects in the capital market after making new market for non-listed companies. This research plays a significant role to take an appropriate decision regarding the present capital market problem. Why investors are only interested in investing on common shares rather than investing in treasury bills, debentures, bonds where common stocks are more risky than others. The research has been made with a hope that it is able to find out all causes of ineffective Nepalese Capital Market and to make recommendation to the relevant sector as like Nepal Stock Exchange (NEPSE), Security Board of Nepal (SEBON) and Nepal Rastra Bank (NRB) which is important for both the existing and new investors.

This research addresses different issues of capital market and tries to investigate different rules, regulations and procedures of Nepal Rastra Bank, Security Board of Nepal and Nepal Stock Exchange. The research will address the issues of primary market. Due to the above reasons this research plays a significant role in the Nepalese Capital Market. 1.5. Limitation of Study This research tries to address many factors but it is unable to address some specific issues due to lack of sufficient resources, technical problems, lack of data and other factors which are as follows: a) Insufficient resource

For this research, no organizations has provided the fund, this research has been conducted under the academic course requirement of Pokhara University. Therefore, there is chance for the shortage of resource. b) Access and reliability of data

This research requires secondary data, primary data only is not sufficient to define objective of the research. Restriction is availing of relevant data from respected sectors too limits the scope of the research. c) Time frame of study

The time frame bound by the University that it must be completed within University academic schedule has affected the research. d) Difficult to decide on without the proper basis of comparison

It uses various statistical tools for analyzing data, outcomes of which is not final and it needs further investigation.

CHAPTER II LITERATURE REVIEW

2.1 Concept of IPO 2.1.1 Introduction of IPO Initial public offering (IPOs) is a part of primary market mechanism. When an institution raises capital form public through issuance of its securities for the first time, then its issue to the public is termed as initial public offering. 2.1.2Reason behind issuing IPOs Every business organization requires fund to run in the initial phase and to run smoothly in the existing period. It means IPOs are issued to accumulate capital but it is not only the single goal. According to the nature of the organizational structure some businesses are more risky and some are less risky, hence, the companies try to diversify their risks. IPO is a better mechanism to diversify the risk of a company. A good organization needs sufficient liquidity, to maintain liquidity organization issues IPOs. Companies always try to gain high leverage from nonfinancing sources; therefore, IPOs are the only one best source to make high leverage from nonfinancing. 2.1.3 Advantages and disadvantages of IPOs Initial public offering (IPOs) enhances liquidity of the organization. It also provides sufficient fund for capital extension of the companies. Issuing the IPOs in the capital market heightens the prestige and recognition of the company among the suppliers and prospective customers. Some drawbacks do exist in IPOs as it is made by the limited decision power of the management. After the issue of IPOs the data is provided up to date, hence, information flow cost increases. The company must adopt legal provisions like auditing and underwriting fees which increases the

direct cost. Management also spends more time and effort to manage IPOs, therefore indirect cost also increases. 2.2.1Review of Thesis Gurung (1999) carried out the research study entitle Share price Behavior of Listed companies in Nepal with the basic objectives of analyzing the price movement of the shares of listed companies in Nepal. The study was based on historical price data covering the period of five years from Jan. 1994 to dec.1998. The study as per its nature was large based on secondary data. The study concluded that, the performance of banking group is highly attractive and liquid as signified by their trading turnover. The performances of listed companies have been deteriorating. This implies the uncertainty and instability in stock market. Similarly, the market was bullish during the initial period of the study but due to political instability, immature liberalization and privatization policy of then HMG. Shrestha (1996) has conducted a research study on public response to primary issue of shares in Nepal. The main objective of the study was to evaluate the primary market of shares, analyze the pattern of public response to the shares and to identify the problems of primary and secondary market in Nepal. He has used both primary and secondary data from 12 selected companies for the period of 3 years from January 1993 to January 1996. He has employed average chi-square test and correlation coefficient for deduction. The study conducted that the public response to the issue of shares of banks, finance and insurance companies were better than that of manufacturing and processing, trading, hotel and others group of companies. The success of response to the public issues largely depends on the response from within Kathmandu valley and to some extent, the issues of share seem to attract from outside the valley. Bhattarai(2006) has performed a study on public response to initial public offering in Nepal with the basic objective of assessing public response to the initial public offering. However, the study also focused on the dealing process and pace of the IPO. The study has used both primary and secondary data. Primary data were mainly collected through direct questionnaire provided to

the general investor while secondary data were collected from various publication of SEBON, NEPSE and various other institutions. The study conducted there most of the general investor in Nepal do no have significant information regarding the primary market but still they very much interested to invest money in the primary market. It also found that almost each sector was getting good response from public. Especially financial institutions and insurance companies were becoming more preferable for public than the other non-financial sector. Adhikari (2005) has conducted a research survey on an analysis of determinants of IPO under pricing in Nepal the basic objectives of the study was to analyze the under pricing of IPOs in the context of Nepal. Beside the study also examined the trends of public offering market and process of going public in Nepal. For the process of study data of the periods of 4 years form fiscal year 1999/2000 to 2003/04 were used. The researcher concluded that under pricing does not occur among Nepalese firms. The researcher also added that the result is not consistent with the theory and differences finding of empirical studies conducted in different countries. IPOs market in Nepal does not enjoy only right to set the price of countries. IPOs markets in Nepal do not enjoy any right to set the price of their own issue. The price setting process is totally controlled by the regularly body because of this reason, Nepalese merchant banker could not play any role to influence the offer price of IPOs. 2.2.2 Brief introduction of capital markets components a) Security Market: Security market is that market where various securities like common stocks, debentures, bonds, treasury bills etc. are traded. Securities are sources of capital for any business organization or Company, issuance of such instrument of capital is done to raise fund in the capital market. A securities market can be defined as a place for bringing the buyers and sellers of financial assets together in order to facilitate trading. Securities markets are primary market and secondary markets. Market indexes are the indicators of performance of the market. For example either the market is moving upward, downward or is stagnant. Mainly there are two types of secondary markets.

b) Primary market: a primary market is the place where corporation and government issue new securities. All securities, whether is money or capital markets, are initially in the primary market. This is the only market in which the company or government is directly involved in the transition and receive directs benefits from an issue that is the company actually receives the proceeds from the sale of securities. Once the securities begin to trade among individuals, businesses, governments or financial institution, savers and investors, they become parts of secondary markets. The term Primary Market is a market where original sale of securities by an issuer to the public. The issuer receives cash, which may be invested in productive assets or retirements of debts.

a) Investment Banking: The efficient functioning of a financial market require a number of financial institution. One of these institutions is an investment banking firm. The firm acts as a middleman in the distribution of new securities to the public and creates a primary market. Therefore, the people or institutions are responsible for finding out investor for the initial public offering (IPOs) of securities sold in the primary market are called investments bankers. The principal function of the bank is to buy the securities from the issuing company and then resell them to investors. For acting the role of mediator, the investment banker received the difference, or spread, between the prices they pay for the securities are resold to the public. The process of issuing securities to the public is called underwriting and in this sense, the investment bank is also called an underwriter. The group of underwriters is called an underwriting syndicate. The underwriting takes place in two ways. The first is typical underwriting. In this arrangement, the investment banker purchase the securities from the company and re-sales them to the public. The other type of arrangement is best effort basic, instead of underwriting the securities issued by the company. Under this arrangement, the investment bankers agree only to sell as many securities as they can at on established price. They have no responsibility for securities that are unsold. They bear no risk.

b) Secondary markets: The securities market in which securities are traded secondly. The organized stock exchanges are the examples of secondary market. Organized securities exchange are the

physical locations where trading of securities is done under a set of rules and regulation. Investors usually purchases securities in the secondary market by calling securities brokers. In the secondary market investors buy and sell securities themselves, the issuer never get any cash flow from the traders. Nepal Stock exchange (NEPSE) is an example of organized stock exchange and this is the only stock exchange in Nepal similarly, the New York stock exchange (NYSE), Tokyo Stock Exchange, American stock exchange(AMEX), Bombay Stock Exchange(BSE) are the examples of organized Stock Exchange.

c) NEPSE: The securities exchange center was established with an objective of facilitating and promoting the growth of the capital market. Before its conversion into stock exchange, it was only the capital market institution undertaking the job of brokering, underwriting, managing, public issue market making for government bonds and other financial services. in 1933, the center was converted into Nepal stock exchange(NEPSE) with the basis objectives of imparting free market ability and providing liquidity to the government and corporate securities by facilitating transaction in its trading floor through market intermediaries, such as brokers, market makers etc. and it is a non- profit organization, operating under securities Exchange Act,1983. NEPSE opened its trading floor on 13 January 1974 through licensed members. His majestys government, Nepal Rastra bank, Nepal Industrials Development Corporation and licensed members are the shareholders of the NEPSE.

d) Brokers: A broker act as a middleman who matches buying and selling orders, thereby securing both the buyers and sellers depend with brokers. A broker does not take title to the securities involved in traction the transition. A commission is charged by the broker for his assistance in the consummating the transaction. A stockbrokers, as a member of stock exchange and sub broker as any persons who acts on behalf of a stock broker as an agent or otherwise, assist in buying, selling or dealing in securities.
2.3.1 Brokerage for equity
S.No. A B Trading Amount Up to 50,000 > 50,000 &< 5,00,000 Brokerage % 1 0.9

C D

> 5,00,000 &< 10,00,000 > 10,00,000

0.8 0.7

2. Brokerage for Government Bond

S.No. A B C Trading Amount Up to 5,00,000 > 5,00,000 &< 50,00,000 > 50,00,000 Brokerage % 0.20 0.10 0.05

3. Brokerage for all other stocks which is not listed in 1 and 2.

S.No. A B C Trading Amount Up to 50,000 > 50,000 &< 50,00,000 > 50,00,000 Brokerage % 0.75 0.60 0.40

e) 2.3.2Regulation of securities market Securities markets are the mechanism for the trading of securities and it should be strictly regulated to stop the malpractices and develop efficiently. Securities Broads (SEBO) Nepal is the supreme body to regulate the Nepalese securities markets. It was established on 26 may, 1993 under the provision of the Securities Exchange ordinance, 2005. The objectives of the board are to promote and protect the interest of investors by regulating securities market. Not only these, to regulate, monitor, direct control and coordinate the entire capital market is also the objective of SEBO. SEBO works under the ministry of finance (MOF). SEBON: regulate primary market different acts and laws have been passed. The public issue activities through the primary market are regulated by the Securities Exchange ordinance, 2005. The related regulation and guidelines are Securities exchange regulation 1993, Securities registration and issue approval guidelines, 2002 and securities allotment guidelines, 1997. Similarly, to regulate the public issue it has made it mandatory to take services of an issue manager by the issuing companies. To regulate secondary market as well as members, different

acts like members of stock exchange and transaction byelaws 1998, and securities listed byelaws 1996 have passed. SEBO also monitors whether the activities carried out by NEPSE are in accordance with the above laws or not. Similarly, SEBON regulates all the members of the secondary market like issue manager, stock brokers, dealers, market marketers and corporations. 2.3.3 Listing And listing requirement Listing means the registration of issued securities with the stock exchange to make them eligible for trading. Corporate- sectors generally raise the required fund through the market either by issuing the common stocks or preferred stocks or debt instrument as like bond and debenture, if the features of marketability and liquidity are not added nobody will be interested to invest the hard earned saving in these instrument. This is simply because the investors are in need of fund and the invested securities are essential. Securities Exchange act, 1983 also prohibits the trading of unlisted securities. It has a provision for listing. It means all the public companies must enlist their securities. In order to enlist securities with the stock Exchange, the company must submit an application form in the prescribed format along with required documents and listing and annual fee. These document are essential to the analyze the profitability of the company to be assured that the proposed securities to enlist will be traded frequency in the trading floor. The major document that are to be submitted are listed below a) Names and addresses of the shareholders, directors and their holding. b) Names and Addresses of the shareholders holding more than 5 percent of the issued shares. c) Names and addresses of the Managing Directors, chief executive officers, accountants, auditors, company secretary and their holding , if any. d) In case of an existing company, the last three years audited balance sheet and profit and loss accounting and in case of a newly established company, projected balance sheet and profit and loss accounts for next three years. e) Shareholders list. f) Documents that reveal the name and address of the company and the date of business commencement. g) Specimen of a share certificate.

h) Tax registration certificate. i) Approval latter from SEBON for public issue (only if the listing is required after going to the public) and a letter from the NRB, the central bank. j) Investment details of the company and promoters and directors, if associated with any other organization. k) The name and address of associated organization. l) Resolution passed by the board of the directors of listing. m) Memorandum and articles of associated and prospectus. n) If the organization is established under a special act, a copy of such act. 2.3.4Types of listing Securities Exchange byelaw, 1996, has categorized the listing of securities into two types: temporary listing and permanent listing. 1. Temporary listing: Temporary listing should be made for redeemable preferred stocks or debentures. The listing will be valid till 15 days before the maturity. 2. Permanent listing: Common stocks; irredeemable preferred stocks, debentures, closed end fund will be listed permanently.

Pre-requisites for listing It enlists the securities of any company, the following conditions need to be met, and otherwise no company can be enlisted with the NEPSE. a) If the shares to be listed are common stocks. b) The minimum paid up capital must be RS 25 million. c) The minimum number of shareholders should be 500, but if the company has not floated at the time of submitting the application form for listing, then listing can be done with the condition that the required number of shareholders should be attained within two years. d) The face value of the shares should be either Rs 10 or RS 100 e) The flotation of the shares needs to be based on the basis of the issued \capital. It is given below Capital as per the decision of NEPSE with the pre-approval of SEBON. The percentage stated above should be issued and allotted to the general public. Once a company has met the requirement for listing, it must meet additional requirements established by the exchange and SEBON in order for its securities to be traded. For example, the listed firm must publish quarterly earnings reports, and fully disclose its financial information annually etc. Table 1.1 Capital Up to Rs 10 million 20% Above Rs 10million to Rs 5 million 15% Above Rs 50 million to Rs100 Million As per the decision of NEPSE with the preAbove Rs 100 million approval of SEBON Flotation % 25%

2.4.1Conceptual framework Conceptual map of share market is a clear concept of share market. It also identifies the variables of capital market and their relationship. It also helps in the further investigation and research to make it more effective and usable.

Common stock

SEBON

Com
Bonds/Debenture Financial instrument Structure of capital market Central Bank NEPSE

mon stock s, bond

Preference share

Treasury bill Independent variable Effect of increasing IPOs in capital market Dependent variable Challenging issues Financial intermediaries

Financial institution Moderate variable

& debe

nture s,

Unsophisticated capital market

Brokers

prefe rence

Ineffective information

share
Issue Dealer

s and treas

No facilitated of OTC Lack of trading floor Intervening Variables

Market maker

ure bills are

Issue manager

the finan cial

instrument of capital market; the sophisticated capital instruments are contributing a lot to the capital market by making huge capital fund available for manufacturing and service sectors. The increasing capital instrument enhances the capital market. Hence, capital market is dependent

variable and capital instruments are independent variables. Some factors perform their jobs like moderating variable; SEBON creates platform to make capital instrument and NEPSE provides secondary market for those capital instrument, financial institutions convert small scale saving into huge investment and at last central bank controls the money market and facilitates the capital market. Financial intermediaries (brokers issue dealer, market maker and issue manager) also play the role of moderating variable for the IPOs management & capital market. For the capital market there are some challenges that influence its growth and performance like the ineffective information, no facilitated OTC, lack of trading floor and many more. Such factors affecting the performance of capital market are also called the intervening variables. The overall explanation concludes that IPOs management in capital market is a dependent variable and there are other factors that contribute either for a positive or negative effect in the capital market.

2.4.2Hypotheses Hypothesis is the backbone of research. It is the starting point of investigation. Researchers use different types of hypothesis according to nature of research. In this research, mainly research hypothesis and null hypothesis are used. Research hypothesis is an assumption that is close with research objectives and null hypothesis is an assumption that reflects for no effect or no difference. The hypotheses related with research are as follows.

Ho=the null hypothesis HA= the alternative hypothesis

I.

Ho: There is no relationship between IPOs management in capital market and financial instruments HA: If capital instruments increases, the IPOs management in capital market is more sophisticated.

II.

Ho: There is no relationship between IPOs management in capital market and structure of capital market. HA: if the market structure becomes more sophisticated, then the IPOs management in capital market becomes more effective.

III.

Ho: There is no relationship between IPOs management in capital market and financial intermediaries. HA: if financial intermediaries are improved, then the IPOs management in capital market is also improved.

IV.

Ho: There is no relationship between IPOs management in capital market and challenging issues. HA: if challenging issues are increased, then IPOs management in capital market becomes more complicated.

CHAPTER III
RESEARCH METHODOLOGY

3.1 Research method 3.1.1 Research Area This research has been conducted to analyze IPOs management and capital market hence it data has been gathered from Nepal Stock exchange (NEPSE), Securities Board of Nepal (SEBON), Nepal Rastra Bank (NRB). It investigates and measures the attitudes and activities of investors, brokers and NEPSEs employees. Nepal stock exchange (NEPSE) is a nonprofit organization, operating under security Exchange Act, 1983. It was established in 2050A.D. the official building is located atRamShah Path near the Singha durbar. The basic objective of NEPSE is to impart free marketable and liquidity to the government and corporate securities by facilitating transaction in its trading floor through member, market intermediaries, such as brokers, market makers etc. Security board of Nepal (SEBON) is located at Gaushala near the Pasupatinath Temple. The main objective of SEBON is to facilitate an organized company to increase its production capacity and fixed assets. It also helps in the investigation, development and promotion of the products. Nepal Rastra Bank: Nepal Rastra Bank (NRB), the central bank of Nepal is located in Baluwatar, Kathmandu. The main objective of NRB is to regulate, control and develop the monetary systems. It also promotes, regulates and develops the national capital. It develops rules, regulations and procedures related with national capital market. This research also covers the investors and stock experts. It includes the behavior, attitude and contribution of investors and stock experts in the capital market.

3.1.2Research Design Research Design (RD) is a plan for the collection and analysis of the data. It presents a series of guide posts to enable to researcher to progress in the right direction in order to achieve the goal. The design may be a specific presentation of the various steps in the research process. These steps include the selection of a research problem, presentation of problem, formulation of hypothesis, conceptual clarity, and methodology, survey of literature and documentation, bibliography, data collection, testing of the hypothesis, interpretation, presentation and report writing. A research design is the specification of methods and procedure for acquiring the information needed. It is the overall operational pattern of framework of the project that stipulates what information is to be collected from it will ensure that the information obtained is relevant to the research questions and that it was collected by objectives and economical procedure. To obtain the correct answers for existing problem; the researcher has used Historical and Explanatory research method in this research. Historical research is concerned with past phenomena. It is a process of collecting, evaluating, verifying past evidence with systematically and objectively to reach a conclusion. Accuracy of the gathered information is the main ingredient of success in historical research. There are two main sources from where past evidences can be found. One is the primary source, where researcher was the direct observer of the recorded event and another is secondary source. In this research both the methods has been used for the data collection. The basic objective of this study is to find out effect of increasing IPOs in capital market to obtain this goal Historical Research has been used as a systematic research method. The study is based on primary and secondary data; information obtained from SEBON, NEPSE, NRB, investors as well as experts. 3.1.3Nature and Resource of data Data are collected from two sources. They are primary sources and secondary sources The primary data are collection through questionnaire. In this research mainly two type questionnaire tools used: self-administrative and interviewee administrative. Online

questionnaire, mail questionnaire, delivery and collection questionnaire are Self-administrative questionnaire. Telephonic questionnaire and interview schedules are also used to collection primary data. Observation, interview as well as group discussion also include to collection primary data. Secondary data source Secondary data collected through different source. This research mainly depend on secondary data because the information related stock can gathered through primary tools hardly possible hence it used secondary data related with share market, SEBON,NEPSE, Central bank. The project used subjective sectors the following sources of data have also been used in the course of study. a. Journal of SEBON, NEPSE and central bank. b. Economic magazine, newspapers, and journal. c. Periodic return submitted by SEBON, NEPSE and central bank. d. Various articles publics in the newspaper. e. Various publications dealing in the subject matter of the study.

3.1.4Data collection techniques For the gathering different facts, information secondary data and primary data are used in the report to understanding the history of stock market and emerging challenge of it. The tools and techniques to collection of primary data are as follows.

a. Online questionnaire: It is electronic data collection tool, which allows researchers to collect information through internet, website, or email in a format that can be directly read and analyzed. In this research only used form online questionnaire

b. Mail questionnaire: In this mail questionnaire, the researchers allow to send questionnaire direct to respondent. It is most effective tools to collect primary data if the respondent and researcher have positive relationship.

c. Delivery and collection questionnaire: The researcher allows sending question through postal and collected them after certain time. It is most appropriate where high technology (telephone, email, internet, mobile etc.) is restricted as like Humla, Jumla place.

d. Telephonic questionnaire: It is most effective tools to collection of data. It also help to measure attitude, concept and reliability of data due to it observe pitch of sound, data flow speed and confidence of respondent. 3.1.5 Data Analysis tools For the purpose of analysis, two tool used. They are as following a) Statistical tools b) Financial tools 3.1.5.1Statistical Tools: Some important statistical tools are used to achieve the objective of the study. In this study statistical tool such as mean, standard deviation, co-efficient variation and coefficient of standard deviation are used. The above statistical tools are broadly categorized in to two sectors; Descriptive Statistic and Inferential Statistic. A) Descriptive Statistics: Statistics, which describes the data that have been gathered, are called descriptive statistic. Such data are often in form of raw, unorganized numerical values. These statistics focus on two aspects of the distribution: the central tendency and dispersion.

i)

Mean: A mean is average value or the sum of all observations divided by the number of observation and it is denoted and given by the formula; x= mean of the value, N= Number of the observation. During the analysis of data, mean is

calculated by using the statistical formula Average on excel data sheet on computer. ii) Standard Deviation: The standard deviation measures the absolute dispersion. It is said that the value of standard deviation the higher the variability and vice-versa. Karl Pierson introduced the concept of the standard deviation in 1823 A.D. and this is denoted by the small Greek letter called Sigma; = x2/N Where X = (x-x mean), during the analysis of data, standard deviation is calculated by the statistical formula (SIDEV) on excel data sheet on computer. iii) Coefficient of variation: the standard deviation calculation from above formulated given as absolute measure of dispersion. The coefficient of variation measure the relation, measure of dispersion hence it also measure their variability. The coefficient of variation is given by the formula and coefficient of variations C.V= standard deviation/mean *100

B) Inferential statistics: they are defining as statistics that help to establish relationship among the variables, from which conclusion can be drown. I) Correlation coefficient (p): It measures the relationship between two variables. Where one variable is dependent or its value depend on another variable. And another is independent which value not depend on another variable. The value of correlation consist any values from 0 to 1. If the value is 0 the correlation perfectly uncorrelated or there is no relationship exists. If the value 0<p>0.5 this means less relative correlated. If p=0.5 relatively correlated and 1 is perfectly correlated. II) Regression coefficient(): regression analysis is used to measure the strength of the relationship between two or more variables. Regression analysis is used to predict or estimate the value of one dependent or response or endogenous variables based on the known values of independent or explanatory variables. The unknown variable which we have to estimate or predict is called dependent variables.

III)

Coefficient of determination (r2): the coefficient of determination measures the strength or extant of the association that exists between dependent variable (y) and independent variable(x). It measures the proportion of variation in the dependent variable(y) that is explained by the regression line. In other word, coefficient of variation measures the total variations in the dependent variable due to independent variable and its denoted by r2.

3.1.5.2Financial Tools: a. Return on Assets (ROA): It measures the productivity of the assets. It is measured in terms of relationship between net profit and assets. This ratio judge the effectiveness in using the total supplied by the owners and creditors. Higher ratio shows the higher return on assets used in business there by indicating effective use of resources available and vice-versa. It is calculated by EAT divided by total assets.

b. PE Ratio: The price/earnings (P/E) ratio how much investors are willing to pay per Rs. of reported profits. To compute the P/E Ratio, we need to know the firms earning per share. The ratio of the price per share to earnings per share shows the Rs. Amount investors will pay for Rs. 1 of current earning, this suggests that the company is regarded as being somewhat riskier than most, as having poorer know unloved has above average risk. It is calculated by MPS divided by EPS; clearly earnings yield and price-earnings ratio are simply two ways to measure the something. In practice, earnings yield are less commonly stated and used, P/E Ratio.

3.1.6 Population and Sample This research has been conducted on topic IPOs Management in Capital Market. It takes population of research from listed companies in NEPSE. Out of 150 listed companies with the listing of 13 new companies with the merging of NB finance and leasing company with bank and de-listing of 5 companies, the total number of listed companies remains to 142 during the fiscal year2007/08. In this research we take only four sectors as population as Commercial banks, Development banks, Finances and Insurance companies. Where 114 companies IPOs from 142 companies taking as population from FY 1993/94 to 2007/08, rest of the 4 sectors restricted from population. Similarly, even though IPOs could be debt, preference share and common equity. The studies only focus on IPOs of common equity. It also analyzesthe existing state of IPOs in Nepal. The offers (amount and number of issue) from collected scheme like mutual fund and citizen investment have not been considered. Sampling method selected stratified random. It represents different section of the population in study. The population divided as strata (capital fund) and simple random sample is taken from each such sub group. A variant of simple stratified sampling is called proportionate sampling. The sample size is 33 [using formula {(2 *2)/t2}], 4 samples from commercial banks, 7 samples from Development banks, 17 From the Finance companies and 5 from the insurance companies (calculation part at appendix).

CHAPTER IV PRESENTATION AND ANALYSIS OF THE DATA

The chapter includes presentation and analysis of data collected through secondary and primary source. it reveals existing state of IPOs in Nepal, analyzes IPOs and its relevant sectors and finally presents relation of IPOs management in capital market and its challenges. All the analyses are based on simple statistical and financial tools.

4.1 Data Presentation & Analysis of capital market

4.1.1 Amount of public issues offered. Securities act, 2063 provisioned that any company which goes for IPOs must get issue approval from Security Board of Nepal (SEBON) prior to make their offer to public. Since first year of SEBON is operation on FY 1993/04, it has given issue approval from security260issues, amounting Rs 22561.4 million till FY 2007/08. As securities regulation also provisioned that the company, which got issue approval, may commit their offer any time within two months from the data date of issue approval (Security Registration and Issue Approval Guideline, 2002)

Table 1.2: Amount of Public Issues Offered

Fiscal Year 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

Amount of public issue (in Billion)

2.444 1.7396 2.9374 3.322 4.6236 2.58 3.2686 4.1049 14.4133 5.5654 10.275 16.2682 24.4328 22.955 106.682

Growth in Capital Market -28.82 68.85 13.09 39.18 -44.19 26.68 25.58 251.12 -61.38 84.62 58.32 50.18 -6.048 364.74

From the past data, amount of public issue was 2.444 billion in 1993/94. In 1994/95 it was 1.7396billion which was decreased by 28.82%. After 1995, capital market is increased by 68.85%, 13.09%and 39.18% in the year 1996, 1997 and 1998 respectively. But, in 1998/99 capital market decreased by 44.19%, which was 2.58 billion. In fiscal year 2006/07 capital market was decline and after the year it was unexpectedly increased by 364.74%.

Chart art 1.1: Amount of Public Issues Offered.

4.1.2 Comparison of Growth between the IPO and Capital Market Growth of capital market represents the strength of capital market and growth of IPOs show the increasing tendency of public companies. Hence the relationship of market and IPOs helps to predict picture of economic growth growth.

Table 1.3: Comparison of Growth between the IPO and Capital Market

Fiscal Year 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

Amount of IPO (in Million) 227.90 173.96 226.74 57.00 119.40 148.00 202.26 278.70 319.46 394.30 657.50 377.48 579.83 380.30 924.00

Growth in IPO -23.67 30.34 -74.86 109.47 23.95 36.66 37.79 14.63 23.43 66.75 -42.59 53.61 -34.41 142.97

Growth in Capital Market -28.82 68.85 13.09 39.18 -44.19 26.68 25.58 251.12 -61.38 84.62 58.32 50.18 -6.048 364.74

The above table shows comparison analysis of capital growth and IPOs growth. In fiscal Year 1994/95 IPOs and capital market both decreased by 23.67% and 28.82% respectively. But in 1995/96 both increased by 30.34% and 68.85% and amount of IPOs reach to 226.74 million. In the following year the IPOs and capital market increased in

same trend. In 2006/07 IPOs decreased by34.41% in result the growth in capital market was 6.048%. But it was unexpectedly increased by 142.97% in IPOs and 364.74% in Capital Market.

Chart1.2: Comparison of Growth between the IPO and Capital Market

400 350 300 250 200 150 100 50 0 -50 -100 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 Growth in Capital Market Growth in IPO

4.1.3 Capital Market Structure and Capital Capital structure incudes financial institutions, security board and stock exchange and central bank. It takes only financial institution and capital market for IPOs management. The trend of data does not show any significant relationship between issues companies and capital market. Table 1.4: Capital market Structure and capital

Fiscal Year Amount of public issue (in Billion) 2.444 1993/94 1.7396 1994/95 2.9374 1995/96 3.322 1996/97 4.6236 1997/98 2.58 1998/99 3.2686 1999/00 4.1049 2000/01 14.4133 2001/02 5.5654 2002/03 10.275 2003/04 16.2682 2004/05 24.4328 2005/06 22.955 2006/07 106.682 2007/08

Number of Issuer Company 16

10 12 5 12 5 6 9 12 18 14 14 29 34 64

Public issue in 1993/94 was 2.444 billion. It was increased by 106.682 in year 2007/08. In the same way the number of issuer companies also increased to 64 companies from 16 companies. But there was no relation between amount of public issue and number of issuer companies. The amount of public issue was very low whether the number of issuer company was higher 18 companies.

Chart 1.3: Capital Market Structure and capital

120 100 80 60 40 20 0 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 Amount of public issue (in Billion) Number of Issuer Company

4.1.4 Sector wise Listed Companies The listed companies were categories in eight sectors according to their nature and capital structure. The rapidly increasing sector is finance companies and other companies also significantly growing. Table 1.5: Sector wise Listed Companies
Sector Commercial Banks Development Banks Finance Companies Insurance Companies Hotels Manufacturing & Processing Companies Trading Companies Other Companies Number of Listed Companies 17 23 55 17 4 18 4 4 Percent 11.97 16.20 38.73 11.97 2.82 12.68 2.82 2.82

From the above table, the number of listed companies leads by finance companies, which is 38.73%. Secondly, the development bank has more coverage with 16.20%. And other companies like commercial bank, insurance companies and manufacturing and processing companies have average coverage with 11.97%, 11.97% and 12.68% respectively. Lastly, hotels, trading companies and other companies have very little contribution with 2.82% for each. Chart 1.4: Sector wise Listed Companies

Listed Companies
Commercial Banks Development Banks Finance Companies Insurance Companies Hotels Manufacturing & Processing Trading Companies Other Companies

4.2 Major Finding of the Study The study was set out to analyze different aspect of IPO in Nepal. The data, which were obtained through secondary & primary sources, were analyzed using different statistical tools and modes which resulted in following findings: 4.2.1 Amount of public issued offering has a decreasing rate at the initial phase which is -28.82. After that, from the fiscal year 1995/96 to FY 1197/98 the growth rate has increased. The data shows that the capital market has an average growth. Hence, it supports the alternative hypothesis that if capital instrument increases, the IPOs management in capital market is more sophisticated.

4.2.2IPOs growth plays a significant role in the growth of capital market. The data shows that there is no direct relationship between them. The growth of capital market and IPOs both have decreases in the FY 1994/95 but in the Fiscal Year 1998/99 growth of capital increased but the growth of IPOs has decreased. It shows that they do not have direct relationship. The trend of capital growth is in an average increase but for IPOs it is fluctuating.

4.2.3Public issue in 1993/94 was 2.444 billion. It was increased by 106.682 in year 2007/08. In the same way the number of issuer companies also increased to 64 in number from 16. The number of institutions can play a significant role in capital market but the information show that they do not have any direct relationship. 4.2.4 Financial intermediaries such as brokers, issue manager, underwriter, dealer, investment bankers play a significant role in the growth of IPOs and capital in the capital market. Many report, journals, and researches show that financial intermediaries are essential component of capital market. Hence, it supports the alternative hypothesis i.e. if financial intermediaries are improved then the IPOs management in capital market also improves. 4.2.5Numbers of listed companies are rapidly increasing in the SEBON. Due to the lack of strong regulation body of Security Board of Nepal and central bank, large amount of public capital is under loss. Nowadays many joint stock companies are losing their performance as well as the market position. Some corporations are bearing loss and probable solvency. The result of bad performance of corporations is indicating that a huge amount of public investment is under risk.

Negligence of monitoring body of capital market or SEBON and Nepal Rastra bank (central bank) and their inappropriate procedure are responsible for all the risksin the capital market. Many financial institutions have borne loss like Nepal Bangladesh Bank, Lumbini Bank etc. and some were even dissolved, like Nepal Development Bank. Securities Act is not effective and appropriate in accordance with the present situation. It directly affects the increasing capital market and initial public offerings (IPOs). There is no any provision for non-listed company and restricted companies. The major problem of capital market is the poor management and the lack of appropriate investment policy. In the current situation,investors out of the valley (Kathmandu) are unable to take the benefit of capital market. Capital market lost huge amount of investors due to the lack of appropriate information, appropriate technical resources and branches in different place of the country. It supports the alternative hypothesis i.e. if challenging issues are increased then IPOs management in capital market becomes more complicated.

CHAPTER V SUMMARY, CONCLUSION AND RECOMMENDATION

This chapter covers three parts of the study: summary, conclusion & recommendation. The first part goes over with summarization of the whole study, the second part depicts the conclusion and the final part presents the recommendation in the light of its finding. 5.1 Summary Money can facilitate by either money market of capital market. Money market provide for short term but business need long term assert. For improvement of long-term assert capital market provide fund. Hence capital market is essential market for business. Initial public offering (IPOs) is a part of primary market mechanism. When an institution raises capital form public through issuance of its securities for the first time, then its issue to the public is termed as initial public offering. It also study overall Nepalese capital market capital market is a best alternative for the investment, in the other part of world capital market is old concept but in Nepal capital market is new emerging market. Stock market helps to development of financial structure of country. Historical backgrounds of Nepalese capital market begin issuing share of BIRATNAGAR JUTE MILL. Secondary market established in 2050-02-13 BS. Nepal stock exchange established with 25 brokers and 5 market makers. During the period 2064the broker and market maker become 31 and 6 by adding 6 brokers and one market maker respectively. The 152 companies are listed in the security board of Nepal at may, 2009, 17 Commercial bank , and 23 development banks, 55 finance companies, 17insurance companies, 18 manufacturing and processing companies m5 trading companies, 4Horel and 6 other companies . Initial public offering (IPOs) is a part of primary market mechanism. When an institution raises capital form public through issuance of its securities for the first time, then its issue to the public is termed as initial public offering. Initial public offering (IPOs) enhanced liquidity of organization. It also provide sufficient fund for capital extend of companies. Issuing the IPOs in the capital market heightens the prestige and recognition of company among suppliers and prospective customers. Some drawbacks exist in IPOs. It made of limited decision power of

management. After issue IPOs the data are providing up to date hence information flow cost increase. The company must be adopt legal provision as like auditing and underwriting fees hence direct cost increases. Management also spent many time and effort to manage IPOs, therefore indirect cost also increase. The securities exchange center was established with an objective of facilitating and promoting the growth of the capital market. Before its conversion into stock exchange, it was only the capital market institution undertaking the job of brokering, underwriting, managing, public issue market making for government bonds and other financial services. in 1933, the center was converted into Nepal stock exchange(NEPSE) with the basis objectives of imparting free market ability and providing liquidity to the government and corporate securities by facilitating transaction in its trading floor through market intermediaries, such as brokers, market makers etc. The public issue activities through the primary market are regulated by the Securities Exchange ordinance, 2005. The related regulation and guidelines are Securities exchange regulation 1993, Securities registration and issue approval guidelines, 2002 and securities allotment guidelines, 1997. The main objective of research is to identify the effect of increasing stock and initial public offering (IPOs) in the capital market of Nepal. In this research we take only four sectors as population as Commercial banks, Development banks, Finances and Insurance companies. The 114 companies IPOs from 142 companies are taking as population from FY 1993/94 to 2007/08. The simple size is 33 [using formula {( 2 *2)/t2}]. Sample taking from commercial banks, 7 sample from Development banks, 17 From the Finance companies and 5 from the insurance companies .Presentation and analysis of data collected through secondary and primary source, reveals the existing state of IPOs in Nepal, analyzes IPOs and its relevant sectors and finally presents relation of IPOs management in capital market and its challenges. All the analyses are based on simple statistical and financial tools.

5.2. Conclusion
5.2.1 In the Nepalese capital market, the capital instrument is increasing and IPOs management in capital market is becoming more sophisticated. The capital market has an average growth. 5.2.2 Growth of capital market and IPOs have significant relationship but not direct. Capital market is in developing phase but IPO (primary market) is not so much sophisticated. Hence, the structure of primary market is not so much developing. 5.2.3 Capital market structure influences the capital market but they havent direct relationship. In Nepal, financial market structure is growing gradually and capital market is also being sophisticated. 5.2.4 NEPSE make plans to improve financial intermediaries, according to their plan they have added more brokers, merchant banks and issue managers. The increasing numbers of intermediaries plays a significant role in the development of capital market of Nepal. 5.2.5 Under regulation of SEBON many listed companies are under risk due to weak monitoring bodies and inappropriate rules and regulations. For example; Nepal Development Bank was dissolved, however, just before it was dissolved, Nepal Development Bank received approval to issue right shares due to the poor management of central bank (NRB) and SEBON.

5.3 Recommendation 5.3.1 The Nepalese public has huge money that must be utilized by the capital market to develop capital infrastructure and long term project. It plays a significant role to develop the economic system. It also helps to improve the GDP. 5.3.2 Primary market is not so sophisticated hence government should develop basic infrastructures for the primary market. And capital market should be familiar with modern technology. 5.3.3 Capital market structures as like NEPSE, SEBON, and Financial institution is not mature and sophisticated. Hence it must be developed by giving authorities as well as responsibilities. They should provide off the job training and on the job training for human resources. 5.3.4 SEBON should make proper plans for the improvement of intermediaries such as brokers, investment banker and dealer. Now capital market has only one dealer which is not sufficient for the market. Hence NEPSE should develop more dealers. 5.3.5 Government should make the authorities and responsibilities of central bank, SEBON and NEPSE clear. Government should control the regulation body of SEBON, NEPSE and central bank.

Questionnaire
Dear respondent this questionnaire is to get the data for my research conducted to know the IPO management in capital market. So it will helpful if you fill this questionnaire to obtain data for my research. For Investors: Age: Address: 1. Why are public interested to invest in stocks? a) To get more profit margin. b) Few investment options. c) Just following the public trend. d) Others.

2. Are public interested to invest in IPO? a) Yes b) No

If yes/no 3. Why do people invest on stock rather than bond? a) High return on stock. b) Stock facilitated market. c) Other factors. 4. Is Nepalese capital market risk free? a) Yes b) No

5. Can Nepalese market cope with the global economy? a) Yes b) No

6. How can a small investor diversify their risk? a) Creating a stock portfolio b) Creating bond portfolio c) Creating Stock & Bond

7. Which type stock do you prefer? a) Banking Companies d) Others 8. Do you know about Nepal Stock Exchange? a) Yes b) No b) Manufacturing Companies c) Hotels

9. Which type of institutions do you prefer to purchase their IPOs? a) Financial Institutions. b) Hydropower Projects. c) Trading and Manufacturing Companies. d) Hotel and Services. 10. Why are people interested to invest on financial sectors? a) High return with low risk. b) Strong supervision by central bank. c) Because everybody invest. d) Others 11. Does stock that pays special dividend always go down by the amount of the dividend? a) Yes b) No

12. How do you value a common stock? 13. Which of the following best describes the stock brokers? a) Market Maker. b) Commission Taker. c) Advisors. d) None of the above.

Questionnaire

Dear respondent this questionnaire is to get the data for my research conducted to know the IPO management in capital market. So it will helpful if you fill this questionnaire to obtain data for my research. For Stock Experts: 1. What determines a stocks price? a) Wealth of organization b) Profit margin of company c) Company management d) Cash flow of company e) Political situation f) All of them g) None of the above 2. How does the stock market work? 3. If you are looking at many companies with equal risks which ones will have the highest stock price? a) Company with highest dividend paid. b) By creating a portfolio. c) Cash flow of investors. d) Others. 4. Is Nepalese Capital Market capable enough to cope with the global economy? a) Yes b) No

5. How can small investors diversify their risk? a) Creating a Portfolio. b) Investing on one company. 6. What is stock repurchase? a) Purchasing own stocks by the company itself. b) Purchasing of stock sold in the market by investors themselves.

7. How and why do the stock prices fluctuate even after the stock exchanges close trading for the day?

a) Changes in the policies of stock market. b) Political Changes. c) Investors Expectations. d) Availability of stocks. 8. Why would a company issue a stock dividend instead of cash dividend? a) To maintain the companys liquidity. b) To fulfill the capital requirement. c) To increase the involvement of investors in the company. d) Others. 9. What are the challenges and opportunities of Nepalese Capital market? Challenges .. 10. What are the capital market instruments? a). b). c). d). .. e). . f). Opportunities .

12. What is the reason behind the increment of capital realization in the primary market in fiscal year 2007/08 A.D.? a) Outcome of successful Peoples Movement 2062/063 B.S. b) Matured Financial Institutions. c) Public Awareness and interest in the Share Market

Bibliography

1. Bhattarai, R.(2006). Stock market in Nepal. Kathmandu: Buddha Academic 2. Brau, J. C. & Fawcett S. E.(2007). Initial Public Offerings: An analysis of theory and practices. The journal of finance 61:399-436. Available http://www.blackwell_synergy.com[2009,November,18] 3. Guring, Jas B.(1999). Share price behavior of listed companies in Nepal. master diss., Tribhuvan University. 4. Nepal Stock Exchange.(2007/08).Annual report. Kathmandu: Author. 5. Nepal Stock Exchange[online] (cited2009). : http://www.nepalstock.com [2009,November,22] 6. Security Board of Nepal.(2007/08). Annual report. Kathmandu: Author. 7. Security Board of Nepal[online] (cited 2009). Available: http://www.sebonp.com[2009,November,18] 8. Shrestha, Raju(2007). An Analysis of Different Aspect of IPO and Its practices in Nepal. Master diss, Tribhuvan University. 9. Shrestha, Suraj K.(1996). A Study on the Public Response to Primary Issue of Share in Nepal. Master diss. Tribhuvan University.

Appendix1 SEBON 1.1 Introduction Security Board of Nepal (SEBON) Securities Board of Nepal (SEBON) was established by the Government of Nepal on June 7, 1993 as an apex regulator of Securities Markets in Nepal. It has been regulating the market under the Securities Act, 2006. The functions, duties and powers of SEBON as per the Act are as follows. To offer advice to Government on matters connected with the development of the capital market.

To register the securities of corporate bodies established with the authority to make a public issue of its securities.

To regulate and systematize the issue, transfer, sale and exchange of registered securities. To give permission to operate a stock exchange to any corporate body desirous of doing so, subject to this Act or the rules and bye-rules framed under this Act.

To supervise and monitor the functions and activities of stock exchange. To inspect whether or not any stock exchange is executing its functions and activities in accordance with this Act or the rules and bye-rules framed under this Act, and to suspend or cancel the license of any stock exchange which is not found to be doing so.

To issue licenses to conduct the business of dealing in securities, subject to this Act, or the rules and the bye-rules framed under this Act, to companies or institutions desirous of conducting the business of dealing in securities.

To supervise and monitor the functions and activities of securities-dealers. To grant permission to operate collective investment schemes and investment fund programs, and to supervise and monitor them.

To approve the bye-rules concerning transactions in securities framed by stock exchanges and institutions engaged in the business of dealing in securities, and, for the purpose of making necessary provisions concerning the development of the capital market and protecting the interests of investors investing in securities, issue orders to have necessary alterations made in such bye-rules of stock exchange and institutions engaged in the business of dealing in securities.

To systematize the task of clearing accounts related to transactions in securities.

To supervise whether or not security dealers are behaving in the manner prescribed in this Act, or the rules and the bye-rules framed under this Act, while conducting business of dealing in securities, and suspend the license to conduct the business of dealing in securities in case any securities dealer is not found to be behaving accordingly.

To make or ensure necessary arrangements to regulate the volume of securities transacted and the procedure of conducting such transactions in order to ensure the promotion, development and clean operation of stock exchanges.

To make necessary arrangements to prevent insider trading or any other offenses relating to transactions in securities in order to protect the interest of investors in securities.

To review or make arrangement for reviewing the financial statements submitted by the corporate bodies issuing securities and security dealers, and issue directives deemed necessary in that connection to the concerned corporate body.

To systematize and make transparent the act of acquiring the ownership of a company or gaining control over its management by purchasing its shares in a single lot or in different lots.

To establish coordination and exchange cooperation with the appropriate agencies in order to supervise and regulate matters concerning securities or companies.

To discharge or make arrangements for discharging such other functions as are necessary for the development of securities and the capital market.

The Governing Board of SEBON is composed of seven members including one full time chairman appointed by the Government for tenure of four years. Other members of the Board include joint secretary of Ministry of Finance, joint secretary of Ministry of Law, Justice and Parliamentary Affairs, representative from Nepal Rastra Bank, representative from Institute of Chartered Accountants of Nepal, representative from Federation of Nepalese Chambers of Commerce and Industries, and one member appointed by the Government from amongst the experts pertaining to management of securities market, development of capital market, financial or economic sector. There are seven departments and sixteen sections in the organization of SEBON. Under the Management Department, there are two divisions namely Human Resources Section and

Finance Section. There are also four sections under the Planning and Development Department

namely Research Section, Training Section, Information Technology Section and International Affairs Section. There are also two sections under the Corporate Finance Department namely, Public Issue Section and Collective Investment Scheme Section. Likewise, Under the Regulation Department, there are two sections namely, Stock Exchange Regulation Section and Market Intermediaries Regulation Section. There are also four sections under the Surveillance Department namely, Stock Exchange Surveillance Section, Market Intermediaries Surveillance Section, Trading Surveillance Section and Corporate Surveillance Section. Finally, under Legal Department, there are two sections Research and Investigation Section and Enforcement Section. The major financial sources of SEBON are the government grant, transaction fee from the stock exchange and registration fee of corporate securities. Other financing sources include registration and renewal of stock exchange and market intermediaries and the income from mobilization of its revolving fund.

Appendix 2

Public Issue Approval (Fiscal Year 1993/94)

S. N.

Name of Issuing Company

Types of securities
Ordinary Share Mutual Fund Ordinary Share Ordinary Share Ordinary Share Ordinary Share Ordinary Share Ordinary Share Preference Share Ordinary Share # Ordinary Share Ordinary Share Ordinary Share Ordinary Share Ordinary Share Ordinary Share Preference Share

Amount of Issue Permission Issue Approved (Rs. in Date Manager/ million) Fund Manager
2.70 100.00 4.00 12.00 53.20 18.00 13.80 16.50 14.00 24.00 36.00 9.80 2.00 21.90 9.00 5.00 2.50 344.40 28/07/1993 28/07/1993 21/09/1993 28/09/1993 12/12/1993 16/12/1993 30/12/1993 10/01/1994 10/01/1994 30/01/1994 22/02/1994 08/05/1994 10/05/1994 05/06/1994 12/06/1994 21/06/1994 21/06/1994 CIT NCML NCML NCML NCML CIT NCML CIT CIT NCML CIT CIT NSML NCML CIT NCML NCML

1 2 3 4 5 6 7 8 9 10* 11* 12* 13* 14 15 16 17

Nepal Med Ltd. NIDC Capital Markets Ltd. Nepal Share Markets Co. Ltd. Himalayan General Insurance Co. Ltd. Harisiddhi Brick & Tiles Factory Ltd. Nimrod Pharmaceuticals Ltd. Nepal Lever Ltd. Necon Air Ltd. Necon Air Ltd. United Insurance Co. (Nepal) Ltd. # Nepal SBI Bank Ltd. Peoples Finance Ltd. Annapurna Finance Ltd. # Nepal Film Development Co. Ltd. Agro Nepal Ltd. Birat Shoe Ltd. Birat Shoe Ltd. Total

(Fiscal Year 1994/1995)

S. N. Name of Issuing Company Types of securities
Ordinary Share Ordinary Share Ordinary Share Ordinary Share Ordinary Share Ordinary Share # Ordinary Share Ordinary Share Ordinary Share Ordinary Share Ordinary Share Unit Scheme

Amount of Issue Approved (Rs. in million)

12.00 12.26 36.00 12.00 19.20 7.50 8.00 15.00 16.00 36.00 30.25 50.00

Permission Issue Manager/ Fund Manager Date

NCML NFCL NCML NCML CIT NSML NCML NCML NFCL NCML NFCL CIT

1* 2 3* 4* 5 6 7* 8 9* 10* 11 12

Premier Insurance Co. Ltd. Ace Laboratries (Nepal) Ltd. Nepal Bangaladesh Bank Ltd. Everest Insurance Co. Ltd. Himgiri Textile Industries Ltd. Balaju Textile Industries Ltd. Kathmandu Finance Co. Ltd. LeatherageBansbari Tannery & Shoe Factory Ltd. Citizen Investment Trust Everest Bank Ltd. KoshByabasthapan Co. Ltd. Citizen Investment Trust

18/08/1994 04//09/1994 29/09/1994 03/10/1994 08/11/1994 24/11/1994 29/01/1995 14/03/1995 10/04/1995 26/04/1995 14/06/1995 29/06/1995

Total

254.21

(Fiscal Year 1995/1996)

S. N. Name of Issuing Company Types of securities Ordinary Share # Ordinary Share Rights Share Ordinary Share Ordinary Share Ordinary Share Ordinary Share Ordinary Share Ordinary Share # Ordinary Share Ordinary Share Rights Share Amount of Issue Approved (Rs. in million) 20.00 4.00 2.00 105.00 8.00 14.34 24.00 15.00 12.28 12.00 10.12 67.00 Permission Date 01/08/1995 11/09/1995 22/10/1995 05/12/1995 05/02/1996 25/03/1996 25/03/1996 04/04/1996 07/04/1996 14/04/1996 06/06/1996 02/07/1996 CIT NCML CIT NCML CIT NCML NSML RBB Issue Manager/ Fund Manager RBB NFCL

1* 2* 3 4 5* 6 7* 8* 9 10* 11* 12

Nepal Abbas BikashBitta Co. Ltd. Narayani Finance Co. Ltd. Nepal Finance & Saving Co. Ltd. Shree Brikuti Pulp & Paper Nepal Ltd. Yeti Finance Co. Ltd. Color Scan Nepal Ltd. HISEF Finance Ltd. Universal Finance and Capital Markets Ltd. Fleur Himalayan Co. Ltd. Ace Finance Co. Ltd. Samjhana Finance Ltd. Seti Cigarette Factory Ltd. #

Total

293.74

(Fiscal Year 1996/1997)

S. N. Name of Issuing Company Types of securities Amount of Issue Approved (Rs. in million)
12.00 45.00 30.00 225.20 20.00

Permission Date

Issue Manager/ Fund Manager

NSML NCML AFCL CIT AFCL

1* 2* 3 4 5

Nepal Housing & Merchant Finance Ltd. # Ordinary Share Bank of Kathmandu Ltd. Himalyan General Insurance Co. Ltd. Bottlers Nepal Ltd. Nepal Share Markets Co. Ltd. # Ordinary Share Rights Share Rights Share Rights Share

26/07/1996 03/10/1996 03/04/1997 03/04/1997 13/05/1997

Total

332.20

(Fiscal Year 1997/1998)

S. N. Name of Issuing Company Types of securities # Ordinary Share Ordinary Share Ordinary Share Debenture Ordinary Share Rights Share Rights Share Amount of Issue Approved (Rs. in million) 8.00 7.40 46.50 93.00 20.00 3.01 241.95 Permission Date Issue Manager/ Fund Manager NSML NSML NCML NCML CIT & RBB NFCL CIT

1* 2 3 4 5* 6 7

General Finance Co. Ltd. Nepal Bitumin& Barrel Udyog Ltd. Shreeram Sugar Mills Ltd. Shreeram Sugar Mills Ltd. Neco Insurance Ltd. Nepal United Co. Ltd. Nepal Bank Ltd.

17/08/1997 17/08/1997 23/10/1997 23/10/1997 26/10/1997 16/11/1997 27/11/1997

8* 9* 10 11* 12*

Mahalaxmi Finance Co. Ltd. Paschimanchal Finance Co. Ltd. # Annapurna Finance Co. Ltd. Lalitpur Finance Co. Ltd. Goodwill Finance & Investment Co. # (Nepal) Ltd.

Ordinary Share Ordinary Share Rights Share Ordinary Share Ordinary Share

10.00 8.00 5.00 9.50 10.00

15/12/1997 05/01/1998 25/01/1998 02/04/1998 27/05/1998

NFCL NSML NFCL NCML NCML

Total

462.36

(Fiscal Year 1998/1999)

S. N. Name of Issuing Company Types of securities Amount of Issue Approved (Rs. in million)
20.00 120.00 80.00 8.00 30.00

Permission Date

Issue Manager/ Fund Manager

CIT NCML, NMB NCML, NMB CIT AFCL

1*
2 3 4* 5

Alliance Insurance Co. Ltd. Taragaon Regency Hotels Ltd. Taragaon Regency Hotels Ltd. Pokhara Finance Co. Ltd. Nepal Share Markets Co. Ltd. #

Ordinary Share Ordinary Share Preference Share Ordinary Share Rights Share

12/08/1998 16/12/1998 16/12/1998 22/03/1999 25/05/1999

Total

258.00

(Fiscal Year 1999/2000)

S. N. Name of Issuing Company Types of securities Amount of Issue Approved (Rs. in million)
3.26 175.00 50.00

Permission Date

Issue Manager/ Fund Manager

CIT NCML& NMB NCML

1* 2* 3*

Universal Finance & Capital Market Ltd. Nepal Industrial & Commercial Bank Ltd. Nepal Merchant Banking & Finance Ltd.

Ordinary Share Ordinary Share Ordinary Share (not issued) Rights Share Ordinary Share

13/09/1999 15/11/1999 30/12/1999

4 5* 6 7 8* 9

Necon Air Ltd. Lumbini Finance & Leasing Co. Ltd. Paschimanchal Finance Co. Ltd. Ace Finance Co. Ltd. Sagarmatha Insurance Co. Ltd. Oriental Hotels Ltd. Citizen Unit Scheme #

89.60 24.00 20.00 15.00 10.20 150.00 93.25*

21/01/2000 01/02/2000 14/02/2000 29/03/2000 14/06/2000 27/06/2000

CIT NSML NSML NSML NCML NCML

Rights Share Rights Share Ordinary Share Ordinary Share Additional Sale

Total

630.31

Public Issue Approval (Fiscal Year 2000/2001)

S. N. Name of Issuing Company Types of securities Amount of Issue Approved (Rs. in million) Permission Date Issue Manager/ Fund Manager

1* 2* 3* 4* 5 6*

Siddartha Finance Ltd. Nepal Merchant Banking & Finance Ltd. Alpic Everest Finance Ltd. Nepal Bangladesh Finance & Leasing Co. Ltd. Narayani Finance Ltd. Nepal Bank of Ceylon Ltd.

Ordinary Share Ordinary Share Ordinary Share Ordinary Share Rights Share Ordinary Share (not issued) Rights Share Ordinary Share Rights Share Additional Sale

8.00 50.00 5.00 7.50 12.58 150.00

07/11/2000 30/11/2000 12/12/2000 19/01/2001 12/03/2001 13/04/2001

NMB NCML NEFINSCO NSML,NSMBL NSML NCML,NSMBL, CIT CIT CIT, NMB NCML

7 8* 9

Everest Bank Ltd. Nepal Development Bank Ltd. Bank of Kathmandu Ltd. Citizen Unit Scheme

119.21 48.00 234.00

82.91*

30/05/2001 18/06/2001 13/07/2001

Total

717.20

Public Issue Approval (Fiscal Year 2001/2002)

S. N. Name of Issuing Company Types of securities
Ordinary Share Rights Share Ordinary Share Ordinary Share Rights Share Rights Share Rights Share

Amount of Issue Approved (Rs. in million)

173.46 15.00 24.00 48.00 45.00 287.87 40.00

Permission Date
10/08/2001 20/11/2001 20/12/2001 02/01/2002 02/01/2002 15/01/2002 18/03/2002

Issue Manager/ Fund Manager

NCML NSML NCML NMB NSML NMB CIT

1 2 3* 4* 5 6 7

Himalayan Distillery Ltd. Nepal Housing & Merchant Finance Ltd. Union Finance Co. Ltd. Development Credit Bank Ltd Ace Finance Ltd. Nepal SBI Bank Ltd. NIDC Capital Markets Ltd.

8* 9* 10 11* 12* 13 14* 15* 16*

Nepal Bank Of Ceylon Ltd. United Finance Ltd. Himalayan Bank Ltd. Nepal Life Insurance Co. Ltd. NirdhanUtthan Bank Ltd. Everest Bank Ltd. International Leasing & Finance Co. Ltd.# Gorkha Finance Ltd. Shree Investment & Finance Co. Ltd.# Citizen Unit Scheme Total

Ordinary Share (Not issued) Ordinary Share Debenture Ordinary Share Ordinary Share Pref. Share Ordinary Share Ordinary Share Ordinary Share Additional Sale

150.00 24.00 360.00 50.00 3.30 140.00 30.00 10.00 16.00 138.48* 1555.11

25/03/2002 08/05/2002 04/06/2002 07/06/2002 14/06/2002 18/06/2002 26/06/2002 05/07/2002 16/07/2002

NCML, NSMB NMB NMB NMB CIT NSML NMB NSML CIT

CIT,

(Fiscal Year 2003/2004)

S. N. Name of Issuing Company Types of securities Amount of Issue Permission Approved Date (Rs. in million)
20.00 300.00 24.00 150.00 20.00 8.00 210.00 20.00 30.00 6.00 3.00 150.00 20.00 359.92 24.00 140.00 21/08/2003 14/10/2003 21/10/2003 12/11/2003 14/11/2003 06/02/2004 13/02/2004 22/04/2004 10/05/2004 24/05/2004 24/05/2004 02/06/2004 08/06/2004 17/06/2004 08/07/2004 15/07/2004

Issue Manager/ Fund Manager

NEFINSCO AFCL NMB NCML, CIT NEFINSCO NMB NCML, CIT NMB NSMBL NCML NMB CIT NMB NSMBL NMB NCML, NSMBL

1 2 3* 4 5 6* 7* 8 9 10* 11* 12* 13* 14 15* 16

Alpic Everest Finance Ltd. Nepal Investment Bank Ltd. Cosmic Merchant Banking & Finance Ltd.# Kumari Bank Ltd. Siddhartha Finance Ltd. Fewa Finance Co. Ltd. Nepal Credit & Commerce Bank Ltd. Prudential Insurance Co. Ltd. NB Finance & Leasing Co. Ltd. Pashchimanchal Development Bank Ltd. Chhimake Development Bank Ltd. Lumbini Bank Ltd. Kist Merchant Banking & Finance Ltd. NB Bank Ltd. World Merchant Banking & Finance Ltd. National Hydro Power Co. Ltd.

Rights Share Debenture Ordinary Share Ordinary Share Rights Share Ordinary Share Ordinary Share Ordinary Share Rights Share Ordinary Share Ordinary Share Ordinary Share Ordinary Share Rights Share Ordinary Share Ordinary Share

Citizen Unit Scheme Total

Additional Sale

62.87* 1547.79

(Fiscal Year 2004/2005)

S. N. Name of Issuing Company Types of securities Amt of Issue Approved (Rs. in million)
20.00

Permission Date

Issue Manager/ Fund Manager

NCML

Annapurna Finance Company Ltd.

Rights Share

07/10/2004

2* 3* 4 5 6 7* 8 9* 10 11 12

Birgunj Finance Ltd. DiproscBikash Bank Ltd. NirdhanUdthan Bank Ltd. Everest Bank Ltd. Nepal SBI Bank Ltd. Everest Finance Ltd. Nepal Investment Bank Ltd. Capital Merchant Banking & Finance National Finance Ltd. (BittiyaSamsthan) Development Credit Bank Ltd. Chilime Hydropower Limited (for staffs including retired, director, ex-director of Nepal BidhutPradhikarn and staffs of the issuing companies) Total

Ordinary Share Ordinary Share Rights Share Debenture Rights Shares Ordinary Share Rights Shares Ordinary Share Rights Shares Rights Shares Ordinary Share

24.00 3.48 15.00 300.00 215.93 8.00 295.29 28.00 43.20 80.00 237.41

05/11/2004 12/01/2005 28/03/2005 30/03/2005 6/04/2005 02/05/2005 02/05/2005 24/05/2005 02/06/2005 14/07/2005 14/07/2005

NMB NMB NMB CIT NMB NMB AFCL CIT NCML NMB CIT

1270.31

(Fiscal Year 2005/2006)

S. N.
1* 2* 3* 4 5* 6 7 8 9 10* 11 12* 13* 14* 15 16 17 18* Siddhartha Bank Limited Srijana Finance Limited (BittiyaSansthan) Prudential Financial Institute Limited Bank of Kathmandu Limited Merchant Finance Company Limited Kumari Bank Ltd. Nepal Development Bank Fewa Finance Company Ltd. Om Finance Ltd. Gandaki Financial Institution Limited Goodwill Finance Co. Ltd. Business Financial Institution Limited Royal Merchant Banking & Finance Ltd. Bajuratna Finance & Saving Co. Ltd. Central Finance Ltd. (BittiyaSansthan) Taragaon Regency Hotels Ltd. Janaki Finance Co. Ltd. (BittiyaSansthan) Guheshwori Merchant & Banking Ltd. Ordinary Share Ordinary Share Ordinary Share Debenture Ordinary Share Rights Share Rights Share Rights Share Rights Share Ordinary Share Rights Share Ordinary Share Ordinary Share Ordinary Share Rights Share Rights Share Rights Share Ordinary Share

Name of Issuing Company

Types of securities

Amt of Issue Approved (Rs. in million)

150.00 4.00 24.50 200.00 12.00 125.00 160.00 30.00 30.00 15.00 25.00 12.00 17.50 10.50 12.00 446.45 10.00 20.00

Permission Date

Issue Manager/ Fund Manager

NCML & NMB NCML NCML NMB NEFINSCO NCML NCML NMB NMB NMB NCML NCML CIT NCML NCML NCML NEFINSCO NCML

03/08/2005 (2062/4/19) 03/08/2005 (2062/4/19) 17/08/2005 (2062/5/1) 07/09/2005 (2062/5/22) 20/09/2005 (2062/6/4) 23/11/2005 (2062/8/6) 26/12/2005 (2062/9/11) 26/12/2005 (2062/9/11) 26/12/2005 (2062/9/11) 28/12/2005 (2062/9/13) 03/01/2006 (2062/9/19) 05/01/2006 (2062/9/21) 25/01/2006 (2062/10/12) 31/01/2006 (2062/10/18) 02/02/2006 (2062/10/20) 07/02/2006 (2062/10/25) 21/02/2006 (2062/11/9) 21/03/2006 (2062/12/8)

19 20* 21* 22 23* 24 25 26 27 28 29 30* 31 32* 33 34

Siddhartha Bikash Bank Ltd. (B. S.) Shikhar Insurance Co. Ltd. IME Financial Institution Limited. Machhapuchchre Bank Ltd. BhrikutiBikash Bank Ltd. (B.S.) Nepal Share Markets & Finance Ltd. (B.S.) Kist Merchant Banking & Finance (B.S.) Patan Finance Limited (B.S.) Nepal Investment Bank Ltd. Nepal Industrial and Commercial Bank Ltd. Nepal SBI Bank Ltd. NarayaniAudhogikBikash Bank Ltd. (B.S) Pokhara Finance Ltd. (B.S.) SanimaBikashBittiyaSanstha Ltd. PaschimanchalBikash Bank Ltd (BS) Lumbini Bank Limited #

Ordinary Share Ordinary Share Ordinary Share Rights Share Ordinary Share Rights Share Rights Share Ordinary Share Debenture Debenture Debenture Ordinary Share Rights Share Ordinary Share Rights Share Rights Share

20.00 25.00 17.50 165.00 6.42 40.00 50.00 20.00 250.00 200.00 200.00 6.00 20.00 96.00 28.00 100.00

27/03/2006 (2062/12/14) 19/04/2006 (2063/1/6) 26/04/2006 (2063/1/13) 01/05/2006 (2063/1/18) 02/05/2006 (2063/1/19) 10/05/2006 (2063/1/27) 11/05/2006 (2063/1/28) 29/05/2006 (2063/2/15) 30/05/2006 (2063/2/16) 31/05/2006 (2063/2/17) 25/06/2006 (2063/3/11) 29/06/2006 (2063/3/15) 29/06/2006 (2063/3/15) 04/07/2006 (2063/3/20) 09/07/2006 (2063/3/25) 13/07/2006 (2063/3/29)

NMB NMB NMB NMB NCML CIT NMB NEFINSCO ACE ACE CIT NEFINSCO NCML NMB NCML NCML

Total

2547.87

(Fiscal Year 2006/2007)

S. N. Name of Issuing Company Types of securities Ordinary Share Rights Share Rights Share Ordinary Share Rights Share Rights Share Rights Share Ordinary Share Rights Share Rights Share Ordinary Share Ordinary Share Ordinary Share Ordinary Share Rights Share Amt of Issue Approved (Rs. in million) 9.00 40.00 20.00 6.00 20.00 160.00 11.00 96.00 194.00 80.00 6.00 12.00 19.50 29.40 6.25 Permission Date Issue Manager

1* 2 3 4* 5 6 7 8* 9 10 11* 12* 13* 14* 15

BageshworiBikash Bank Ltd.(B.S) Peoples Finance Ltd. (B.S.) ChhimekBikash Bank Ltd. (B.S.) SahayogiBikash Bank Ltd. (B.S.) Alpic Everest Finance Ltd. (B.S.) Nepal Development Bank Ltd. (B.S.) Navadurga Finance Co. Ltd. (B.S.) Gorkha Development Bank Ltd. Ace Finance Co. Ltd. (B.S.) Annapurna Finance Co. Ltd. (B.S.) SwabalambanBikash Bank Ltd. (B.S.) HimchuliBikash Bank Ltd. Imperial Financial Institution Ltd. Annapurna Bikash Bank Ltd. (B.S.) # Yeti Finance Ltd. (B.S.)

18/07/2006 (2063/4/2) 03/08/2006 (2063/4/18) 01/09/2006 (2063/5/16) 03/09/2006 (2063/5/18) 07/09/2006 (2063/5/22) 30/10/2006 (2063/7/13) 12/12/2006 (2063/8/26) 31/12/2006 (2063/9/16) 12/01/2007 (2063/9/28) 15/01/2007 (2063/10/1) 26/01/2007 (2063/10/14) 04/02/2007 (2063/10/21) 06/02/2007 (2063/10/23) 21/02/2007 (2063/11/9) 05/03/2007 (2063/11/21)

NMB NCML NMB NCML NMB NCML NEFINSCO NMB & NCML NCML NCML NMB NCML NMB NEFINSCO NCML

16* 17* 18 19 20 21* 22 23 24* 25* 26* 27 28 29 30

ICFC BittiyaSanstha Ltd. Civil Merchant BittiyaSanstha Ltd. Capital Merchant Banking & Finance Ltd. Laxmi Bank Limited Business Development Bank Ltd. Nepal Express Finance Limited # Kist Merchant Banking & Finance Ltd. Siddhartha Bank Ltd. Excel Development Bank Ltd. Biratlaxmi Development Bank Ltd. Malika Development Bank Ltd. # Lumbini Bank Ltd. Nepal Investment Bank Ltd. Nepal Credit & Commerce Bank Ltd. Everest Bank Ltd.

Ordinary Share Ordinary Share Rights Share Rights Share Rights Share Ordinary Share Rights Share Rights Share Ordinary Share Ordinary Share Ordinary Share Rights Share Debenture Rights Share Preference Share Ordinary Share

24.354 20.00 84.00 122.00 30.00 15.00 100.00 100.00 6.00 20.00 15.00 150.00 250.00 700.00 400.00 (with Rs. 100 premium) 12.00 2757.504

08/03/2007 (2063/11/24) 15/03/2007 (2063/12/1) 28/03/2007 (2063/12/14) 04/04/2007 (2063/12/21) 18/04/2007 (2064/1/5) 23/04/2007 (2064/1/10) 04/05/2007 (2064/1/21) 16/05/2007 (2064/2/2) 17/05/2007 (2064/2/3) 18/05/2007 (2064/2/4) 27/05/2007 (2064/2/13) 29/05/2007 (2064/2/15) 30/05/2007 (2064/2/16) 06/06/2007 (2064/2/23) 26/06/2007 (2064/3/12) 15/07/2007 (2064/3/31)

NMB NEFINSCO CIT NMB ACE NCML NCML ACE NMB NCML NMB ACE ACE CIT CIT

31*

Merchant Finance Co. Ltd. Total

NEFINSCO

Issue Approval (Fiscal Year 2007/2008) Update on 14 July, 2008

S. N.

Name of Issuing Company

Type of Securities

Amount of Issue Approved

Permission Date

Date of Issue

Issue Manag er

1* Lumbini General Insurance Co. Ltd.

Ordinary Share

25.00

29/07/2007 (2064/4/13)

24/08/2007 (2064/5/7)

NMB

Central Finance Company Ltd.

Rights Share (2:1)

24.00

03/08/2007 (2064/4/18)

11/09/2007 (2064/5/25)

NCML

3* Siddhartha Insurance Ltd.

Ordinary Share

25.00

12/08/2007 (2064/4/27)

02/09/2007 (2064/5/16)

NMB

4* SetiBittiyaSansthan Limited

Ordinary Share

4.90

23/09/2007 (2064/6/6)

Not Issued

NCML

NirdhanUttan Bank Limited

Rights Share (1:1.20)

39.52

26/09/2007 (2064/6/9)

16/11/2007 (2064/7/30)

NCML

Nepal Share Markets & Finance Ltd.

Rights Share (1:1.5)

240.00

28/09/2007 (2064/6/11)

19/11/2007 (2064/8/3)

CIT

7* Infrastructure Development Bank Ltd. .. # 8* Agriculture Development Bank Ltd.

Ordinary Share

24.00

03/10/2007 (2064/6/16)

30/10/2007 (2064/7/13)

NMB

Ordinary Share (for its existing shareholder of Group B)

125.00

04/10/2007 (2064/6/17)

30/11/2007 (2064/8/14)

ACE

9* Kuber Merchant Banking & Finance Ltd.

Ordinary Share

22.50

09/10/2007 (2064/6/22)

14/11/2007 (2064/7/28)

NMB

10* Prabhu Finance Company Limited

Ordinary Share

48.00

14/10/2007 (2064/6/27)

22/11/2007 (2064/8/6)

NMB

11 IME Financial Institution Ltd.

Rights Share (1:1)

50.00

31/10/2007 (2064/7/14)

02/12/2007 (2064/8/16)

NMB

12 Paschimanchal Development Bank Ltd. . #

Rights Share (1:0.9) Rights Share (1:1.25)

47.50

04/11/2007 (2064/7/18)

02/12/2007 (2064/8/16)

ACE

13 BhrikutiBikash Bank Ltd.

30.03

12/11/2007 (2064/7/26)

10/12/2007 (2064/8/24)

NCML

14 Capital Merchant Banking & Finance Ltd.

Rights Share (1:1)

161.00

12/11/2007 (2064/7/26)

09/12/2007 (2064/8/23)

ACE

15 Premier Finance Company Ltd.

Rights Share (2:1)

14.40

28/11/2007 (2064/8/12)

28/12/2007 (2064/9/13)

NCML

16 Development Credit Bank Ltd.

Rights Share (1:3)

806.40

13/12/2007 (2064/8/27)

03/01/2008 (2064/9/19)

NMB

17 Nepal Merchant Banking & Finance Ltd. .

Rights Share (1:4)

800.00

13/12/2007 (2064/8/27)

08/01/2008 (2064/9/24)

NFL

18 Nepal Investment Bank Ltd.

Rights Share (5:1)

201.28

09/01/2008 (2064/9/25)

29/01/2008 (2064/10/15) 02/20/2008 (2064/11/8) 02/10/2008 (2064/10/27) 03/14/2008 (2064/12/1) 02/14/2008 (2064/11/2) 11/03/2008 (2064/11/28) 02/25/2008 (2064/11/13) 03/14/2008 (2064/12/1) 03/31/2008 (2064/12/18) 04/24/2008 (2065/1/12) 05/02/2008 (2065/1/20) 05/07/2008 (2065/1/25) 05/19/2008

ACE

19 Sagarmatha Insurance Company Ltd.

Rights Share (10:3)

23.56

14/01/2008 (2064/9/30)

ACE

20 Siddhartha Development Bank Ltd.

Rights Share (1:1)

50.00

16/01/2008 (2064/10/2)

ACE

21 Prudential BittiyaSanstha Ltd.

Rights Share (1:1)

50.00

16/01/2008 (2064/10/2)

ACE

22 Nepal Electricity Authority

Debenture

1500.00

25/01/2008 (2064/10/11)

NMB

23* Nepal Development & Employment Bank # 24 Siddhartha Bank Ltd.

Ordinary

128.00

06/02/2008 (2064/10/23)

ACE

Rights Share (5:1)

138.00

06/02/2008 (2064/10/23)

NMB

25 NIC Bank Ltd.

Rights Share (5:1)

158.40

15/02/2008 (2064/11/3)

NCML

26 Lumbini Bank Ltd.

Rights Share (3:1)

250.00

10/03/2008 (2064/11/27)

ACE

27 Kumari Bank Ltd.

Rights Share (5:1)

180.00

24/03/2008 (2064/12/11)

NCML

28 Laxmi Bank Ltd.

Rights Share (4:1)

183.00

03/04/2008 (2064/12/21)

NMB

29 SanimaBikash Bank Ltd.

Rights Shares (5:1)

64.00

03/04/2008 (2064/12/21)

NCML

30 Paschimanchal Finance Co. Ltd.

Rights Share

27.83

04/04/2008

NFL

(2:1) 31 Kumari Bank Ltd. Debenture 400.00

(2064/12/22) 04/24/2008 (2065/1/12)

(2065/2/6) 05/15/2008 (2065/2/2) 05/16/2008 (2065/2/3) 05/25/2008 (2065/2/12) 05/25/2008 (2065/2/12) 05/26/2008 (2065/2/13) 05/29/2008 (2065/2/16) 05/30/2008 (2065/2/17) 05/30/2008 (2065/2/17) 06/02/2008 (2065/2/20) 06/01/2008 (2065/2/19) 06/10/2008 (2065/2/28) 06/27/2008 (2065/3/13) 06/21/2008 (2065/3/8) 06/09/2008 (2065/2/27) 06/10/2008 (2065/2/28) 06/19/2008 (2065/3/5) 07/07/2008 (2065/3/23) NMB & NCML NEFIN SCO NMB NEFIN SCO NCML NMB NMB ACE NCML NCML NCML ACE CIT ACE NCML ACE NMB

32 Kist Merchant Banking and Finance

Rights Share (1:3)

600.00

04/24/2008 (2065/1/12)

33 Ace Development Bank Ltd.

Rights Share (10:3)

96.00

05/04/2008 (2065/1/22)

34 Goodwill Finance Ltd.

Rights Share (1:1)

50.00

05/04/2008 (2065/1/22)

35 Gorkha Development Bank

Rights Share (2:1)

160.00

05/06/2008 (2065/1/24)

36 Business Development Bank

Rights Share (1:2.5)

150.00

05/08/2008 (2065/1/26)

37 HimchuliBikash Bank Ltd.

Rights Share (1:2)

60.00

05/08/2008 (2065/1/26)

38 United Finance Ltd.

Rights Share (1:1)

75.00

05/08/2008 (2065/1/26)

39 Nepal Express Finance Ltd.

Rights Share (5:3)

30.00

05/12/2008 (2065/1/30)

40 Royal Merchant Banking & Finance

Rights Share (1:1)

60.14

05/12/2008 (2065/1/30)

41 ICFC BittiyaSanstha

Rights Share (1:3)

224.81

05/13/2008 (2065/1/31

42* Kaski Finance Ltd.

Ordinary

20.00

05/18/2008 (2065/2/5)

43* ShikharBittiyaSansthan Ltd.

Ordinary

20.00

05/18/2008 (2065/2/5)

44 International Leasing and Finance Ltd.

Rights Share (1:3.5)

504.00

05/18/2008 (2065/2/5)

45 Annapurna Bikash Bank Ltd.

Rights Share (1:2.5)

150.00

05/18/2008 (2065/2/5)

46* Clean Energy Development Bank

Ordinary

96.00

05/23/2008 (2065/2/10)

47* Reliable Investment BittiyaSanstha#

Ordinary

24.75

05/26/2008 (2065/2/13)

48* Lord Buddha Financial Institution

Ordinary

22.50

05/26/2008 (2065/2/13)

06/29/2008 (2065/3/15) 06/25/2008 (2065/3/11) 06/17/2008 (2065/3/3) 06/25/2008 (2065/3/11) 07/06/2008 (2065/3/22) 07/17/2008 (2065/4/2) 06/22/2008 (2065/3/8)

ACE

49 Nepal Housing & Merchant Finance

Rights Share (1:1)

80.44

05/26/2008 (2065/2/13)

ACE

50 SahayogiBikash Bank

Rights Share (2:1)

10.00

05/26/2008 (2065/2/13)

NCML

51* SubechchhaBikash Bank

Ordinary

12.00

05/27/2008 (2065/2/14)

ACE

52 Sagarmatha Merchant and Finance

Ordinary

20.00

05/27/2008 (2065/2/14)

CIT

53* TriveniBikash Bank

Ordinary

15.00

06/01/2008 (2065/2/19)

ACE

54 Himalayan Bank Ltd.

Debenture

500.00

06/01/2008 (2065/2/19)

ACE

55 Shree Investment Finance Ltd.

Rights Share (4:1)

16.80

06/01/2008 (2065/2/19)

06/23/2008 (2065/3/9) 06/26/2008 (2065/3/12) 06/30/2008 (2065/3/16) 07/15/2008 (2065/3/31) 07/31/2008 (2065/4/16) 07/07/2008 (2065/3/23) 06/26/2008 (2065/3/12) 07/13/2008 (2065/3/29) 07/15/2008 (2065/3/31) 07/30/2008 (2065/4/15) 06/13/2008 (2065/3/30)

NMB

Source: official website of

56 Premier Insurance Co Ltd.

Rights Share (1:1.3)

39.00

06/01/2008 (2065/2/19)

ACE

57 Standard Finance Ltd.

Rights Share (1:1)

72.60

06/03/2008 (2065/2/21)

NCML

58 Guheshwori Merchant Banking & Finance

Rights Share (5:3)

37.01

05/06/2008 (2065/2/23)

NCML

NEPSE and SEBON *Populati on of

59 Narayani Finance Ltd.

Rights Share (1:2.25)

150.07

05/06/2008 (2065/2/23)

NMB

60 Himalayan General Insurance

Rights Share (5:3)

37.80

06/06/2008 (2065/2/24)

ACE

61 Nepal Investment Bank

Debenture

250.00

06/16/2008 (2065/3/2)

ACE

62 Gorkha Finance Ltd.

Rights Share (1:1)

30.00

06/22/2008 (2065/3/8)

CIT

study
NFL

63 Nepal AwasBikashBitta Company

Rights Share (1:1)

70.49

06/24/2008 (2065/3/10)

# Sample of study

64 Kathmandu Finance Limited

Rights Share (1:1)

37.95

06/25/2008 (2065/3/11)

ACE

65 Nabil Bank Ltd.

Debenture

300.00

06/29/2008 (2065/3/15)

NCML

66 Neco Insurance Company Ltd.

Rights Share (1:1)

55.00

06/30/2008 (2065/3/16)

CIT

Appen
07/09/2008 (2065/3/25) 07/28/2008 (2065/4/13) 07/29/2008 (2065/4/14) ACE NMB NCML NCML

67* Global Bank Ltd.

Ordinary

300.00

07/01/2008 (2065/3/17)

dix 3 Listed compa nies sector wise

68 National Hydro Power Company Ltd.

Rights Share (1:1)

694.94

07/01/2008 (2065/3/17)

69 Machhapuchchhre Bank Ltd.

Rights Share (10:6)

492.99

07/02/2008 (2065/3/18)

70 Yeti Finance Ltd.

Rights Share (1:1)

31.25

07/02/2008 (2065/3/18)

71 GandakiBikash Bank Ltd.

Rights Share (1:1)

50.00

07/07/2008 (2065/3/23)

07/29/2008 (2065/4/14)

NMB

72* Pasupati Development Bank Ltd.

Ordinary

80.00

07/13/2008 (2065/3/29)

NEFIN SCO & NCML

Total

11567.86

Commercial Banks
1 2 3 4 5 6

Nabil Bank Ltd. Nepal Investment Bank Ltd. Standard Chartered Bank Ltd. Himalayan Bank Ltd. Nepal SBI Bank Limited Nepal Bangladesh Bank Ltd.

NABIL NIB SCB HBL SBI NBB

9,657,470 24,070,689 9,319,664 12,162,150 8,734,791 18,603,890

100 100 100 100 100 100

965,747,000 2,407,068,900 931,966,400 1,216,215,000 873,479,100 1,860,389,000

7 8 9 10 11 12 13 14 15 16 17

Everest Bank Ltd Bank of Kathmandu Nepal Industrial And Co.Bank Machhachapuchhre Bank Ltd Laxmi Bank Limited Kumari Bank Ltd Lumbini Bank Ltd. Nepal Credit And Com. Bank Siddhartha Bank Limited NMB Bank Ltd. Bank of Asia Nepal Limited Citizens Bank International

EBL BOK NICB MBL LBL KBL LUBL NCCB SBL NMB BOAN

6,388,200 8,443,979 11,404,800 13,146,420 10,980,861 11,858,374 10,000,000 13,908,900 9,522,000 14,246,413 10,000,000

100 100 100 100 100 100 100 100 100 100 100

638,820,000 844,397,900 1,140,480,000 1,314,642,000 1,098,086,100 1,185,837,400 1,000,000,000 1,390,890,000 952,200,000 1,424,641,300 1,000,000,000

18

Limited
19 20 21 22 23 Total

CZBIL

10,000,000

100

1,000,000,000

KIST Bank Limited DCBL Bank Ltd. Global Bank Limited Prime Commercial Bank Limited Sunrise Bank Limited

KIST DCBL GBL PCBL SRBL

20,000,000 16,611,840 10,000,000 10,000,000 12,500,000 #######

100 100 100 100 100 2,300

2,000,000,000 1,661,184,000 1,000,000,000 1,000,000,000 1,250,000,000 28,156,044,100

Finance 24 25 26 27

Nepal Finance and Saving Co.Ltd. NIDC Capital Markets Ltd. National Finance Co. Ltd. Nepal Share Markets Ltd. Annapurna Finance Company

NFS NCM NFC NSM

300,000 1,012,500 2,174,071 4,320,000

100 100 100 100

30,000,000 101,250,000 217,407,100 432,000,000

28

Limited
29 30 31 32 33 34

AFC

2,620,800

100

262,080,000

Kathmandu Finance Limited. Peoples Finance Limited. Union Finance Ltd. Citizen Investment Trust Nepal AawasBikasBeeta Co. Ltd. Narayani Finance Limited

KFL PFCL UFCL CIT NABB NFL

759,000 2,021,038 1,590,025 800,000 1,523,681 2,136,517

100 100 100 100 100 100

75,900,000 202,103,800 159,002,500 80,000,000 152,368,100 213,651,700

35 36 37 38 39 40 41 42 43 44 45 46 47

Yeti Finance Company Ltd. Gorkha Finance Ltd. Samjhana Finance Co. Ltd. Universal Finance Ltd. Nepal Housing And Merchant Fin. General Finance Ltd. MahaLaxmi Finance Ltd. Lalitpur Finance Ltd. Goodwill Finance Co. Ltd. Paschimanchal Finance Co. Ltd Pokhara Finance Ltd. Lumbini Finance Ltd. Siddhartha Finance Limited Alpic Everest Finance Company

YFL GFLK SFC UFLK NHMF GFL MFL LFC GFCL PFC PFL LFLC SFL

625,000 595,000 225,000 602,184 1,607,387 242,434 960,000 1,138,604 1,154,741 556,600 2,387,280 900,000 869,322

100 100 100 100 100 100 100 100 100 100 100 100 100

62,500,000 59,500,000 22,500,000 60,218,400 160,738,700 24,243,400 96,000,000 113,860,400 115,474,100 55,660,000 238,728,000 90,000,000 86,932,200

48

AEFL

780,000

100

78,000,000

Limited
49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66

United Finance Ltd International Leasing And Fin. Co. Shree Investment Finance Co. Ltd Central Finance Co. Ltd. Nepal Shree Lanka Merchant Bank Premier Finance Co. Ltd Nava Durga Finance Co.Ltd. Butwal Finance Ltd Janaki Finance Ltd. Standard Finance Ltd. Om Finance Ltd. Cosmic Mer.Bank And Fin. Fewa Finance Co. Ltd. World Merchant Bank Ltd Birgunj Finance Ltd Capital Mer. Bank And Fin Everest Finance Ltd, Prudential Bittiya Sans

UFL ILFC SIFC CFCL NSLMB PFCLL NDFL BFL JFL STFL OFL CMBF FFCL WMBF BJFL CMB EFL PFIL

1,650,000 6,480,000 1,008,000 1,015,493 1,000,000 555,984 455,948 826,330 400,000 10,018,041 1,049,569 750,510 910,000 720,000 852,983 3,740,278 200,000 1,000,000

100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

165,000,000 648,000,000 100,800,000 101,549,300 100,000,000 55,598,400 45,594,800 82,633,000 40,000,000 1,001,804,100 104,956,900 75,051,000 91,000,000 72,000,000 85,298,300 374,027,800 20,000,000 100,000,000

67 68 69 70 71 72 73 74 75

Shrijana Finance(Bittiya Sa Royal Mer. Bank. And Fin Guheyshwori Mer. Bank. Fin IME Financial Institution BhajuratnaFin.AndSav. Co. Ltd. Patan Finance Ltd. Imperial Financial Inst. Ltd. Civil Merchant bittyasanstha ICFC BittyaSanstha Ltd. Lord Buddha Financial

SFFIL RMBFI GMFIL IMEFI BFIL PFLBS IFIL CMBSL ICFC

280,000 1,342,544 986,901 2,494,602 385,000 500,000 500,000 500,000 3,293,837

100 100 100 100 100 100 100 100 100

28,000,000 134,254,400 98,690,100 249,460,200 38,500,000 50,000,000 50,000,000 50,000,000 329,383,700

76

LBFIL

750,000

100

75,000,000

Institutional Limited Sagarmatha Merchant Banking

77 SMBF 500,000 100 50,000,000

And Finance Limited

78

Kaski Finance Limited Merchant Finance Company

KAFIL

500,000

100

50,000,000

79

MFCL

300,000

100

30,000,000

Limited
80 81 82 83 84 85 86 Total

Reliable Finance Limited ShikharBittiyaSanstha Limited Nepal Express Finance Limited Kuber Merchant Finance Limited Prabhu Finance Company Limited Api Finance Limtied Crystal Finance Limited

RIBSL SBSL NEFL KMBSL PRFL AFL CFL

825,000 500,000 1,040,000 500,000 1,600,000 600,000 700,000 82,632,204

100 100 100 100 100 100 100 6,300

82,500,000 50,000,000 104,000,000 50,000,000 160,000,000 60,000,000 70,000,000 8,263,220,400

Hotels 87 88 89 90 Total

Yak and Yeti Hotel Ltd.(Ord.) Soaltee Hotel Ltd. Taragaon Regency Hotel Oriental Hotel Ltd.

YHL SHL TRH OHL

2,209,208 9,566,815 7,449,875 5,000,000 24,225,898

100 10 100 100 310

220,920,800 95,668,150 744,987,500 500,000,000 1,561,576,450

Manufacturing & Processing 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 Total

Bottlers Nepal Ltd.(Balaju) Nepal Lube Oil Ltd. Nepal Vanaspati Ghee Udhyog Ltd Raghupati Jute Mills Ltd. Butwal Spinning Mills Ltd. Gorakhakali Rubber Udhyog Ltd. Jyoti Spinning Mills Ltd (ord.) ArunVanaspatiUdhyog Limited Bottlers Nepal (Terai)Ltd. Harisiddhi Brick and Tile Fac.Ltd. Birat Shoe Ltd.(Ord.) Uniliver Nepal Ltd. Nepal KhadyaUdhyog Ltd. Shree Bhrikuti Pulp And Paper Ltd Fluer Himalayan Limited Shree Ram Sugar Mills Ltd Nepal Bitumin and Barrel Udyog Himalayan Distillery Ltd.

BNL NLO NVG RJM BSM GRU JSM AVU BNT HBT BSL UNL NKU SBPP FHL SRS NBBU HDL

1,948,887 203,936 101,250 1,806,966 1,306,693 3,833,400 1,270,288 550,343 1,210,000 18,650,000 165,000 920,700 90,000 3,500,000 262,102 3,045,990 210,680 4,130,000 43,206,235

100 100 100 100 100 75 100 100 100 10 100 100 100 100 75 100 100 100 1,660

194,888,700 20,393,600 10,125,000 180,696,600 130,669,300 287,505,000 127,028,800 55,034,300 121,000,000 186,500,000 16,500,000 92,070,000 9,000,000 350,000,000 19,657,650 304,599,000 21,068,000 413,000,000 2,539,735,950

Others 109

Nepal Film Dev.Co. Ltd. Nepal Doorsanchar Company

NFD

491,285

100

49,128,500

110

NTC

####### #######

100 200

15,000,000,000 15,049,128,500

Limited
Total

HydroPower 111 112 113

National Hydro Power Co. Butwal Power Co. Ltd. Chilime Hydro power Co. Arun Valley Hydropower

NHPC BPCL CHCL

13,851,862 8,390,577 7,296,000

100 100 100

1,385,186,200 839,057,700 729,600,000

114

Development Company Limited

AHPC

1,715,000

100

171,500,000

Total

31,253,439

400

3,125,343,900

Tradings 115 116 117 118 Total

Salt Trading Corporation Bishal Bazar Co. Ltd. Nepal Trading Ltd. Nepal Welfare Company Ltd.

STC BBC NTL NWC

247,777 491,400 50,000 41,000 830,177

100 100 50 50 300

24,777,700 49,140,000 2,500,000 2,050,000 78,467,700

Insurance 119 120 121 122 123 124 125 126

Nepal Insurance Co.Ltd. RastriyaBeemaSansthan National LifeInsu. Co.Ltd. Himalayan Gen.Insu. Co.Ltd. United Insurance Co.(Nepal)Ltd. Everest Insurance Co. Ltd. Premier Insurance co. Ltd. Neco Insurance Co. Alliance Insurance Company

NICL RBS NLICL HGI UIC EIC PIC NIL

1,026,984 995,138 1,320,000 1,008,000 600,000 1,012,500 1,020,000 1,100,000

100 100 100 100 100 100 100 100

102,698,400 99,513,800 132,000,000 100,800,000 60,000,000 101,250,000 102,000,000 110,000,000

127

Limited
128 129 130 131 132 133 134 135 Total

AIC

599,862

100

59,986,200

Sagarmatha Insurance Co.Ltd NB Insurance Co. Ltd. Nepal Life Insurance Co. Ltd. Life Insurance Co. Nepal Prudential Insurance Co. Lumbini General Insurance Shikhar Insurance Co. Ltd. Siddhartha Insurance Limited

SIC NBIL NLIC LICN PICL LGIL SICL SIL

1,021,020 1,000,000 3,000,000 2,500,000 1,000,000 1,250,000 1,250,000 1,000,000 20,703,504

100 100 100 100 100 100 100 100 1,700

102,102,000 100,000,000 300,000,000 250,000,000 100,000,000 125,000,000 125,000,000 100,000,000 2,070,350,400

Development Banks 136

Nepal Industrial Dev. Corp.

NIDC

2,978,784

100

297,878,400

137 138 139 140

Nepal Development Bank NirdhanUtthan Bank Ltd. ChhimekVikash Bank Ltd. PaschimanchalBikash Bank Infrastructure Development Bank

NDB NUBL CBBL PDBL

3,200,000 790,721 510,000 1,000,000

100 100 100 100

320,000,000 79,072,100 51,000,000 100,000,000

141

Limited
142 143 144 145 146 147

IDBL

3,200,000

100

320,000,000

Diprox Development Bank GandakiBikas Bank Limited Business Development Bank Ltd. BhrikutiVikash Bank Limited SanimaVikash Bank Ltd. Narayani Development Bank Ltd. Clean Energy Development Bank

DDBL GDBL BDBL BBBL SBBL NABBC

226,200 1,000,000 2,100,000 704,947 7,680,000 250,000

100 100 100 100 100 100

22,620,000 100,000,000 210,000,000 70,494,700 768,000,000 25,000,000

148

Limited
149

CEDBL

3,200,000

100

320,000,000

TriveniBikas Bank Limited PurwanchalGrameenBikash Bank

TBBL

500,000

100

50,000,000

150

Limited Pashupati Development Bank

151

PGBL

600,000

100

60,000,000

PSDBL

2,000,000

100

200,000,000

Limited
152 153 154 155 156 157 158 159

BageshoworiDev.Bank SahayogiVikas Bank Gurkha Development Bank Annapurna Bikash Bank Limited SwabalamwanBikash Bank Ace Development Bank Limited HimchuliBikash Bank Ltd. MalikaBikash Bank Limited Siddhartha Development Bank

BBBLN SBBLJ GDBNL ABBL SWBBL ACEDBL HBBL MDBL

495,000 360,000 4,800,000 2,100,000 630,607 7,504,619 900,000 500,000

100 100 100 100 100 100 100 100

49,500,000 36,000,000 480,000,000 210,000,000 63,060,700 750,461,900 90,000,000 50,000,000

160

Limited
161 162

SDBL

6,450,000

100

645,000,000

BiratlaxmiBikash Bank Limited Excel Development Bank Ltd. Nepal Development And

BLDBL EDBL

500,000 200,000

100 100

50,000,000 20,000,000

163

Employment Promotion Bank

NDEP

4,765,970

100

476,597,000

Limited
164 165 Total

SubhechhaBikas Bank Limited ViborBikas Bank Limited

SUBBL VBBL

400,000 6,800,000 66,346,848

100 100 3,000

40,000,000 680,000,000 6,634,684,800

Government Bond 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 Total

BikashRinpatra 2067 BikashRinpatra 2067 Ka BikashRinpatra 2067 Kha BikashRinpatra 2067 Ga BikashRinpatra 2072 BikashRinpatra 2075 BikashRinpatra 2075 Ka BikashRinpatra 2076 BikashRinpatra 2076 Ka BikashRinpatra 2076 Kha BikashRinpatra 2076 Ga BikashRinpatra 2072 Ka BikashRinpatra 2071 Ka BikashRinpatra 2071 Kha BikashRinpatra 2073 Ka

NRBBR2067 NRBBR2067ka NRBBR2067kha NRBBR2067ga NRBBR2072 NRBBR2075 NRBBR2075ka NRBBR2076 NRBBR2076ka NRBBR2076Kha NRBBR2076Ga NRBBR2072ka NRBBR2071ka NRBBR2071Kha NRBBR2073 KA

5,000,000 10,000,000 7,500,000 7,500,000 7,500,000 12,000,000 21,000,000 22,000,000 9,000,000 10,400,000 4,600,000 15,000,000 20,000,000 30,000,000 27,500,000 #######

1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 15,000

5,000,000,000 10,000,000,000 7,500,000,000 7,500,000,000 7,500,000,000 12,000,000,000 21,000,000,000 22,000,000,000 9,000,000,000 10,400,000,000 4,600,000,000 15,000,000,000 20,000,000,000 30,000,000,000 27,500,000,000 209,000,000,000

Corporate Debenture

Nepal Investment Bank Limited

181 NIBB2067 300,000 1,000 300,000,000

Bond 2067 Everest Bank Limited Rinpatra

182 EBLB2061 300,000 1,000 300,000,000

2061
183

Bank of Kathmandu Rinpatra 2069 Nepal Investment Bank Limited

BOKB2069

200,000

1,000

200,000,000

184

NIBB2070

250,000

1,000

250,000,000

Bond 2070
185

Nepal Industrial and Commercial

NICBB2070

200,000

1,000

200,000,000

Bank Limited Bond 2070

186 187

Nepal SBI Bank Rinpatra 2070 Nepal Investment Bank Bond 2071 Nepal BidhutPradhikaranRinpatra

SBIB2070 NIBB2071

200,000 225,000

1,000 1,000

200,000,000 225,000,000

188

2069 Himalayan Bank Limited Rinpatra

189

NEAB2069

1,500,000

1,000

1,500,000,000

HBLB2072

500,000

1,000

500,000,000

2072
190

Nabil Bank Limited Bond 2075 Laxmi Bank Limited Debenture

NABILB2075

300,000

1,000

300,000,000

191

2072 Nepal Investment Bank Limited

192

LBLB2072

350,000

1,000

350,000,000

NIBB2072

250,000

1,000

250,000,000

Bond 2072
193 Total

Kumari Bank Limited BOND 2070

KBLB2070

400,000 4,975,000

1,000 13,000

400,000,000 4,975,000,000

Preferred Stock

Everest Bank Limited Convertible

194

Preference
Total

EBLCP

2,000,000 2,000,000

100 100

200,000,000 200,000,000

Mutual Fund 195 Total

NCM Mutual Fund

NCMMF

10,000,000 10,000,000

10 10

100,000,000 100,000,000

Promotor Share

KIST Bank Limited Promoter

196 KISTPO 1,200,000 100 120,000,000

Share Capital Merchant Banking And

197 CMBFLP 500,000 100 50,000,000

Finance Limited Promotor Share Nepal SBI Bank Ltd. Promoter

198

Share
199

SBIPO

6,114,353

100

611,435,300

United Finance Limited Promoter

UFLPO

900,000

100

90,000,000

Share Gorkha Finance Ltd. Promoter

200 GFLKPO 357,300 0 0

Share Cosmic Merchant Bank And Fin.

201 CMBFPO 450,306 100 45,030,600

Co. Ltd. Promoter Share Laxmi Bank Limited Promotor

202 LBLPO 300,000 100 30,000,000

Share Royal Merchant Bank And Finance

203

RMBFPO

357,500

100

35,750,000

Co. Ltd. Promoter Share Nepal Share Markets Limited

204 NSMPO 100,000 100 10,000,000

Promoter Share SwabalambanBikas Bank Limited

205

Promoter Share Kathmandu Finance Limited

206

SWBBLP

175,000

100

17,500,000

KFLPO

198,000

100

19,800,000

Promoter Share Nepal Housing And Merchant Co.

207 NHMFPO 482,642 100 48,264,200

Ltd. Promoter Share Fewa Finance Co. Ltd. Promoter

208

FFCLPO

420,000

100

42,000,000

Share Nepal Credit And Commercial

209 NCCBPO 6,880,104 100 688,010,400

Bank Ltd. Promoter Share Lalitpur Finance Co. Ltd. Promoter

210

Share Malika Development Bank

211

LFCPO

417,656

100

41,765,600

MDBLPO

350,000

100

35,000,000

Limited promoter Share Janaki Finance Limited Promoter

212 JFLPO 240,000 100 24,000,000

Share ACE Development Bank Limited

213

ACEDPO

1,920,000

100

192,000,000

Promoter Share Patan Finance Limited Promoter

214 PFLBSP 300,000 100 30,000,000

Share Annapurna Finance Co. Ltd.

215

Promoter Share

AFCPO

1,008,000

100

100,800,000

Everest Finance Limited Promoter

216

Share General Finance Co. Ltd. Promoter

217

EFLPO

120,000

100

12,000,000

GFLPO

145,460

100

14,546,000

Share PaschimanchalBikash Bank Ltd.

218 PDBLPO 600,000 100 60,000,000

Promoter Share Bank of Kathmandu Promotor

219

Share Nepal Development Bank Limited

220

BOKPO

5,000,000

100

500,000,000

NDBPO

1,120,000

100

112,000,000

Promoter Share NABIL Bank Limited Promotor

221 NABILP 4,811,751 100 481,175,100

Share Machhachapuchhre Bank Limited

222

MBLPO

5,751,559

100

575,155,900

Promotor Share Kumari Bank Limited Promotor

223 KBLPO 5,250,000 100 525,000,000

Share Alpic Everest Finance Company

224

Limited Promotor Share Lumbini Bank Limited Promotor

225

AEFLPO

585,000

100

58,500,000

LUBLPO

5,250,000

100

525,000,000

Share World Merchant Bank And

226 WMBFPO 360,000 100 36,000,000

Finance Limited Promoter Share Samjhana Finance Co. Ltd.

227

SFCPO

123,750

100

12,375,000

Promoter Share Siddhartha Development Bank

228 SDBLPO 300,000 100 30,000,000

Limited Promoter Share Yeti Finance Co. Ltd. Promoter

229 YFLPO 375,000 100 37,500,000

Share Peoples Finance Co. Ltd Promoter

230

PFCLPO

338,610

100

33,861,000

Share Nepal Industrial And Co.Bank

231 NICBPO 6,211,141 100 621,114,100

Promoter Share
232

Development Credit Bank Ltd.

DCBLPO

1,680,000

100

168,000,000

Promoter Share Shrijana Finance Ltd. Promoter

233 SFFILP 84,000 100 8,400,000

Share Merchant Finance Company

234 MFCLPO 180,000 100 18,000,000

Limited Promoter Share Goodwill Finance Co. Ltd.

235 GFCLPO 461,896 61,419,028 100 3,900 46,189,600 6,106,172,800

Promoter Share
Total

Appendix4 Brokers list

S. No 1 2 3 4

Firm Name Kumari Securities Pvt. Limited Arun Securities Pvt. Limited Opal Securities Investment Pvt. Limited Market Securities Exchange Company Pvt. Limited

Code 1 3 4 5

Tel. No. 01-4418036 01-6916470 01-4421648 01-4248973

Address DilliBazar,Kathmandu Putalisadak,Kathmandu RamshahPath,Kathmandu KichhaPokhari,Kathmandu

5 6 7 8 9

Agrawal Securities Pvt. Limited J.F. Securities Company Pvt. Limited Ashutosh Brokerage & Securities Pvt. Limited Pragyan Securities Pvt. Limited Malla&Malla Stock Broking Company Pvt. Limited

6 7 8 10 11

01-4229739 01-4223089 01-4220276 01-4498234 01-4414263

ShankardevMarga, Putalisadak,Kathmandu Putalisadak,Kathmandu KichhaPokhari,Kathmandu Putalisadak,Kathmandu Dillibazar,Kathmandu

10 11 12 13 14

Annapurna Securities Service Pvt. Limited Nepal Stock House Pvt. Limited Primo Securities Pvt. Limited ABC Securities Pvt. Limited Sagarmatha Securities Pvt. Limited

13 14 16 17 18

01-4419051 01-4255732 01-4239214 01-4230787 01-4242548

Putalisadak,Kathmandu Anamnagar,Kathmandu ShankardevMarga, Putalisadak,Kathmandu Indrachowk,Kathmandu Putalisadak,Kathmandu

15 16 17 18 19 20 21 22 23

Nepal Investment & Securities Trading Pvt. Limited Sipla Securities Pvt. Limited Midas Stock Broking Company Pvt. Limited Siprabi Securities Pvt. Limited Sweta Securities Pvt. Limited Asian Securities Pvt. Limited Shree Krishna Securities Pvt. Limited Trishul Securities Pvt. Limited Premier Securites Pvt. Limited

19 20 21 22 25 26 28 29 32

01-4495450 01-4255782 01-4416050 01-5530701 01-4444791 01-4240609 01-4224262 01-4440709 01-4231339

Old Baneshowar,Kathmandu NewRoad,Kathmandu Dillibazar,Kathmandu Kupondol,Lalitpur Putalisadak,Kathmandu Viharmarga,Kathmandu NewRoad,Kathmandu Putalisadak,Kathmandu Putalisadak,Kathmandu

Appendix5 Nepal Stock Exchange

Introduction

Nepal Stock Exchange, in short NEPSE, is established under the company act, operating under Securities Exchange Act, 1983. The basic objective of NEPSE is to impart free marketability and liquidity to the government and corporate securities by facilitating transactions in its trading floor through member, market intermediaries, such as broker, market makers etc. NEPSE opened its trading floor on 13th January 1994. Government of Nepal, Nepal Rastra

Bank, Nepal Industrial Development Corporation and members are the shareholders of NEPSE. . History The history of securities market began with the floatation of shares by Biratnagar Jute Mills Ltd. and Nepal Bank Ltd. in 1937. Introduction of the Company Act in 1964, the first issuance of Government Bond in 1964 and the establishment of Securities Exchange Center Ltd. in 1976 were other significant development relating to capital markets.

Securities Exchange Center was established with an objective of facilitating and promoting the

growth of capital markets. Before conversion into stock exchange it was the only capital markets institution undertaking the job of brokering, underwriting, managing public issue, market making for government bonds and other financial services. Nepal Government, under a program initiated to reform capital markets converted Securities Exchange Center into Nepal Stock Exchange in 1993.

Members Members of NEPSE are permitted to act as intermediaries in buying and selling of government bonds and listed corporate securities. At present, there are 23 member brokers and 2 market makers, who operate on the trading floor as per the Securities Exchange Act, 1983, rules and bye-laws. .

Besides this, NEPSE has also granted membership to issue and sales manager securities trader (Dealer). Issue and sales manager works as manager to the issue and underwriter for public issue of securities whereas securities trader (Dealer) works as individual portfolio manager. .

At present there are 11 sales and issue manager and 2 dealers (Secondary market). Click here to get information of NEPSE members. .

The tenure of the membership is one year. The license should be renewed within 3 months after the closure of the fiscal year. If not, it can be done within another three months by paying 25% penalty. Trading: NEPSE the only Stock Exchange in Nepal introduced fully automated screen based trading since 24th August, 2007. The NEPSE trading system is called NEPSE Automated Trading System (NATS) is a fully automated screen based trading system, which adopts the principle of an order driven market. Market Timings: Trading on equities takes place on all days of week (except Saturdays and holidays declared by exchange in advance). On Friday only odd lot trading is done. The market timings of the equities are:-

Market Open: - 12:00 Hours Market Close: - 15:00 Hours Odd Lot Trading is done on Fridays. For Odd Lot Trading Market Timings are Market Open: - 12:00 Hours Market Close: - 13:00 Hours Note:- The exchange may however close the market on days other than schedule holidays or may open the market on days originally declared as holidays. The exchange may also extend, advance or reduce trading hours when it deems fit necessary. Trading Holidays for Calendar year (2065/66) i.e 2009-04-14 to 2010-03-24 Securities Available for Trading: NEPSE facilitates trading in the following instruments A. Shares Equity Shares Preference Shares B. Debentures C. Government Bonds D. Mutual Funds Circuit Breakers NEPSE has implemented index-based circuit breakers with effect from 2064/6/4 (21 September 2007). In addition to the circuit breakers, price range is also applicable on individual securities. Index-based Circuit Breakers The index-based circuit breaker system applies at 3 stages of the NEPSE index movement of 3%, 4% and 5%, . These circuit breakers when triggered bring about a trading halt in all equity. In case of 3% movement either way, there would be a market halt for 15 minutes if the movement takes place during first hour of trading i.e. 13:00 hours. In case this movement takes after 13:00 hours there will be no trading halt at this level and market shall continue trading.

 In case of 4% movement either way, there would be a market halt for half an hour if the movement takes place before 14:00 hours. In case this movement takes after 14:00 hours there will be no trading halt at this level and market shall continue trading. In case of 5% movement in either way, trading shall be halted for the remainder of the day. Price Range Price Range is applicable on individual securities. The trading of the individual securities are not halted but allowed to trade within the price range. The price band is 10% of previous close on either way. * * During the ATO session the range is 5% on either way of Previous Close Price. After the band is 2% on either way of the Last traded price till it reaches to 10% of the previous close. Trading Location: The trading can be done either from NEPSEs trading floor or from the brokers office. NEPSE uses sophisticated technology through brokers can trade remotely from their office located inside the Kathmandu valley. This remote trading facility was started from 1 November 2007. Trading System: NEPSE operates on the NEPSE Automated Trading System (NATS), a fully screen based automated trading system, which adopts the principle of an order driven market. Order Matching Rules The system adopts principle of order driven market. The best buy order is matched with the best sell order. An order may match partially with another order producing multiple trades. For order matching the best buy order is the one with the highest price and the best sell order is the one with the lowest price. This is because the system views all buy orders available from the point of view of the sellers and all sell orders from the point of view of the buyers in the market. So, of all buy orders available in the market at any point of time, a seller would obviously like to sell at the highest possible buy price that is offered. Hence, the best buy order is the order with the highest price and the best sell order is the order with the lowest price.

Settlement NEPSE has adopted a T+3 settlement system. Settlement will be carried out on the basis of paper verses payment. The trading is done at "T" and at T+1; the buying brokers have to submit bank vouchers for settlement with covering letter. At T+2, the selling brokers must submit share certificate with covering letter. At T+3, NEPSE prepares billing for payment and this will be forwarded to the bank. .

Once the settlement is done the buying brokers with the consultation of the clients must decide and present the purchased shares if they want to record it as blank transfer. This must be completed within T+5. Blank Transfer Under this mechanism an opportunities to derive the market benefit is provided. But presently, the buying brokers must complete the BT process within T+5. The transactions that are executed can be recorded in different way and NEPSE has considered all possible retention. The followings are the major key points to be considered. 1. This is related only with buy of the securities. 2. The buyer may decide to have market benefit either to have capital gains or to minimize the loss. 3. In order to do this s/he may partly send for name transfer or may register it in blank transfer. 4. If s/he register total purchase in blank transfer and can put for sale and if only the part of the shares are subscribed then s/he can handover the part and the part can be forwarded for name transfer to the concerned company. In order to do this s/he has to cancel the blank transfer for that portion.