This article is all about the legal provisions relating to stock exchange registration in Nepal.
Stock exchange registration in Nepal is governed by Securities Act 2063.
Stock Exchange Registration in Nepal – Legal Provisions
Securities Act 2063,
License to be obtained to operate a stock exchange
A person who desires to operate a stock exchange shall obtain from the Board the license to operate the stock exchange under this Act.
No person shall operate a stock exchange or purchase, sell or exchange securities without obtaining from the Board a license under this Act nor shall any person use the name of a stock exchange without obtaining such a license.
Process of Stock Exchange Registration in Nepal
- Application to be made to carry on exchange. Only a body corporate may make an application to the Board for a license to carry on a stock exchange.
- Issue of License to carry out on stock exchange. The Board may if it is satisfied with the following matters by making necessary inquiries into the matter, issue a license to carry on a stock exchange in such format as may be prescribed:
- Where it considers that the issue of the license to carry on a stock exchange would serve the interests of investors and the general public or the issuance of such a license is necessary for the proper operation of the stock exchange,
- Where the applicant body corporate has fulfilled the matters in such format and accompanied by such acts.
Matters Necessary to set out while filing an Application
- Legal provisions of establishing the body corporate its memorandum of association stipulate that the body corporate has been established with the object to establish and operate at sock exchange.
- The body corporate maintains its paid-up capital as prescribed by the Board that such capital is not less than fifty million rupees so long as the body corporate operates the stock exchange.
- There are sufficient grounds to the satisfaction of the Board that the body corporate can provide such infrastructures and facilities as may be required to operate the stock exchange.
- Matters relating to enlisting or making similar other provisions to recognize securities to be transacted through itself.
- Matters that the interests of investors would be protected through regular operation of transactions in securities through the provisions and systems to be adopted by the body corporate in relation to the exchange and transactions proposed by the body corporate for the operation of the stock exchange.
- That it has appropriate provisions for the settlement of transactions in the stock exchange and the publication of records thereof and statements of transactions.
- Complaints filed in relation to transactions carried on by its members can be examined in a proper manner.
- That action can be taken as mentioned in the Bye-laws in the event of failure of its members to fulfill the liabilities under the contract.
Minimum Capital and Financial Source
The paid-up capital of a body corporate carrying on a stock exchange shall be so prescribed by the Board, from time to time, as it shall not be less than fifty million rupees; and the body corporate shall maintain such financial sources as may be adequate for the provision of the stock exchange that it carries on.
Also Read: Company Registration in Nepal
Disclosure to be Made by Stock Exchange
- Where it appears that any of its members have committed any financial irregularity or the economic status of such a member appears to be suspicious from any activities of such a member.
- Where it appears that any of its members have failed to fulfill such obligation as required to be fulfilled by such a member under laws or is not capable of performing such obligation.
- Where it appears that any of its members have failed to observe financial Rules and Bye-laws or is not capable of observing such Rules and Bye-laws,
- Such other information as may be prescribed.
Stock Exchange to Submit a Report
The stock exchange shall submit to the Board a report on the activities carried out by it in each fiscal year not later than three months after the expiration of such a fiscal year.