A new draft of the 'Company Law Bill-2082', prepared by the Ministry of Industry, Commerce, and Supplies, proposes allowing companies the autonomy to issue shares at lower face values based on their specific requirements and business nature.
Key Highlights of the Draft Bill
- Flexible Face Values: The preliminary draft proposes that the minimum face value of a public company's shares can be fixed at Rs 50 or in further decrements of 10 points.
- Allowed Denominations: If implemented, companies can openly issue shares at Rs 10, Rs 20, Rs 30, or Rs 50, breaking away from the rigid Rs 100 standard.
- Market Impact: Lowering the barrier to entry is expected to significantly widen access for small-scale and student investors, strengthening broader public participation in Nepal's capital market.
Current Outliers in the Nepali Market
While the Rs 100 face value remains the norm, a few entities have historically broken the mold through older provisions or special regulatory permissions:
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Entity / Company
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Face Value
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Notes
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Soaltee Hotel Limited
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Rs 10
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One of the oldest listed companies on NEPSE; its shares have historically traded at high premium market prices despite the low face value.
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Hathway Investment Nepal
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Rs 50
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Recently entered the capital market after obtaining special permission from the Securities Board of Nepal (SEBON).
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Mutual Funds
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Rs 10
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Mutual fund schemes routinely sell their units at a face value of Rs 10.
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The Akama Hotel Precedent: Highlighting the current rigidness of the regulatory environment, Akama Hotel had initially applied to issue its IPO at a face value of Rs 50. However, due to regulatory pressure under existing laws, the hotel was forced to revise its application back to Rs 100. Sanima Capital is managing the issue.
Looking Ahead
Once the bill passes through Parliament and is enacted into law, the necessity for seeking "special permission" for lower face values will be eliminated. Nepal's capital market is expected to see a significant surge in companies opting for Rs 10 or Rs 50 IPOs, mirroring flexible structural practices seen in global financial markets.
