Promoter shares of nearly a dozen companies have not been listed on the CDS and Clearing House due to a dispute over the issuance of separate International Securities Identification Numbers (ISINs) for promoter and ordinary shares. While ordinary shares of these companies have been listed at CDS and Clearing Limited (CDSC), 1.61bn units of promoter shares are still pending.
Since January, around a dozen companies, including six in the Hydropower group, one in Manufacturing, three in Others group, and one each in Hotels and Tourism and Microfinance sectors, have launched their IPO. Promoter shares of these companies have not been listed yet.
This is mainly due to the CDSC’s proposal to require two separate ISINs—one for promoter shares and another for ordinary shares—under its new Securities Dematerialization Operating Guidelines, 2025. The guidelines, however, have not been approved by the Securities Board of Nepal (Sebon). Stakeholders also say the move lacks legal basis and could seriously disrupt the capital market.
The Independent Power Producers’ Association of Nepal (IPPAN) has warned that the provision could derail the government’s target of generating 28,500 MW within the next decade. The association has warned of protest if the new provision is not withdrawn.
Stakeholders say the dual-ISIN system would create uncertainty for companies nearing the end of their lock-in period, as well as those preparing IPOs. Likewise, promoter shareholders complain their shares, once eligible for public trading, will remain trapped which will freeze liquidity and discourage further investment. The dispute has already blocked the listing of promoter shares from companies such as Om Mega Shri Pharmaceuticals and Bikash Hydropower.
Stakeholders argue that the provision is inconsistent with international practice. “Nowhere in the world are separate ISINs issued for promoter and ordinary shares,” said IPPAN Deputy Secretary General Prakash Dulal. “If implemented, it will undermine the principle that once the lock-in period ends, promoter shares should carry equal rights as ordinary shares.”
The controversy began in December last year when Emerging Nepal Limited requested a merger of its two ISINs after its lock-in expired. Although Nepal Stock Exchange (Nepse) granted it a single stock symbol as demanded, CDSC refused to unify the ISIN without Sebon’s approval.
Sebon has said that it has yet to decide on the guidelines prepared by the CDSC. Sebon Spokesperson Niranjaya Ghimire said the directive is still under discussion.
The guidelines require listed companies to have separate share codes for promoter shares and public shares. This code is known as the ISIN. Until now, except for banks and financial institutions—where founder and public shares are assigned separate ISINs—most other listed companies have been given a single ISIN. In the case of banks, financial institutions and insurance companies, Nepal Rastra Bank and the Nepal Insurance Authority mandate that at least 51 percent of shares remain with the promoter shareholders' group. For other companies, however, no such provision exists. This means that once the lock-in period ends, promoter shares automatically become equivalent to public shares.
The matter has now reached the Commission for the Investigation of Abuse of Authority (CIAA). In the petition filed with the constitutional anti-graft body on Aug 19, plaintiffs have accused CDSC officials of jeopardizing investors’ right to property and urged Sebon to act in line with global best practices.
At present, promoter shares worth an estimated Rs 87 billion in energy, media and cement sectors remain under lock-in. Of these, the energy sector alone accounts for Rs 53bn worth of shares.
