Issuance of Shares at a Premium in Nepal: Public Companies

• Public Companies in Nepal:
• Public companies in Nepal authorized to issue securities under prevailing securities laws can issue shares at a premium price, provided they adhere to the specified terms and conditions outlined by the Companies Act 2063.

Issuing Securities at a Premium under the Securities Registration and Issue Regulation 2063:

• Conditions for Issuing Securities at a Premium:
• Net Profit Requirement:
• The institution must have been continuously profitable, operating with a net profit for the last three years.
• Alternatively, institutions with a paid-up capital of at least one billion rupees profitable for the last two years are also eligible to issue securities at a premium price.
• Net Worth Condition:
• The institution’s net worth per share must be higher than the paid-up capital per share, ensuring financial stability and investor confidence.
• Approval by General Meeting:
• The decision to issue securities at a premium must be formally approved by the institution’s general meeting, ensuring transparency and shareholder consent.
• Determination of Premium Price:
• The premium price must be determined based on a comprehensive securities valuation report, which is certified by external experts or recognized expert institutions.
• The valuation report should include the methodology used, its justification, and the supporting evidence for the premium price, ensuring a fair and transparent process.
• Directive Compliance:
• The institution must comply with all provisions related to premium price determination as outlined in the relevant directives, ensuring adherence to legal and regulatory standards.
• Credit Rating Requirement:
• The institution must have achieved at least an average or higher credit rating grade, signifying its financial health and risk assessment, which is crucial for investor trust.

 Please note that the above-mentioned is general information to help the reader understand the related laws in Nepal, and the same should not be construed as a legal opinion. For a detailed opinion or inquiry, please inquire: