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Nepse directs firms to demat stocks within 21 days

Nepal Stock Exchange (Nepse) today directed the listed companies – that are yet to be registered with CDS and Clearing (CDSC) – to dematerialise their shares within the next three weeks.

Currently, out of 240 listed companies, only 68 have converted their stocks into demat-electronic-format.

According to the regulation, electronic share settlement is mandatory and only demat shares can be traded after October 19. However, in the first phase, the CDS is starting to trade demat shares of all the commercial banks listed with Nepse from October 6.

Nepse also warned to take necessary actions against the companies that do not register themselves at CDSC and demat their stocks by the cutoff date.

Likewise, Nepse has asked all the stockbrokers to take license of depository participants by September 16. It has also urged the investors to do transactions only through their demat account within the prescribed date.

According to Central Depository Service Regulation 2010 that governs CDSC, six months after CDSC begins operation, only demat shares can be traded.
Though Nepse carried out the paperless transaction for the first time on April 16 – more than two years after it was established – many companies are yet to get their stocks registered before mid-July to avoid paying annual fee for utilising the services for less than three months.

The operation of CDS will not only remove the necessity of holding physical scrip for share trading but also make stock transfer quicker and punctual. The investors will also get their stock transaction settled within four days of trading. They will not have to wait for share certificates to be verified and transferred, which takes maximum time while trading securities at present.
Moreover, a broker who is also a DP will take the buy or sell order, then execute the order and transfer the stocks.

The annual listing fee ranges from Rs 50,000 to Rs 500,000, depending on the company’s paid-up capital.