The capital market regulator is planning to allow merchant banks expand their services with increased paid up capital.
Securities Board of Nepal (Sebon) is going to let the merchant banks do consultancy services, said an official at the board. A new regulation – that the regulator is preparing – has proposed to let the merchant banks engage in consultancy services.
According to the existing rule, merchant bankers can operate as sales and issue manager, underwriter, share registrar and investment manager.
But the proposed new category of consultancy services, they will be permitted to provide counsel on merger, asset valuation and business plan of corporate bodies, capital restructuring, loan syndication and working capital financing.
They can also provide consultancy to venture capital and wealth management of companies.
The new proposal is based on global practice.
The proposed regulation has also increased paid-up capital for the merchant banks by Rs 10 million – from current Rs 70 million to Rs 80 million – if they expand their service. But those happy with the current services, do not need to hike paid-up capital.
The capital requirement for sales and issue manager and underwriter has been proposed at Rs 30 million and Rs 40 million, respectively. Likewise, for share registrar and investment manager, they should have Rs 10 million paid-up capital, each.
Similarly, the proposed regulation has also eased a provision that any company failing to publish its audited report for the last two years cannot purchase promoter shares of merchant banks. The current rule prohibits a company to purchase promoter share, if it ha snot not been publishing audited reports for the last three years.
However, the proposed policy has made ownership transfer provision more strict.