Kathmandu- A high-level study committee has recommended dissolving the current Board of Directors of the Nepal Stock Exchange (NEPSE) as a key step toward restructuring the country’s capital market regulator. The committee has also proposed that no single organization or group should hold more than 5 percent of NEPSE shares.
The recommendations are contained in a report submitted on Monday to Finance Minister Rameshwor Khanal by the NEPSE Restructuring Study Committee, which was formed by the government on November 19.
According to Ministry of Finance spokesperson Tanka Prasad Pandey, the committee has completed its assigned study and submitted a detailed restructuring roadmap. The report identifies governance reform as the primary requirement and suggests that the existing board be dissolved and replaced with a new expert-based board of directors, selected from shareholder institutions and relevant regulatory bodies.
The committee states that restructuring cannot be implemented effectively without forming a dedicated and competent board. It suggests that experts may be nominated either directly by the Ministry of Finance or by shareholder institutions to constitute the new board.
Government Shareholding Options
Currently, the government holds 58.66 percent ownership in NEPSE. The committee has recommended selling this stake through an open bidding process, following a due diligence audit to determine NEPSE’s fair valuation.
- The report presents two alternative options regarding government ownership:
- The government retains 25 percent ownership and sells the remaining shares, or
- The government exits fully by selling 100 percent of its shares.
Additionally, the committee has proposed allocating 15 to 25 percent of shares to strategic partners, while ensuring that no local institution receives more than 5 percent ownership. Commercial banks have been recommended as priority local investors.
Current Shareholding Structure
At present, NEPSE’s shareholding includes:
- Government of Nepal: 58.66%
- Nepal Rastra Bank: 9.51%
- Rastriya Banijya Bank: 11.23%
- Employees Provident Fund: 10%
- Laxmi Sunrise Bank: 5%
- Prabhu Bank: 5%
- Securities brokers: 0.6%
The committee has cautioned that excessive ownership concentration could undermine market neutrality and governance reforms.
Committee Composition
The 50-day study committee was coordinated by Prakash Jung Thapa, former chairperson of the Nepal Accounting Standards Board. Members included:
- Murahari Parajuli, Nepal Stock Exchange
- Subhash Chandra Ghimire, Director, Nepal Rastra Bank
- Rupesh KC, Deputy Executive Director, Securities Board of Nepal (SEBON)
- Niraj Giri, former Executive Director, SEBON
Sharad Niraula, Deputy Secretary at the Ministry of Finance, served as the committee’s member secretary.
The report emphasizes that without immediate governance reform and professional leadership, NEPSE will struggle to modernize and meet the expectations of a growing capital market.
