Share Market Management Company Registration Nepal

28 May

Table of Contents

What Is Share Market Management Company Registration Nepal?

Share Market Management Company Registration Nepal refers to the formal process by which a securities market intermediary is incorporated under the Companies Act and licensed by the Securities Board of Nepal to conduct regulated capital market activities. Under the Securities Act, 2063 (2007), and the Securities Businessperson Regulations, 2064 (2008), no entity is permitted to operate as a stock broker, securities dealer, merchant banker, portfolio manager, market maker, or registrar to issue without first obtaining a license from SEBON and becoming a member of the Nepal Stock Exchange. The registration framework has been significantly reformed since 2022, with the introduction of a three-tier broker licensing system, revised capital requirements, and enhanced infrastructure standards. For financial institutions, entrepreneurs, and foreign investors seeking to enter Nepal's expanding capital market, a thorough understanding of the licensing categories, capital thresholds, and compliance obligations is essential. This guide has been prepared to explain every stage of the procedure in a manner that is both legally accurate and practically actionable. CorporateNp is recognized as a trusted service provider for securities business licensing and SEBON compliance in Nepal.

Legal Framework Governing Share Market Management Company Registration Nepal

Multiple statutes and regulations are applied to govern the licensing and operation of securities market intermediaries in Nepal. The primary legislation is the Securities Act, 2063 (2007), which establishes SEBON as the apex regulator and defines the scope of securities business activities. The Securities Businessperson Regulations, 2064 (2008) prescribe the licensing requirements, capital adequacy standards, and operational infrastructure for stock brokers, securities dealers, and market makers. The Merchant Banker Regulation, 2064 governs issue management and underwriting activities. The Portfolio Management Regulation, 2064 regulates fund management and advisory services. The Registrar to Issue Regulation, 2064 establishes requirements for share registry operations. The Companies Act, 2063 (2006) governs the incorporation of the management company itself. The Foreign Investment and Technology Transfer Act, 2075 (2019) permits foreign participation in securities business through Nepal-incorporated subsidiaries. The Income Tax Act, 2058 (2002) imposes corporate tax at 25% on securities business income. Together, these laws create a comprehensive regulatory system through which Share Market Management Company Registration Nepal is administered.

Legal Framework Summary Table

Legislation	Relevance to Securities Licensing
Securities Act, 2063 (2007)	Apex regulator authority, market oversight, investor protection
Securities Businessperson Regulations, 2064	Licensing for brokers, dealers, market makers
Merchant Banker Regulation, 2064	Issue management, underwriting, IPO facilitation
Portfolio Management Regulation, 2064	Fund management, investment advisory services
Registrar to Issue Regulation, 2064	Share registry, allotment, and transfer services
Companies Act, 2063	Company incorporation and corporate governance
FITTA, 2075	Foreign investment in securities business
Income Tax Act, 2058	Corporate tax on securities business income

Types of Securities Business Licenses in Nepal

Seven distinct categories of securities business licenses are issued by SEBON. Each category is differentiated by its permitted activities, capital requirements, and operational scope.

Stock Broker License

Permits the execution of buy and sell orders on behalf of investors on the NEPSE trading platform
Three-tier licensing structure introduced in 2022:
Limited Transaction Broker: Reduced capital and operational requirements
Full Transaction Broker: Standard broker operations
Stock Dealer: Expanded dealing and proprietary trading capabilities
Minimum paid-up capital: NPR 25,000,000
Minimum net worth: NPR 20,000,000
Minimum two shareholders, both natural persons
No person may hold shares in more than one stock broker company

Securities Dealer License

Permits dealing in securities for own account and on behalf of clients
Broader trading authority than standard brokers
Minimum paid-up capital: NPR 50,000,000
Minimum net worth: NPR 40,000,000
Enhanced infrastructure requirements compared to brokers

Merchant Banker License

Permits issue management, underwriting, corporate advisory, and IPO facilitation
Minimum paid-up capital: NPR 50,000,000
Minimum net worth: NPR 40,000,000
Ten years of merchant banking experience required for public issuance approval as of February 2025
Minimum paid-up capital of NPR 100,000,000 (1 Arba) with 30% equity capital for issue management services
License issuance resumed by SEBON in February 2025 after suspension since 2075 BS

Portfolio Manager License

Permits discretionary and non-discretionary portfolio management services
Minimum paid-up capital: NPR 25,000,000
Minimum net worth: NPR 20,000,000
Requires qualified investment professionals and compliance officers

Market Maker License

Permits market making activities to provide liquidity in securities
Highest capital requirement among all categories
Minimum paid-up capital: NPR 100,000,000
Minimum net worth: NPR 80,000,000
Requires sophisticated trading infrastructure and risk management systems

Registrar to Issue License

Permits share registry, allotment processing, and investor record maintenance
Minimum paid-up capital: NPR 10,000,000
Minimum net worth: NPR 8,000,000
Lower capital threshold reflects the non-trading nature of the activity

Investment Manager License

Permits management of investment funds and collective investment schemes
Minimum paid-up capital: NPR 50,000,000
Minimum net worth: NPR 40,000,000
Overlaps with SIF fund manager licensing under Specialized Investment Fund Regulations

License Category Comparison Table

License Category	Minimum Paid-up Capital	Minimum Net Worth	Primary Activity
Stock Broker	NPR 25,000,000	NPR 20,000,000	Order execution on NEPSE
Securities Dealer	NPR 50,000,000	NPR 40,000,000	Proprietary and client dealing
Merchant Banker	NPR 50,000,000	NPR 40,000,000	Issue management, underwriting
Portfolio Manager	NPR 25,000,000	NPR 20,000,000	Portfolio management services
Market Maker	NPR 100,000,000	NPR 80,000,000	Liquidity provision
Registrar to Issue	NPR 10,000,000	NPR 8,000,000	Share registry and allotment
Investment Manager	NPR 50,000,000	NPR 40,000,000	Fund management

Eligibility Criteria for Share Market Management Company Registration Nepal

Specific eligibility conditions must be satisfied by the applicant company, its promoters, and its directors before a securities business license is granted.

Company Eligibility

The applicant must be a company incorporated in Nepal under the Companies Act, 2063
The memorandum of association must expressly include securities brokerage, dealing, merchant banking, portfolio management, or other relevant objectives
The company must have a clean regulatory history with no major violations
Foreign institutions may participate through Nepal-incorporated subsidiaries, provided they comply fully with local laws

Promoter and Director Eligibility

All promoters and proposed directors must pass SEBON's fit-and-proper test
They must have a clean legal record and be of sound mind and good character
They must have no history of serious financial misconduct
Disqualifications apply to:
Undischarged bankrupts
Persons convicted of offenses involving moral turpitude
Persons denylisted by the Credit Information Bureau
Persons who have defaulted on obligations to financial institutions

Capital Maintenance

The paid-up capital must be fully deposited in a separate bank account
A bank verification certificate must be submitted with the application
The capital must remain unencumbered and always maintained at or above the required minimum
Dropping below the minimum capital level constitutes a regulatory breach

Step-by-Step Share Market Management Company Registration Nepal Process

The procedure for obtaining a securities business license involves two principal stages: company incorporation and SEBON licensing. The step-by-step process is described below.

Stage 1: Company Incorporation

Step 1: Reserve Company Name

An online name reservation application is submitted through the OCR portal
The proposed name should reflect the securities business nature of the entity
Name reservation is generally approved within 1 to 3 working days

Step 2: Draft MOA and AOA

The Memorandum of Association must include securities business as a primary objective
The Articles of Association must provide for:
Board composition and director appointment
Share transfer restrictions
Compliance officer appointment
Internal control and risk management frameworks

Step 3: Submit Incorporation Documents to OCR

Required documents include:
Name reservation approval
MOA and AOA signed by all promoters
Notarized citizenship certificates of promoters
Passport-sized photographs of promoters
Office rent agreement
Ward office recommendation letter
OCR verification and approval typically takes 3 to 7 working days

Step 4: Obtain PAN and Tax Registration

Permanent Account Number is registered at the Inland Revenue Department
Tax clearance certificate is obtained
VAT registration is completed if turnover thresholds are met

Stage 2: SEBON Licensing

Step 5: Deposit Minimum Paid-up Capital

The required minimum capital is deposited in a separate bank account with a scheduled commercial bank
A capital verification certificate is obtained from the bank
The capital must remain unencumbered throughout the licensing process

Step 6: Prepare Infrastructure

Office space is secured meeting SEBON's minimum requirements:
Stock broker: minimum 200 square feet
Securities dealer and market maker: minimum 500 square feet
Trading terminals are installed and connected to the NEPSE system
Computer systems, printers, fax machines, and telephones are procured
Stock broker: minimum three sets
Securities dealer and market maker: minimum five sets
Physical and data security measures are implemented
Qualified personnel are recruited:
Stock broker: minimum five employees with at least one graduate degree holder
Securities dealer and market maker: minimum seven employees with at least two graduate degree holders
At least two individuals must have passed the Stockbroker Licensing Examination conducted by SEBON

Step 7: Obtain NEPSE Recommendation

The application is submitted to the Nepal Stock Exchange for preliminary evaluation
NEPSE assesses market needs, infrastructure capacity, and operational plans
A recommendation letter is issued if NEPSE is satisfied
This process typically takes 30 to 45 days

Step 8: Submit Application to SEBON

The complete application package is submitted to SEBON's office in Jawalakhel, Lalitpur
Required documents include:
Prescribed application form (Schedule-1)
NEPSE recommendation letter
Certificate of incorporation, MOA, and AOA
Capital verification certificate
PAN registration and tax clearance certificate
Promoter and director biodata with educational qualifications and professional experience
Citizenship certificates and police clearance reports of promoters and directors
Office lease agreement and floor plan
Infrastructure details and photographs
Personnel details including licensed securities traders and compliance officer
Business plan and operational procedures manual
Internal control and risk management framework
Client protection and grievance handling mechanism
Information technology infrastructure details and disaster recovery plan
Banker's report on financial standing
Undertaking to comply with all SEBON regulations
Application fees are paid as per Schedule-2:
Stock broker: NPR 5,000
Securities dealer: NPR 8,000
Market maker: NPR 8,000

Step 9: SEBON Review and Inspection

SEBON conducts a detailed evaluation of the application
Document verification, financial scrutiny, and management capability assessment are performed
An on-site inspection is conducted within 30 days of infrastructure setup
The inspection covers:
Physical infrastructure including office space and technology systems
Internal procedures, systems, and compliance readiness
Management team's ability to operate the firm efficiently

Step 10: License Issuance

If the on-site inspection is satisfactory, SEBON issues the securities business license
The license fee is paid before issuance:
Stock broker: NPR 40,000
Securities dealer: NPR 60,000
Market maker: NPR 60,000
The license is issued in Schedule-6 format
The license is valid for one year from the date of issuance

Documents Required for Share Market Management Company Registration Nepal

Proper documentation is essential for the successful licensing of a securities business entity. The following documents are required to be submitted at various stages of the process.

Company Incorporation Documents

Certificate of incorporation issued by the Office of Company Registrar
Memorandum and Articles of Association
Board resolution authorizing the application for securities business license
PAN registration certificate
Tax clearance certificate

Capital and Financial Documents

Paid-up capital verification certificate from a scheduled commercial bank
Audited financial statements of the company
Bank account opening certificate
Banker's report on the financial standing of promoters

Promoter and Director Documents

Detailed biodata of all promoters and proposed directors
Educational certificates and professional experience letters
Citizenship certificates
Police clearance reports
Photographs
Declaration that no promoter or director is denylisted by the Credit Information Bureau

Infrastructure Documents

Office premises ownership document or lease agreement (minimum 3 years)
Floor plan and photographs of office premises
Details of computer systems, trading terminals, and communication equipment
Information technology infrastructure details and disaster recovery plan

Personnel Documents

Educational certificates and experience letters of key personnel
License certificates of securities traders who have passed SEBON's examination
Compliance officer appointment letter and qualifications
Organizational structure and job division provisions

Operational Documents

Detailed business plan outlining proposed operations and target market
Operational procedures manual
Internal control and risk management framework document
Client protection and grievance handling mechanism
Anti-money laundering and know-your-client procedures

Documents Summary Table

Document Category	Specific Documents	Stage
Company	Certificate of incorporation, MOA, AOA, PAN, tax clearance	OCR and SEBON
Capital	Bank verification certificate, audited financials, banker's report	SEBON
Promoters/Directors	Biodata, citizenship, police clearance, photographs, CIB declaration	SEBON
Infrastructure	Lease agreement, floor plan, photographs, IT details	SEBON
Personnel	Trader licenses, compliance officer CV, organizational structure	SEBON
Operational	Business plan, risk management, client protection, AML/KYC	SEBO

Fees and Timeline for Share Market Management Company Registration Nepal

The cost and duration of Share Market Management Company Registration Nepal vary depending on the license category, infrastructure investment, and whether professional assistance is engaged.

Government Fees

Company registration at OCR: NPR 15,000
Application fees:
Stock broker: NPR 5,000
Securities dealer: NPR 8,000
Market maker: NPR 8,000
License fees:
Stock broker: NPR 40,000
Securities dealer: NPR 60,000
Market maker: NPR 60,000
Annual renewal fees:
Stock broker: NPR 25,000
Securities dealer: NPR 40,000
Market maker: NPR 40,000
Ward office registration: NPR 5,000 to NPR 15,000 annually
PAN registration: free of charge

Infrastructure and Setup Costs

Office space lease or purchase: variable by location
Trading terminals and IT infrastructure: NPR 500,000 to NPR 2,000,000
Furniture, fixtures, and security systems: NPR 300,000 to NPR 1,000,000
Staff recruitment and training: variable

Professional Service Fees

Legal and documentation support: NPR 50,000 to NPR 200,000
Compliance advisory and SEBON liaison: NPR 100,000 to NPR 500,000

Timeline Expectations

Company incorporation: 5 to 10 working days
Capital deposit and infrastructure setup: 1 to 3 months
NEPSE recommendation: 30 to 45 days
SEBON review and inspection: 30 to 60 days
Total estimated timeline: 8 to 12 months from initial incorporation to license issuance

Fees and Timeline Summary Table

Cost Item	Stock Broker	Securities Dealer	Market Maker
Application Fee	NPR 5,000	NPR 8,000	NPR 8,000
License Fee	NPR 40,000	NPR 60,000	NPR 60,000
Annual Renewal	NPR 25,000	NPR 40,000	NPR 40,000
Minimum Capital	NPR 25,000,000	NPR 50,000,000	NPR 100,000,000
Infrastructure Setup	NPR 800,000-3,000,000	NPR 1,500,000-5,000,000	NPR 2,000,000-7,000,000

Post-Registration Compliance for Securities Business License Holders

Ongoing compliance is mandatory to maintain the securities business license and operate legally in Nepal's capital market.

Capital and Net Worth Maintenance

Minimum paid-up capital and net worth requirements must be maintained at all times
Any drop below the prescribed levels constitutes a regulatory breach
SEBON may conduct periodic verification of capital adequacy

Reporting Obligations

Monthly reports: trading volumes, financial position, regulatory compliance
Quarterly reports: financial data, risk assessments, internal audit findings
Annual reports: full audited accounts, compliance statements, business review
Material event notifications: changes in ownership, board composition, or major operational changes

Audit Requirements

Annual statutory audits by external auditors registered with SEBON
Periodic SEBON compliance audits examining internal controls and reporting accuracy
Maintenance of proper books of accounts and transaction records for a minimum of 7 years

License Renewal

Licenses must be renewed annually within three months of the end of the fiscal year
Renewal application is submitted in Schedule-8 format
Annual renewal fee is paid as prescribed in Schedule-2
Failure to renew within three months results in suspension of trading activities until renewal is completed

Staff and Training Requirements

All securities traders must maintain valid licenses issued by SEBON
Key personnel must complete continuing professional education
Compliance officers must remain updated on regulatory developments

Client Protection Measures

Segregation of client assets from firm assets
Establishment and operation of investor grievance handling mechanisms
Maintenance of professional indemnity insurance coverage as prescribed
Implementation of anti-money laundering and know-your-client procedures

Code of Conduct

All brokers and employees must adhere to SEBON's prescribed Code of Conduct
Fair dealing with clients, conflict of interest management, and market integrity maintenance are mandatory

Compliance Calendar Table

Compliance Item	Frequency	Deadline	Authority
Capital adequacy verification	Ongoing	Continuous	SEBON
Monthly trading reports	Monthly	Within prescribed period	SEBON
Quarterly financial reports	Quarterly	Within prescribed period	SEBON
Annual audited financial statements	Annual	Within 6 months of fiscal year-end	SEBON
License renewal	Annual	Within 3 months of fiscal year-end	SEBON
Staff continuing education	Ongoing	As prescribed	SEBON
Client grievance handling	Ongoing	Immediate response required	SEBON

Foreign Investment in Nepal's Securities Business

Foreign participation in Nepal's securities market is permitted under the Foreign Investment and Technology Transfer Act, 2075, subject to specific conditions.

Permitted Foreign Participation

Foreign institutions may establish securities business entities through Nepal-incorporated subsidiaries
Joint ventures with Nepali partners are commonly preferred
Prior approval from the Department of Industry and SEBON is required
Foreign investment limits are prescribed by SEBON from time to time

Compliance Requirements for Foreign-Owned Entities

Full compliance with local laws including active local management presence
All promoters and directors must meet SEBON's fit-and-proper criteria
Capital requirements are identical to those for domestically owned entities
Repatriation of profits is permitted after tax compliance under NRB regulations

Frequently Asked Questions

What is Share Market Management Company Registration Nepal?

It is the formal process by which a securities market intermediary is incorporated under the Companies Act and licensed by SEBON to conduct regulated capital market activities such as brokerage, dealing, merchant banking, portfolio management, or market making.

Who regulates share market management companies in Nepal?

The Securities Board of Nepal (SEBON) is the apex regulatory authority for Nepal's capital market. It licenses, supervises, and regulates all securities business entities including brokers, dealers, merchant bankers, and portfolio managers.

What is the minimum capital required for a stock broker license in Nepal?

The minimum paid-up capital for a stock broker license is NPR 25,000,000. Additionally, brokers must maintain a minimum net worth of NPR 20,000,000 at all times during operations.

What are the different types of securities business licenses in Nepal?

SEBON issues seven categories of licenses:

Stock broker
Securities dealer
Merchant banker
Portfolio manager
Market maker
Registrar to issue
Investment manager

How long does the securities business licensing process take?

The complete process from company incorporation to license issuance typically takes 8 to 12 months, assuming the application is well prepared and issues are addressed promptly.

What is the three-tier broker licensing system in Nepal?

Introduced in 2022, the three-tier system comprises:

Limited Transaction Broker
Full Transaction Broker
Stock Dealer

Each tier has distinct capital requirements and operational scopes.

Can a foreign company obtain a securities business license in Nepal?

Yes, foreign institutions may obtain licenses through Nepal-incorporated subsidiaries, subject to compliance with the Foreign Investment and Technology Transfer Act and SEBON regulations. Joint ventures with Nepali partners are commonly preferred.

What infrastructure is required for a stock broker office?

Minimum office area of 200 square feet
Minimum three sets of computer, printer, fax, and telephone
Minimum five employees with at least one graduate degree holder
Trading terminals connected to the NEPSE system
Physical and data security measures

How often must a securities business license be renewed?

Licenses must be renewed annually within three months of the end of the fiscal year. Failure to renew on time results in suspension of trading activities.

What are the ongoing compliance duties of a licensed broker?

Licensed brokers must:

Maintain minimum capital and net worth
Submit monthly, quarterly, and annual reports
Undergo statutory and compliance audits
Renew licenses annually
Maintain staff licenses and continuing education
Implement client protection and AML/KYC measures

What is the role of NEPSE in the licensing process?

NEPSE evaluates the applicant's infrastructure, operational plans, and business model before issuing a recommendation letter. SEBON requires this NEPSE recommendation as part of the license application.

What disqualifies a person from being a promoter or director of a securities company?

Disqualifications include:

Undischarged bankruptcy
Conviction of offenses involving moral turpitude
Denylisting by the Credit Information Bureau
Default on obligations to financial institutions

How CorporateNp Assists with Share Market Management Company Registration Nepal

Navigating the Share Market Management Company Registration Nepal process requires precise coordination across company incorporation, capital deployment, infrastructure setup, and SEBON regulatory compliance. CorporateNp provides comprehensive legal and advisory services to entrepreneurs, financial institutions, and foreign investors seeking to establish securities business entities in Nepal.

Services Provided

Legal consultation on selecting the optimal securities business license category
Company incorporation with SEBON-compliant memorandum and articles of association
Preparation and submission of SEBON license applications
Coordination with NEPSE for recommendation letters
Capital verification and banking documentation support
Infrastructure compliance advisory including office setup and IT systems
Recruitment guidance for licensed securities traders and compliance officers
Drafting of business plans, risk management frameworks, and operational manuals
Ongoing compliance management including reporting, audit coordination, and license renewal

Expertise and Credentials

Deep expertise in the Securities Act, Securities Businessperson Regulations, Merchant Banker Regulations, and Portfolio Management Regulations
Proven track record of successful securities business license applications
Established relationships with SEBON, NEPSE, and regulatory authorities

Call to Action

Entrepreneurs and financial institutions are encouraged to contact CorporateNp for a consultation before initiating the share market management company registration process.

Disclaimer

The information provided in this guide is intended for general informational and educational purposes only. It does not constitute legal, tax, or investment advice. Laws and regulations in Nepal are subject to frequent amendment, and individual circumstances may vary. Readers are strongly advised to seek independent professional advice from qualified legal counsel or financial advisors before making decisions related to securities business licensing. CorporateNp disclaims any liability for actions taken based on the contents of this guide.

References

For further reading and official guidance, the following authoritative sources are recommended.