Securities Board Operations Halt Amid Absence of Executive Chairman, Stock Market Remains Unstable

With no executive chairman appointed at the Nepal Securities Board for nearly two months, both the stock market and regular board operations have come to a standstill. Although the nomination committee recommended four candidates on May 18, the Council of Ministers has yet to appoint a chairman after 25 days. In the absence of a chairman, approvals for issuing new shares, bonus share listings, and merger processes of financial institutions have all been suspended.

On June 11, Kathmandu — The government’s failure to appoint an executive chairman for the Nepal Securities Board (SEBON) has led to widespread disruption in the capital market. Without the administrative chief, the board’s routine functions have been affected, sending negative signals throughout the capital market.

Following the people’s movement and the general elections that resulted in a clear majority for the Nepali Congress-led government, various officials, including those in regulatory bodies, were removed via ordinances. Just days before the ordinance was introduced, Santosh Narayan Shrestha resigned from his position as chairman of the Securities Board roughly two months ago. After Shrestha’s resignation, the government formed a recommendation committee to propose candidates for the chairmanship. Despite the committee recommending names 25 days ago, the board continues to lack leadership. Since those recommendations, the Council of Ministers has held five meetings but has not yet made an appointment.

On May 18, the recommendation committee put forward four names: Dr. Navaraj Adhikari, Vinay Dev Acharya, Mukund Kumar Kshetri, and Dr. Gopal Prasad Bhatt.

Committee member Bhuvan Kumar Dahal, who was part of the panel tasked with nominating candidates for chairman, stated, “The government has already received the recommended names, so the delay in the appointment process will be addressed by the government itself.” Government spokesperson and Education Minister Sashmit Pokharel has publicly acknowledged the delay in appointing the chairman. The absence of an executive chairman at the board has weakened investor confidence, which is directly reflected in the daily trading volume at the Nepal Stock Exchange (NEPSE). New public share issuances and rights shares approvals have not been granted.

Moreover, since some companies have not registered their bonus shares with the board, the listing of those shares on NEPSE has also been halted. Board employees report that several licensing processes remain stalled. A merchant banker explained, “Bonus shares approved at the annual general meeting have been submitted to the government, and taxes paid. Investors’ holdings are regularly maintained and registered with the board, but since the registration certificate is not issued, the listing on NEPSE has been stopped.”

The same merchant banker added, “Even after all procedures are completed, the absence of this letter prevents listing, leaving investors unable to sell their shares on the secondary market.” Another merchant banker noted that efforts to expand collective investment schemes have been impeded. More than half a dozen merchant bankers have applied to the board to increase the size of collective investment schemes, but these applications have been stalled due to no chairman being appointed.

Although the central bank had instructed that the merger of Pokhara Finance and Samriddhi Finance be completed within 30 days, the Securities Board has blocked the merger. Merchant bankers explain that the merger cannot proceed without the chairman’s approval, leading to ongoing issues.

The Ministry of Finance’s nominee was supposed to act as the chairman temporarily; however, an employee at the board stated that this has not materialized. “By law, the assigned individual should carry out the duties, but the ministry’s representative has not yet arrived and no progress has been made. Earlier, they were busy with budget preparations, and even now, they have not come,” the official said. The absence of a chairman also meant the board could not even formally celebrate its anniversary. Most regular tasks have been suspended, including staff training. Only tasks manageable by the executive director are being performed.

Board staff explained, “According to the Securities Act, the full-time executive chairman is granted greater authority. Many activities are halted without a full-time chairman. Since the chairman is the primary administrative officer responsible for daily operations, it is natural that delays affect work when a capable individual is not appointed.”