The government is considering a major reform in Nepal’s capital market by allowing public limited companies to issue primary shares with a face value lower than the current standard of Rs 100 per unit.
At present, except for mutual fund schemes and a few special cases, the Securities Board of Nepal (SEBON) permits companies to issue shares with a minimum face value of Rs 100.
However, the draft Company Law Bill, 2025, prepared by the Ministry of Industry, Commerce and Supplies, proposes a new provision that would enable companies to issue shares at denominations other than Rs 100.
Lower Face Value Shares Proposed
According to the initial draft of the bill, the minimum face value of shares of a public company may be fixed at Rs 50 or any amount divisible by ten. If enacted, the provision would allow companies to issue shares with face values such as:
- Rs 10,
- Rs 20,
- Rs 30,
- Rs 50, and
- the existing Rs 100 denomination.
Potential Impact on the Capital Market
The proposed change is expected to provide greater flexibility to companies in raising capital and could make share ownership more accessible to small investors.
A lower face value would enable firms to issue a larger number of shares while maintaining the same amount of paid-up capital. Market experts believe the move could:
- Increase retail investor participation;
- Improve market liquidity;
- Facilitate capital raising for companies;
- Align Nepal’s share issuance practices more closely with international standards; and
- Provide companies with greater flexibility in structuring their equity capital.
Current Practice
Under the existing framework, most companies launching Initial Public Offerings (IPOs) issue shares at a face value of Rs 100 per share, although they may charge a premium depending on their financial strength and valuation.
If the proposed provision is incorporated into the new Company Act, it would mark one of the most significant changes in Nepal’s corporate and securities framework, potentially reshaping the structure of the country’s primary market.
