Nepal Stock Exchange: Guide to IPOs, ESOPs & Regulations (2025)

Decoding Nepal’s Stock Market: A Guide to Laws, IPOs, and ESOPs

The Nepal Stock Exchange (NEPSE) has captured the imagination of many aspiring investors. But before diving in, it’s crucial to understand the legal framework that governs it. A solid grasp of the stock exchange law in Nepal not only protects your investment but also empowers you to make smarter decisions.

This guide will walk you through the essential regulations, from the IPO process to Employee Stock Ownership Plans (ESOPs), and introduce you to the key regulator shaping the Nepal stock exchange policy.

The Legal Bedrock: Core Stock Market Laws

Nepal’s stock market doesn’t operate in a vacuum. It’s built on a foundation of specific acts and regulations designed to ensure fairness, transparency, and investor protection.

The single most important piece of legislation is the Securities Act, 2063 (2007). This act is the cornerstone of securities law in Nepal, covering everything from the issuance and trading of securities to the regulation of stock exchanges and professionals involved in the market.

Other key legal documents include:

• The Companies Act, 2063 (2006): Governs how public companies are formed and managed, which is essential for IPOs and ESOPs.
• Stock Exchange Operation Regulations, 2064 (2008): These are specific rules that dictate the day-to-day functioning of NEPSE, including listing requirements, trading mechanisms, and broker responsibilities.
• Various Directives and Bylaws issued by the regulatory body.

How to Trade on NEPSE (The Secondary Market)

Ready to buy and sell stocks of already listed companies like Nabil Bank or Nepal Telecom? This is where the real action happens.

Step 1: Choose a Stockbroker.

Select a licensed broker that you find reliable and has good customer service. You can find the official list on the NEPSE website.

Step 2: Open a Trading Account.

Visit the broker’s office or use their online form to open a trading account. They will provide you with your TMS username and password.

Step 3: Load Funds for Trading.

You need to deposit money into your broker’s bank account, which will then be reflected as collateral in your TMS account, allowing you to buy shares.

Step 4: Place Buy/Sell Orders.

Log in to your TMS portal. You can search for company ticker symbols (e.g., NTC for Nepal Telecom), see their live market price, and place “buy” or “sell” orders.

Step 5: Settle Your Trades.

After you buy shares, you must pay the full amount to your broker within the settlement period (usually T+2, or two days after the trade). When you sell, the funds will be sent to you by the broker after they receive the shares from your DEMAT account.

Of course. Here’s a more detailed guide focused on the practical steps of investing in stocks and IPOs in Nepal, complete with a new introduction.

Beginner’s Guide to Stocks & IPOs in Nepal

You’ve heard the buzz. Friends, family, and news headlines are all talking about the Nepal Stock Exchange (NEPSE). Stories of successful IPO allotments and market gains have made stock investing more popular than ever. But what does it actually take to get started? It might seem complex, but breaking into Nepal’s stock market is more accessible than you think.

This guide is your starting point. We’ll demystify the process, outlining the exact steps you need to take to apply for an IPO and trade stocks on the secondary market. Let’s turn your curiosity into confident action.

Primary vs. Secondary Market: The Two Doors to Investing

First, it’s essential to understand the two main ways you can buy stocks in Nepal.

• Primary Market (IPOs): This is where companies offer their shares to the public for the very first time. It’s called an Initial Public Offering (IPO). When you apply for an IPO, you’re buying shares directly from the company at a fixed price (usually Rs. 100 per share). It’s like buying a brand-new car directly from the factory.
• Secondary Market (NEPSE): This is the main stock exchange where shares that have already been issued through an IPO are bought and sold among investors. The prices here fluctuate based on company performance, market sentiment, and economic factors. This is like buying a used car from another owner, where the price is determined by demand and supply.

Your Investing Toolkit: What You Absolutely Need

Before you can buy a single share, you need to set up your investment infrastructure. Think of it as getting your driver’s license before you can drive.

1. Bank Account: This is the foundation. All your investment funds will move from and to this account.
2. DEMAT Account: A DEMAT account is a digital wallet where your shares are held electronically. Gone are the days of physical share certificates. You can open a DEMAT account at most banks or licensed Capital Market Institutions.
3. Mero Share Account: This is the online portal that links your bank account and your DEMAT account. It is essential for applying for IPOs online. You get your Mero Share login details when you open your DEMAT account.
4. Broker Account & TMS: To trade on the secondary market (NEPSE), you need to choose one of Nepal’s licensed stockbrokers and open a trading account. They will provide you with a login for their Trade Management System (TMS), which is the online platform for buying and selling stocks.

How to Apply for an IPO in Nepal (Step-by-Step)

Applying for IPOs is the most popular entry point for new investors in Nepal. Here’s how it works:

Step 1: Get Your Tools Ready

Ensure your DEMAT and Mero Share accounts are active.

Step 2: Link Your Bank Account.

You need to get C-ASBA registration from your bank. This allows Mero Share to block the necessary funds from your bank account when you apply for an IPO.

Step 3: Find an Open IPO.

Check the “My ASBA” section in your Mero Share portal, or look at financial news websites to see which companies have opened their IPOs to the public.

Step 4: Apply online for IPO

In Mero Share, select the company, enter the number of shares you want to apply for (the standard is 10 units, or “kitta,” which costs Rs. 1,000), enter your CRN number (from your bank), and submit.

Step 5: Wait for Allotment.

Due to high demand, IPOs are distributed via a lottery system. You can check the results on IPO result websites a week or so after the issue closes. If you are allotted shares, the money is deducted from your bank; if not, the blocked amount is released.

SEBON: The Market’s Watchdog 

The primary regulatory body for the stock market in Nepal is the Securities Board of Nepal (SEBON). Established under the Securities Act, SEBON is responsible for:

• Regulating and managing the issuance, purchase, sale, and exchange of securities.
• Supervising the Nepal Stock Exchange (NEPSE) and other market players like brokers and merchant bankers.
• Protecting the interests of investors.
• Developing and promoting a healthy and vibrant capital market.

Think of SEBON as the referee of the game, ensuring everyone plays by the rules.

The Journey of a Share: The IPO Process in Nepal

An Initial Public Offering (IPO) is how a private company becomes a public one by offering its shares to the general public for the first time. The IPO process in Nepal is strictly regulated by SEBON to ensure transparency.

Here’s a simplified breakdown of the steps:

1. Appoint an Issue Manager: The company hires a licensed merchant banker to manage the IPO process.
2. Prepare a Prospectus: This is a detailed document containing all information about the company’s financials, operations, and risks.
3. SEBON Approval: The prospectus is submitted to SEBON for review and approval. This is the most critical step.
4. Public Offering: Once approved, the IPO is opened to the public for a specific period, typically through platforms like Mero Share.
5. Allotment: After the offering closes, shares are allotted to applicants based on regulatory guidelines.
6. Listing on NEPSE: Finally, the company’s shares are listed on the Nepal Stock Exchange, where they can be traded freely in the secondary market.

Employee Stock Ownership Plans (ESOP) Law in Nepal

An Employee Stock Ownership Plan (ESOP) is a program that gives a company’s employees an ownership stake in the business. It’s a powerful tool for motivating and retaining talent.

In Nepal, the framework for ESOP law is primarily derived from the Companies Act, 2063. While there isn’t a separate, standalone “ESOP Act,” companies can issue shares to their employees by following the provisions outlined in the Companies Act and their own articles of association. Any such plan requires approval from the company’s general meeting and must comply with directives from SEBON, especially if the company is publicly listed.