Securities law of Nepal is mainly found in the Securities Act.
“Securities” is defined in Securities Act as any shares, stocks, bonds, debentures, debenture stocks or collective investment scheme certificate issued by a body corporate or treasury bonds, saving bonds or bonds issued by the Government of Nepal or by a body corporate against the guarantee of the of the Government of Nepal, and this term also includes such other securities as may be specified by the Board to be transacted or transferable through the stock exchange or the instrument to purchase, sell or exchange such securities.
Securities Exchange Board of Nepal (SEBON) has been formed and empowered as the regulatory agency in relation to securities laws of Nepal. As of date Nepal Stock Exchange (NEPSE) is the only licensed stock exchange of Nepal.
Registration of securities with SEBON is necessary prior to their issuance. Where a body corporate allots or sells securities after registering such securities, the body corporate shall have to give a notice along with the details of securities so allotted or sold to the SEBON within seven days.
Where a body corporate is to sell and distribute securities to more than fifty persons at a time, it shall make public issue for the sale and distribution of such securities. A body corporate shall have to get a prospectus approved by SEBON for making public issue of securities and publish the prospectus for information to all the concerned.
A company or body desirous of carrying on securities business has to obtain a license to carry on securities business from the Board pursuant to this Act. ” Securities business” means transactions in securities to be carried on by a company or body such as stock brokerage or stock dealership.
If any person deals in securities or causes any other person to deal in securities on the basis of any insider information or notice that
are unpublished or communicates any information or notice known to such a person in the course of the discharge of his or her duties in manner likely to affect the price of securities such a person shall be deemed to have been committed an insider trading in securities.
“Insider information or notice” means any such specific kind of information or notice not published by a body corporate issuing any securities as may be capable of affecting the price of such securities if such information or notice is disclosed.
A person who commits an insider trading as referred to in Section 91 shall, upon being convicted of the offense of insider trading, be
liable to the punishment with a fine equal to the amount in controversy or with imprisonment for a term not exceeding one year or with both punishments.
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