FNCCI welcomes government's capital market reform plan to boost investment

KATHMANDU: Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has welcomed the government’s new action plans for the development, expansion and reform of the capital market. The federation said effective implementation of the plans will improve the investment climate and create a dynamic economy.

The FNCCI said the proposed provisions represent a milestone that will make the market more transparent, competitive and investment-friendly. It noted that implementing the book-building system in initial public offerings, restructuring the stock exchange and reforming the regulatory framework are welcome steps. Expanding intraday and margin trading, together with securities borrowing and lending, is expected to increase market depth and liquidity.

The FNCCI said new investment opportunities are expected to emerge from provisions that facilitate market access for non-resident Nepalis, manage private equity and venture capital, and mobilise capital in startups. The statement urged joint efforts and recommended reviewing international practices during the implementation phase, adding, “Furthermore, we consider that moving forward by collaborating with the FNCCI to operate the capital market more sustainably will be beneficial to everyone.”

Highlighting long-term financial resources, the FNCCI stated that provisions allowing project-specific debentures, easier share-collateral loans and effective trading of treasury securities and development bonds will assist market expansion. It commended the Council of Ministers for passing a provision to reduce capital gains tax and levy the final tax only after adjusting for losses, calling the move highly positive for market stability and investment promotion.

Seeking further improvements, the FNCCI urged the government to harmonise the 10% tax on gains from the disposal of unlisted company shares with the tax rate for listed securities. It also recommended a 15% tax rate for investment companies engaged in securities trading to promote institutional investment.

On the recently implemented 'Intent to Securities Sale', the FNCCI advised making the measure more practical and aligned with global standards. It proposed mandatory prior disclosure for share sales by strategic partners or main promoters and suggested these transactions be recorded outside the regular trading system through an offer for sale. The federation added that shareholders not involved in the business but holding 5% or more should report any ownership change exceeding 1% to the securities market before opening hours.

The FNCCI concluded that effective coordination among regulatory bodies, the Nepal Stock Exchange, institutional investors and the private sector is essential. It said it remains committed to continuous policy dialogue to attract domestic and foreign investment, mobilise long-term capital and support the sustainable development of Nepal’s economy.