FNCCI and ICAN Representatives Proposed to Be Removed from SEBON Board
August 20, 2024 | Investopaper
Securities Board of Nepal (SEBON) is planning to remove the representation of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and the Institute of Chartered Accountants of Nepal (ICAN) from its board of directors. This proposal is included in the amendment bill for the “Securities Act 2063.” The move aims to address conflicts of interest that have been a longstanding issue, as representatives from these organizations often have vested interests that could influence board decisions.
The Securities Board is responsible for overseeing and regulating the issuance, trading, distribution, and exchange of securities in Nepal, ensuring the protection of investor interests and the orderly development of the capital market. The board consists of seven members, including an executive chairman appointed by the government. Other members include joint secretaries from the Ministry of Finance and the Ministry of Law, Justice, and Parliamentary Affairs. FNCCI and ICAN representatives are also currently part of the board, but their removal is now being proposed.
In addition to these changes, the bill suggests that the remaining board members should include one independent member appointed by the government. The independent member should have at least a master’s degree in economics, management, finance, or law, with at least seven years of experience in the capital market or related fields. The bill also proposes increasing the required experience from seven to ten years for professional members.
Currently, FNCCI and ICAN are represented by vice-presidents from these organizations. However, their involvement has raised concerns, as they often have direct or indirect affiliations with listed companies, leading to potential conflicts of interest. Although discussions on removing these representatives have been ongoing, this is the first time the proposal has reached the parliament.
If the bill is passed as it is, FNCCI and ICAN representatives will no longer be part of the board. However, the bill remains silent on who would replace them. The bill also proposes that individuals holding key positions in listed companies should not be eligible to serve as the board’s chairman or members to prevent conflicts of interest.
Moreover, companies established with the purpose of investing in the stock market would need prior approval from SEBON before being registered. Currently, such companies only need to be registered with the Office of the Company Registrar, which has led to an increase in market dominance and malpractice in recent years.
