Minimum Capital For A Commodity Exchange Should Be One Billion: SEBON

May 2, 2021 | Investopaper

Securities Board Of Nepal (SEBON) has proposed to have a minimum paid-up capital of Rs 1 billion for the commodity exchange company. Unveiling the draft of the Directive-2077 on the policy and procedural provision for issuing licenses to operate the commodity exchange market, the Board has proposed a capital of Rs. 1 billion to Rs. 2 billion.

The minimum paid-up capital for operating an exchange was set at Rs. 500 million in the Commodity Exchange Market Act-2074 BS. The Board has been given the power to determine the paid-up capital in the Act.

As per the draft, Rs 1 billion capital has been proposed for operating the exchange that trades in cotton, cardamom, cumin, chilli, cashew, betel nut, lentils, pulses, maize, wheat, paddy, potato, fenugreek, zucchini, soybean, aalash, fapar, sugarcane, tobacco, jute, ginger, turmeric, fruits and Agricultural products including juice, coconut oil, palm oil, mustard oil, soybean oil, sunflower oil, Aalash oil and sugar, sugarcane, tea, coffee, eggs and herbs.

Similarly, the board has proposed Rs 1.5 billion for the exchange that transacts in metallic commodities such as aluminum, copper, lead, nickel, tin, brass, iron, steel, zinc. Likewise, Rs 2 billion has been proposed for transacting precious metals such as gold, silver, platinum and mineral oil products such as crude oil, petroleum products, natural gas and heating oil.

The draft stipulates that the promoters of a company operating an exchange market should invest at least 51 percent of the capital. There is a provision that foreign strategic partners or companies providing technical assistance can be brought in the company. Promoters cannot invest in the company from the amount borrowed from banks, financial institutions and others.

A company operating an exchange market should have a maximum of seven board of directors, including at least two independent directors. The director should have at least a master’s degree or a chartered accountancy degree from an accredited educational institution in economics, commerce, finance, accounting, management or law and have at least five years of work experience in the related field.

The Board has requested the stakeholders to submit their views and suggestions on the proposed provisions within Baisakh 31.


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