Mutual Funds Restricted from Selling IPO Shares for Six Months

November 7, 2023 | Investopaper

Mutual funds in Nepal are now subject to a new restriction related to their ability to sell shares acquired through initial public offerings (IPOs). As of Karthik 21, 2080, these funds will be prohibited from collectively selling such shares for a period of six months from the date of their acquisition. This directive has been issued by the Regulation Department of Securities Board of Nepal (SEBON), and it applies to both the CDSC and all mutual fund managers.

The regulation further emphasizes that even if mutual funds exceed the predetermined limit for selling IPO shares as per their investment plans, they are still not permitted to initiate the sale or transfer of these shares until at least six months have elapsed from the date of acquisition.

In essence, this regulation aims to ensure a fair and stable market by preventing excessive and rapid selling of IPO shares by mutual funds shortly after their acquisition. It allows for a reasonable waiting period before such shares can be sold, reducing the potential for market volatility.

Mutual Fund Regulation of 2067 stipulates a 5% allotment on the total public issue for mutual funds.

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