KATHMANDU: The Securities Act, 2006, currently under revision, has sparked intense debate as lawmakers propose amendments to the Securities (First Amendment) Bill, 2024.
The proposed changes, under review in the Finance Committee of the House of Representatives, focus on key provisions governing the Securities Board of Nepal (SEBON).
Chapter 2 of the existing Act outlines the composition of SEBON’s board. Currently, the board includes a government-appointed chairperson, representatives from the Ministry of Finance, the Ministry of Law, Nepal Rastra Bank, and an expert nominated by the government.
Additionally, representatives from the Institute of Chartered Accountants of Nepal (ICAN) and the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) are included.
The bill proposes removing ICAN and FNCCI representatives from the board, citing potential conflicts of interest. Critics argue that representatives of ICAN, whose members audit companies listed on the Nepal Stock Exchange (NEPSE), and FNCCI, an umbrella organization of traders and industrialists, may hinder impartial decision-making.
Despite conflict-of-interest concerns, lawmakers from various parties are lobbying to retain ICAN and FNCCI’s presence on the board.
Lawmakers Ganesh Parajuli, Manish Jha, and Toshima Karki from the Rastriya Swatantra Party (RSP) have submitted amendments supporting their inclusion. Similarly, lawmakers from Nepali Congress, Maoist Centre, UML, and Unified Socialist have filed similar motions.
Some lawmakers have also proposed amendments to ensure gender representation on SEBON’s board.
Nepali Congress’ Udaya Shamsher Rana and RSP’s Sobita Gautam have suggested appointing one or two female board members, respectively.
Additionally, Nepali Congress lawmakers, led by General Secretary Gagan Kumar Thapa, have proposed appointing a vice-chairperson and revising qualifications for expert members to enhance accountability.
Amid debates over ICAN and FNCCI’s roles, stakeholders have suggested introducing representatives from the Nepal Bar Association to the board.
Proponents argue that a legal expert from the Bar could bring a citizen-centric perspective and enhance lawmaking capabilities. However, former SEBON Chairperson Chiranjivi Nepal dismissed this idea, stating that existing legal representatives are sufficient.
Former SEBON Chairperson Nepal has long advocated removing ICAN and FNCCI from the board, emphasizing their conflicting business interests.
“Representatives from these organizations prioritize their own interests, making impartial decision-making difficult,” he said.
He further argued that SEBON’s role as a regulatory body requires independent oversight, free from vested interests.
Finance Committee Chair Santosh Chalise acknowledged the ongoing debate, stating that the committee will consult experts before finalizing the amendments.
Meanwhile, Chartered Accountant Analraj Bhattarai stressed the need for innovative solutions to balance SEBON’s regulatory role with diverse representation.
The final decision on the Securities (First Amendment) Bill, 2024, will determine SEBON’s future structure and its ability to regulate Nepal’s capital market effectively.
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