A petition has been filed in the Supreme Court demanding the cancellation of the permission process for the new stock exchange to be established with private sector investment. Advocate Krishna Bahadur Thapa filed a petition in the constitutional bench of the Supreme Court on Tuesday to cancel the entire process, saying that there is an error in the policy arrangement made by the board regarding the granting of license to the new exchange.

In the writ, the Nepal Securities Board, the Ministry of Finance and the Office of the Prime Minister and the Council of Ministers have been made defendants. In the

writ, the guidelines on providing recommendations from the board to establish an organized organization for the operation of the securities market, Section 118 of the 2079 Securities Act, 2063, Article 1, Article 46, Article 162 of the Constitution and the principles underlying it are in conflict with the guidelines issued by the Securities Board earlier. However, according to Article 133(1), (2) and 830 of the Constitution, the demand for invalidation has been claimed.

It is mentioned in the writ that the Nepal Securities Board misinterpreted Section 118 of the Securities Act, 2063 and issued a guideline, 2079 regarding the establishment of an organized organization for the operation of the securities market. It is claimed in the writ that the directive is in conflict with Section 118 of the Securities Act, 2063, and that the Directive, 2079 on providing recommendations from the board to establish an organized organization for the operation of the securities market, is entitled to be revoked, and that there is a substantial concern and a constitutional obligation in accordance with Article 48 of the Constitution of Nepal.

Section 118 of the Securities Act, 2063 seems to have empowered the Nepal Securities Board to make guidelines only on the following matters. According to which, there are other issues related to securities registration and issuing permission, securities issuance and sale management, securities distribution, professional ethics, securities trading regulation,'' the writ says, 'it seems that the Nepal Securities Board has the right to make guidelines and implement them only in the mentioned matters. The Nepal Securities Board does not seem to have the right to make guidelines for the establishment of an organized organization for the operation of the securities market. It is mentioned in the writ that a notice has been published regarding making an application to the board for the recommendation to establish an organized organization. Due to the

controversy, the license distribution process of the new stock exchange with private sector investment has been postponed for a long time. However, the Council of Ministers meeting held on January 5 has decided to send the report of the study committee formed earlier to the Ministry of Finance regarding the granting of a license for the operation of the securities market. Accordingly, the report has also come to the Ministry of Finance. However, the Ministry of Finance has not instructed the Securities Board to proceed with the process as it is still under study. About three weeks after the appointment of Santosh Narayan Shrestha as the chairman of the Nepal Securities Board, the government has started the process of proceeding with the license process of the new exchange.

The then Prime Minister Pushpa Kamal Dahal gave instructions to stop the process in Baisakh 2080 after there was a strong protest on both the streets and the parliament saying that the license of stock exchange was manipulated to certain business houses. Parliamentarians also protested against the distribution of licenses to private investment stock exchanges claiming that there was financial manipulation.

The Securities Board was being accused of proceeding with the licensing process 'in a middleman's setting'. This issue was also raised in the House of Representatives. The Prime Minister had instructed to stop the process saying that it is not appropriate to distribute new licenses to the private sector despite the presence of the Government Stock Exchange (NEPSE).

The former chairman of the Securities Board, Ramesh Hamal, started the license distribution process by making policy arrangements for the distribution of licenses of private stock exchanges. However, the process for issuing new licenses started when Sher Bahadur Deuba was the Prime Minister and Janardan Sharma was the Finance Minister. Claiming that there is institutional corruption in the license distribution process, the parliamentarians have been demanding to stop it.

The Securities Board had amended the 'Securities Market Operation Regulations, 2064' contrary to previous policy and international practice, in which private limited companies can also invest in the stock exchange. Previously, only banks, financial institutions, securities dealers and listed organizations could invest in the securities market. Private limited companies could not invest in the stock exchange. According to the previous provisions, no single company or organization can hold more than 10 percent of the total share capital of the securities market.