The latest decision made by the board of directors of CDS and Clearing Limited (CDSC) regarding the registration of dematerialized shares of companies will affect 870 million shares worth 87 billion in 58 industries including energy, media, cement, IPPAN claims.

According to this, only 47 projects in the energy sector will be affected and 530 million shares worth 53 billion will be affected, as well as the investment of 37 companies that have applied to issue shares worth 41 billion will also be negatively affected, according to a statement issued by IPPAN on Tuesday.

Energy producers claim that this step will have a big impact, especially in the energy sector. According to Ippan, even the target of producing 28,500 megawatts of electricity within 10 years will be impossible.

CDSC has proposed two (International Securities Identification Number-ISIN) numbers in the process of dematerialization (turning physical shares into an electronic system) of the founder group of companies that are in the process of being listed in the securities market. 

After stopping the process of dematerialization of shares for a long time, CDSC finally prepared dematerialization operational guidelines 082 to issue separate ISIN numbers for the shares issued to founders and general public of all companies and sent it to Nepal Securities Board (Sebon) for approval. Ippan claims that the

directory has created more confusion and frustration among founding investors, private sector, foreign investors and general investors. Ippan warned, "If this proposal is implemented, it will not only be against the existing law, international recognition and established ISIN practice, but it will have a long-term impact on the capital market of Nepal." This will create difficulty in domestic capital collection, investment coming through non-resident Nepalis and direct foreign investment.'

This decision of CDSC has caused a loss of confidence in the investment made by the private sector in various industries and businesses, and foreign investors have also raised serious doubts about Nepal's investment environment. Ippan claims that the system of separating founder and general shares will create a situation where foreign investors cannot withdraw their investment by selling their shares and will damage the government's foreign investment promotion policy and the strengthening of the capital market.

This decision of CDSC will make it difficult not only for the energy sector, but also for the private sector to collect capital in productive industries such as tourism, health, infrastructure, etc. It will also discourage investors in startup, private equity, venture capital and other sectors. This system will not only negatively affect the overall capital market for a long time, but it is sure to affect the economy of Nepal itself. 

Currently, the publicly issued shares have a lock-in period of three years, so that the CDSC itself cannot sell them (like the land mortgaged on the property). A new provision does not seem to be necessary as the existing provisions are sufficient to sell only after publishing a notice three times in the national newspaper one month before the opening of the lock-in period.

'Therefore, because the shares of the founder and the public group have the same value, rights and dividends, the implementation of the proposal of different ISIN numbers for the same nature of shares is against the existing law, it is not only illegal from a legal point of view, it will create a big obstacle to achieve the goal of enriching the country by bringing in and mobilizing more investments, creating jobs and increasing economic activity within the country through entrepreneurship within the country,' said Ipan.