Securities Board of Nepal (SEBON) was established by the Government of Nepal on June 7, 1993 as an apex regulator of Securities Markets. It has been regulating the market under the Securities Act, 2006. The Governing Board of SEBON is composed of seven members including one full time chairman appointed by the Government for tenure of four years. Other members of the Board include joint secretary of Ministry of Finance, joint secretary of Ministry of Law, Justice and Parliamentary Affairs, representative from Nepal Rastra Bank, representative from Institute of Chartered Accountants of Nepal, representative from Federation of Nepalese Chambers of Commerce and Industries, and one member appointed by the Government from amongst the experts pertaining to management of securities market, development of capital market, financial or economic sector.
The major functions, duties and power of SEBON as per Securities Act, 2006 are as follows:
- Provide advice to Government on matters related with the development of capital market.
- Issue necessary securities regulations and directives.
- Register the securities of public companies.
- Regulate and systematize the issue, transfer, sale and exchange of registered securities.
- Issue license to operate stock exchange.
- Issue license to stock broker, dealer, merchant banker and fund manager.
- Issue license to depository company, depository participant and credit rating agency.
- Register mutual funds, grant permission to operate collective investment schemes, and supervise and monitor them.
- Approve the bye-laws of stock exchange and depository company.
- Take necessary actions to prevent insider trading or any other offenses relating to transactions in securities in order to protect the interest of investors in securities.
- Establish coordination and exchange cooperation with appropriate agencies in order to supervise and regulate matters concerning securities or companies.
- Discharge or make arrangements for discharging such other functions as are necessary for the development of the capital market.
There are two departments namely Regulation and Management Department, and Supervision and Research Department in SEBON. Under Regulation and Management Department, there are three divisions namely Regulation Division, Legal & Enforcement Division and Management Division. Likewise, under Supervision and Research Department there are three divisions - Securities Businesspersons' Supervision Division; Capital Market, Central Depository Service & Fund Supervision Division; and Policy, Research & Planning Division. Under each division there are two sections with a total of twelve sections and twenty-five sub-sections.
The major financial sources of SEBON are the government grant, transaction fee from the stock exchange and registration fee of corporate securities. Other financing sources include registration and renewal of stock exchange and market intermediaries and the income from mobilization of its revolving fund.