May 16: Nepal Stock Exchange (NEPSE) has unveiled the proposed securities listing bylaw on Sunday. The new mechanism of company listing that was only seen as a concept till few years back is likely to come into effect if the bylaw is implemented.

The proposed listing bylaw has adopted policy to categorise companies in A, B, G and Z groups. Although the features of such companies has not been mentioned in the unveiled bylaw. However, as per the current practice in NEPSE, companies that earn profit for continuous five years, distributing above 20 percent in dividends, having paid-up capital of above Rs 20 million and having number of shareholders above 1,000 are categorised as ‘A’ listed. Likewise, companies with similar traits of ‘A’ but are reluctant to distribute dividend are kept in the ‘B’ group. Also, companies distributing up to 10 percent dividend for last five years will listed in ‘B’ group.

The new group ‘Z’ will list the companies with problems relating to financial report and corporate governance. The list also includes companies having operational problems for last two years.

Similarly, newly listed and companies that are unable to upgrade to other groups will be listed in the group ‘G’.  Nevertheless, the new arrangements will be implemented only after Securities Board of Nepal (SEBON) endorsed the proposal of the bylaw submitted by the NEPSE on last Thursday. As per the Securities Listing Bylaw 2053, NEPSE has been categorising listed companies in ‘A’ and ‘B’ groups.

Meanwhile, stakeholders who have been criticising the old classification mechanism as unscientific are expressing their dissatisfaction over the proposed bylaw. The dissatisfying group argue to consider weighted average of the companies as a base in the classification.