KATHMANDU: The Securities Board of Nepal (SEBON) has been operating in a state of limbo following a legal dispute over the appointment of its chairman. With the next court hearing scheduled for January, the regulatory body responsible for overseeing the capital market has been functioning without a full-time chairman for the past nine months. Currently, SEBON is being led by officials appointed by the Ministry of Finance in an acting capacity.
The prolonged delay in appointing a permanent chairman has been attributed to political interference, with key political figures attempting to influence the selection process. This has led to SEBON being run in an ad hoc manner for an extended period.
Earlier, the appointment process had reached the interview stage, but only two candidates participated, falling short of the legal requirement of recommending at least three names for the position. As a result, the government decided to cancel the process. However, Santosh Narayan Shrestha, one of the candidates, filed a petition challenging this decision in the Supreme Court. The court issued an interim order to halt the cancellation and instructed that the recommendation of three candidates should be made in compliance with the law.
While the Supreme Court acknowledged that the selection committee has the discretion to decide how to recommend three candidates, it indicated that there is no legal mandate requiring interviews as part of the process. This interpretation has led the Ministry of Finance to seek further guidance from the Office of the Attorney General.
The attorney general’s office advised that the selection process could move forward without mandatory interviews, and that the selection committee could determine the appropriate procedure. Despite this advice, the Ministry of Finance has been slow to act, with no progress made in advancing the appointment process. It has been two weeks since the legal opinion was received, yet no tangible steps have been taken to resolve the issue.
Internal sources indicate that political maneuvering has once again stalled the process. “Although there are claims of legal analysis, the real issue is the ongoing political interference in the appointment. The Ministry of Finance seems hesitant to move forward due to these pressures,” said an official close to the ministry.
In the absence of a full-time chairman, SEBON has struggled to carry out its regulatory duties. Files from hundreds of companies seeking capital market approval for business expansion remain untouched. Applications for rights issues and additional share offerings from about two dozen companies have been stalled, affecting the overall functioning of the capital market.
Although the Ministry of Finance has temporarily appointed Mahesh Baral to lead SEBON, following the tenure of Narendra Rana, both officials were unable to make significant decisions due to the temporary nature of their assignments. “It’s difficult to make impactful decisions when you’re only in the position for a short period. By the time you understand the issues, it’s already time to leave,” commented one senior official who previously held the acting chairman position.
The Securities Board has been without a chairman since January 4, 2024 (Poush 20, 2080 BS), when the term of former chairman Ramesh Hamal ended. Despite the government initiating the appointment process, political interference has caused repeated delays, leaving SEBON in a state of uncertainty and slowing down its crucial role in regulating Nepal’s capital markets.