On September 17, 2026, the Securities Board of Nepal published the draft General Eligibility Guidelines for Public Issuance, 2083, and inside them sat a single number that has since dominated the country's primary market: any company issuing shares at a face value of Rs 100 must have net worth per share of at least Rs 100. Three days later, Independent Power Producers' Association Nepal (IPPAN) president Mohan Kumar Dangi called the number impractical for hydropower in a video statement, arguing that depreciation during construction drags net worth below par long before a project generates its first unit of electricity. IPPAN warns that 60 percent of hydropower projects could lose their route to the public market under the rule as drafted.
The conflict is mechanical, not ideological. A hydropower project spends the most money exactly when it earns nothing: during construction. Equipment depreciates, costs accumulate, and no revenue arrives until commercial operation begins. A profitable factory can lift its net worth before listing; a dam that is 80 percent built cannot. Under the existing arrangement described by IPPAN, projects could seek IPO approval once construction reached 65 percent completion. The association says the board is considering moving that line to full completion. Dangi's argument is direct: requiring a finished project before allowing it to raise public money defeats the purpose of raising money to build it.
The draft raises the bar everywhere, not just on net worth
Net worth is the most contested clause, but it is not the only new gate. Issuers would need three years of audited financial statements, documented management and governance standards, and fit-and-proper assessments of promoters, directors and senior executives. IPO proceeds would sit in a separate bank account, fund utilisation plans would be disclosed in advance, and companies would file quarterly and annual reports on how the money was used. Applications could be rejected over financial irregularities, serious legal disputes or weak governance, while SEBON would apply risk-based scrutiny to issuers, issue managers and auditors. Several of these requirements address documented failure modes: an independent engineer's due diligence certificate verifies that the asset exists, segregated accounts control where the money goes after it is raised, and disqualification for an adverse auditor note on going concern or promoter blacklisting is basic investor protection, as Nepalytix has argued in its own analysis of the draft.
IPPAN is not rejecting the whole draft. It wants a dedicated chapter and checklist for hydropower instead of a uniform standard, a net-worth floor of Rs 90 per share that recognises a project's power value and future earning potential, the IPO application line kept at roughly 65 percent physical progress, no SEBON-prescribed debt-to-capital ratios since financing structures vary across projects, an exemption for companies that already applied for approval, and fit-and-proper screening focused on directors and management rather than every promoter shareholder. Where the association wants investor protection tightened, it wants it through comprehensive disclosure, underwriting and credit ratings, tools that inform investors without deciding for them.
The figures behind the warning
The numbers underneath IPPAN's objection are hard to dismiss. Of 111 listed hydropower companies, 43 ended the last fiscal year with net worth per share below Rs 100. Upper Tamakoshi (UPPER), one of Nepal's largest projects in commercial operation, reported net worth of Rs 44.28 per share. Menchhiyam Hydropower reportedly carried net worth of minus Rs 25 per share while its shares traded above Rs 250 in the secondary market. These are not failed companies; they are projects at particular stages of a long investment cycle, priced by a market that discounts future cash flows rather than accumulated equity. The draft would ask the same market to forget that distinction at the moment of listing.
There is also a second conflict inside the draft that has drawn less attention. Securities rules require hydropower projects to allocate up to 10 percent of issued capital to residents of affected areas, a provision designed to give local communities a stake in the projects reshaping their valleys. IPPAN argues that barring companies with net worth below Rs 100 from issuing shares at all would hollow out that requirement, since the projects that most need local buy-in are the ones most likely to fall below the line. A gate built for investor protection could end up filtering out the very issuances the law mandates.
112 companies are waiting to find out
The regulator has not closed the door. SEBON chairman Bhatt told the House of Representatives Finance Committee that the net-worth threshold is not final and could be revised after stakeholder feedback, and the board has said the guidelines will be finalised before pending IPO applications are approved, according to Farsight Nepal. The waiting room is large: 112 companies sit in SEBON's IPO pipeline, and separately 34 companies are awaiting approval to issue shares worth roughly NRs 17.19 billion. The draft is one item in a wider reform sequence the government laid out on September 15, with deliverables running to January 2027. SEBON has since published the intraday trading concept paper, and earlier in October an amendment making an 85 percent IPO legal, so the net-worth floor is arriving in the middle of the busiest IPO rulebook rewrite in years.
A few cautions are in order. IPPAN's 60 percent figure is the industry's own warning, not an independently audited census of every project in the pipeline. The Upper Tamakoshi and Menchhiyam figures describe balance-sheet positions at a point in time; net worth moves with construction progress and operating results, and a single fiscal-year reading can be noisy. And the rule is a draft published for feedback, not a regulation. SEBON's record of revising proposals under pressure is well documented; the board saying the threshold is not final, before the guidelines are even finished, is one more example. History describes what happened; it does not dictate what comes next.
The genuine tension is this: SEBON is right that Nepal's primary market needs stronger gates, and IPPAN is right that the gate being proposed was built for a different kind of company. A net-worth floor protects retail investors from listing-day failures. Applied to hydropower, it measures the asset at its most depreciated and the company at its most indebted, and calls the result a quality filter. The next move belongs to the regulator, and it will show up in a single figure: whatever number replaces Rs 100, and whether hydropower gets its own chapter. Until then, the pipeline waits, and the government's 30,000-megawatt target keeps its own count.