Chaper-3

Chaper-3
Provisions Relating to Stock Exchange
12. To Submit an Application for Obtaining the License to Operate the
Stock Exchange: (1) The Corporate Body desirous to operate or cause

9
Amended by Second Amendment.
10 Inserted by Second Amendment.
to operate Stock Exchange shall submit an application in format of
Schedule-1 to the Board for obtaining the license to operate the Stock
Exchange. The fee as prescribed in Schedule-2 shall have to be enclosed
along with the application to be submitted in such manner.
(2) The following particulars and documents shall have to be
enclosed with the application pursuant to sub-rule (1):-
(a) The Memorandum and Article of Association or
Constitution of the Corporate Body.
(b) In case the Corporate Body has been constituted under
any specific Act, the Rules and Bye-Laws made under
that Act.
(c) Details of the movable and immovable properties.
(d) Name, surname, address of the promoters and Board of
Directors and the shares to be taken by them.
(e) The details of qualification and experience of Promoter.
(f) Name and qualification of the Executive Chief and the
details of experience.
(g) The matters relating to the operation place of the Stock
Exchange, scope of Transaction and membership.
(h) The feasibility study report relating to the Transaction of
the Securities mentioned the statements of the projection
at least of three years the income and expenditure also.
(i) Other matters as prescribed by the Board.
13. To Issue the License for Operation of the Stock Exchange: (1) If an
application of any Corporate Body for obtaining the license for the
operation of the Stock Exchange pursuant Rule 12 is received, the Board
shall issue the license in format of Schedule-3 for the operation of Stock
Exchange if it deemed appropriate while conducting the necessary
inquiry upon the application remaining under sub-rule (2).
(2) In case the Corporate Body which has submitted an
application for the operation of the Stock Exchange fulfill the following
terms and conditions, the Board shall issue the license for the operation
of the Stock exchange to such Corporate Body :-
(a) Should be Incorporated as to limit the liability the of the
shareholders and Member.
(b) Should be mentioned clearly the provision that it shall
not distribute the profit to the shareholders and members
in the Article of Association or the constitution of the
Corporate Body.
(c) Should be mentioned the provision that only the
Securities Entrepreneur except the other Corporate Body
as prescribed by Government of Nepal, Nepal Rastra
Bank or Government of Nepal shall be the member and
shareholder.
(d) The member of the Board of Directors and the Executive
Chief of the Corporate Body has gained the experience in
the field of the Transaction of Securities or related field.
(e) Should be seen strong and satisfactory fiscal condition of
the Corporate Body.
(f) Should have appropriate provisions in relation to the
following matters in the Article of Association or
Constitution:-
(1) Provisions relating to grant the membership.
(2) Provisions relating to the qualification required
for membership.
(3) Provisions relating to the discipline to be
followed by the person who has obtained the
membership, disciplinary action and removal
from membership.
(4) Provisions relating to listing the Securities to be
transacted.
(5) Provisions relating to cancellation of the
registered Securities and procedures to be
followed therefor.
(6) Provisions relating to regularise systematise the
Transaction to be carried out by the person who
has obtained the license.
(7) Provisions relating to make available and
publication of necessary notices for the
information of investors.
(8) Provisions relating to check giving false and
misleading notices relating to the Transaction of
Securities and carrying out the fraud and illegal
Transaction.
(9) Provisions relating to examine and inspection of
the acts done by the Broker or Securities
Entrepreneur.
(10) Provisions relating to the manner of getting
details of Transaction and notices from the
Broker or Securities Entrepreneur and
procedures therefor.
(11) Provisions relating to not allowing to invest the
amount by the Broker or Securities Entrepreneur
deposited by the investor.
14. May Demand Additional Details: (1) Notwithstanding anything
contained elsewhere in this Act, while examining the details and
documents enclosed along with the application submitted for obtaining
the license for operation of Stock Exchange by any Corporate Body, if
the Board deemed necessary may demand other details and documents
in addition.
(2) Until not submitting the additional details and documents by
the concerned Corporate Body as demanded by the Board pursuant to
Sub-section (1), the license for the operation of Stock Exchange shall
not be given to such Corporate Body.
1114A. Stock Exchange Shall have to Submit Statements and Reports : (1)
The Stock Exchange which starts the Transaction of Securities after
obtaining the permission to operate the Stock Exchange pursuant to Rule
13, shall submits the following statements to the Board from time to
time :-
(a) Statements relating to the decisions made by the General
Assembly and the Board of Directors in relation to the
management and operation of the Stock exchange.
(b) Statements relating to the Securities Entrepreneur and their
representatives.

11 Inserted by First Amendment.
(c) Statements relating to the security obtained from the
Securities Entrepreneur.
(2) The Stock Exchange shall submit an annual report of the acts
it has carried out in relation to the Transaction of Securities to the Board
within three months from the date of expiry of every fiscal year. In the
annual report so submitted, the following matters shall be mentioned
also:-
(a) Statements relating to the Transaction of Securities carried
out during one fiscal year.
12 (b) Statements of the proceedings which has been taken
against any Securities Entrepreneur.
c) Statements of the Securities which have been listed or
which listing has been cancelled during one fiscal year.
13 15. License Fee : (1) The Corporate Body which has obtained the license to
operate the Stock Exchange pursuant Rule 13 shall submit the yearly
license fee pursuant to Schedule-2 to the Board within 6 months from
the date of expiry of each fiscal year.
(2) The Corporate Body which has obtained the license to operate
the Stock Exchange without submitting the yearly license fee within the
time limit as prescribed in sub-rule (1) shall not operate Stock
Exchange.
14 15A. Stock Exchange may Open Branches: The Stock Exchange may,
having obtained the prior approval of the Board, open branches and
sub-branches within the Nepal to cause to raise participation on the
Transaction of Securities and to broaden the operation of Transaction.

12 Amended by Second Amendment.
13 Amended by Second Amendment.
14 Inserted by Second Amendment.
16. Procedures to Suspend and Cancel the License: (1) Before
suspending or cancelling the license of any Stock Exchange Pursuant to
Section 7E of the Act, the Board shall provide reasonable opportunity to
the concerned Stock Exchange to improve its activities.
(2) If the Stock Exchange does not improve its activities within
the time limit provided in accordance to Sub-rule (1), the Board may
suspend the license of such Stock Exchange up to Six months.
(3) Within the suspension time of the license of any Stock
Exchange pursuant to sub-rule (2), If such Stock Exchange fulfils the
terms and conditions to be fulfilled, the Board may make free the
suspension of such license prior to expire the time limit of suspension.
(4) If the Stock Exchange does not fulfill the terms and
conditions to be fulfilled within the time limit of suspension of license
of the Stock exchange pursuant to Sub-rule (2), the Board shall suspend
the license of such Stock Exchange.