Kathmandu: The debate over dual ISINs in Nepal’s capital market often brings up the case of NRR Infrastructure and Development Limited, a company that initially operated with separate ISINs for promoter and public shares.
Over time, however, it completed the process of consolidating these into a single ISIN after securing approval from regulators. Originally, the company’s articles distinguished between promoter and ordinary shares, but its 11th Annual General Meeting endorsed a proposal to merge both categories into a single class of shares.
Following the expiration of the three-year lock-in period, the Nepal Stock Exchange (NEPSE) and CDSC approved a unified ISIN. This allowed promoter shareholders to trade their holdings in the secondary market under the same “NRN” symbol used by public investors. The case has since been cited as a workable model, suggesting that even if companies are initially assigned dual ISINs, they can transition to a single ISIN after fulfilling due procedures, including amending their articles through a general meeting.
Despite this pathway, the private sector remains uneasy. CDSC itself has indicated that companies need not panic over dual ISIN arrangements, as a single general meeting resolution could enable consolidation once the lock-in period ends. However, concerns persist largely due to the stance taken by CDSC Executive Director Praveen Pandey, whose past actions have reportedly complicated the unification process for companies that initially adopted dual ISINs.
Market experts argue that a separate ISIN is unnecessary to enforce a lock-in period. They point out that share restrictions can be managed administratively, much like pledged shares used as collateral for loans are frozen without requiring a distinct ISIN. From a practical standpoint, they contend, assigning two ISINs to the same class of shares only adds complexity without delivering real benefits.
The controversy deepened as Pandey allegedly resisted requests from companies seeking to merge ISINs even after the lock-in period had expired. In several cases, NEPSE had already issued a unified trading symbol, but CDSC delayed or declined to align the ISIN structure accordingly. This has fueled frustration within the private sector, which views such resistance as inconsistent and unnecessarily burdensome.
A recent example is Emerging Nepal, which has struggled to consolidate its ISINs despite the lock-in period for promoter shares ending earlier this year. Although NEPSE provided a single trading symbol, CDSC has yet to approve a unified ISIN, citing the absence of a clear legal framework for such a move. Critics argue that this contradicts earlier precedents where companies like NRR Infrastructure and Chandragiri Hills successfully merged their ISINs under similar circumstances.
Adding to the complexity, not all promoter shares become freely tradable immediately after the lock-in period. Board members, for instance, must wait an additional year after stepping down before selling their shares. This nuance further complicates the regulatory landscape and strengthens the argument that dual ISINs may not be the most efficient mechanism.
Legal experts also note that Nepal’s Company Act does not define “promoter shares” as a separate class of securities but merely refers to shares held by promoters. In essence, a share remains a share regardless of who holds it, making the rationale for dual ISINs questionable.
According to the draft Securities Dematerialization Directive 2025 prepared by CDSC, securities of the same type should generally be assigned a single ISIN, while different types may receive separate identifiers. However, if a company’s constitutional documents distinguish between promoter and public share groups, the directive mandates separate ISINs for each. It also states that previously unified ISINs may be split under the new rules.
The directive does, however, provide for ISIN mergers. If separate ISINs are deemed unnecessary under prevailing laws, CDSC may consolidate them upon request from the issuing company, provided certain conditions are met. These include approval from the general meeting, public notices, consent from the Securities Board, and formal notification to the stock exchange.
Despite this provision, stakeholders argue that the process has become overly complicated in practice. Hydropower and manufacturing companies, in particular, have expressed strong opposition, noting that what was once a straightforward transition after the lock-in period has now turned into a bureaucratic hurdle. While some believe dual ISINs could enhance transparency by separating promoter and public holdings, others warn that such measures risk creating more distortions rather than improving market discipline.
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