Got a Right Share Offer? Here's What to Check First

You own shares in a company, and suddenly there's a notice: "1:1 right share issue." It sounds like a gift. It isn't. It's the company asking you for more money.

That isn't necessarily bad. Plenty of good companies raise money this way. But it does deserve a proper look, and it's one of those decisions where doing nothing is also a decision with consequences.

How right shares work

A right share issue (or rights issue) lets existing shareholders buy additional shares in proportion to what they already own, usually at a price below the current market price. In Nepal, right shares are often offered at the face value of Rs 100, though not always.

The ratio tells you how many you can buy:

• 1:1 — one new share for every one you hold. Own 200, apply for up to 200.
• 10:3 — three new shares for every ten you hold. Own 200, apply for up to 60.
• 2:1 — one new share for every two you hold. Own 200, apply for up to 100.

The basic process:

1. The company gets approval and announces the issue, ratio and price.
2. A book closure date is set. You need the shares in your Demat by then to be eligible.
3. An application window opens, usually a few weeks long.
4. You apply through Mero Share (or the channel in the official notice), and the amount is blocked in your bank account.
5. After the window closes, the right shares are allotted and credited to your Demat.
6. Shares that existing shareholders don't take up are typically auctioned to the public later.

Why the price adjusts

When a company offers new shares below the market price, the overall value per share gets diluted. After book closure, the market price usually adjusts down.

A rough formula for the theoretical adjusted price:

(Market price + (Right price × ratio)) ÷ (1 + ratio)

Example: market price Rs 400, right price Rs 100, ratio 1:1.

(400 + 100) ÷ 2 = Rs 250

• Before: 100 shares × Rs 400 = Rs 40,000
• If you apply: you pay Rs 10,000 for 100 more shares. Now 200 shares × Rs 250 = Rs 50,000. You put in Rs 10,000, so your total is still Rs 50,000. No gain or loss from the issue itself.
• If you don't apply: you still have 100 shares, now at Rs 250 = Rs 25,000. You've effectively lost Rs 15,000 in value. Your share of the company is smaller too.

That's why ignoring a right issue isn't "free". In practice the market price after adjustment won't match the formula exactly, but the principle holds.

Questions I ask before applying

Why does the company need the money?

This is the most important question. Read the offer document.

• To expand or build something specific: a new hydro project, more branches, a factory expansion. Could be good, if the plan makes sense.
• To meet regulatory capital requirements: very common for banks, insurance companies and microfinance in Nepal. Not necessarily bad, but it's not growth either.
• To cover losses or repay debt: a warning sign. Ask how the company got into that situation and whether more money will fix it.
• For a hydro project that's delayed or over budget: be careful. Sometimes right shares are needed because the original plan didn't work.

Can I afford it?

200 shares at Rs 100 is Rs 20,000 you need to have ready within the window. If you hold shares in several companies that announce right issues around the same time, this adds up quickly.

Don't borrow to apply for right shares unless you've thought it through very carefully.

Would I buy more of this company anyway?

Imagine the right issue didn't exist. Would you buy more shares of this company at today's price? If yes, applying makes sense. If no, the right issue doesn't change that.

What will the company look like after?

More shares means profit needs to grow for EPS to hold. If the new money doesn't generate returns, EPS and dividends per share will fall. (I explain why in my EPS and P/E post.)

If you decide not to apply

Some options to consider:

• Sell before book closure if you don't want to put in more money and don't want to hold diluted shares. (Remember capital gains tax and fees.)
• Apply for part of your entitlement if you can't afford the full amount. You don't have to apply for all of it.
• Accept the dilution if you're comfortable with a smaller share of the company.

Right share entitlements in Nepal generally aren't tradable separately, unlike in some other countries, so you can't just "sell the right".

Don't miss the practical steps

• Note the book closure date. Buying a day before isn't enough. Settlement takes time, so the shares need to be in your Demat before book closure.
• Note the application window. I've seen people lose out simply because they didn't notice the deadline. Set a reminder on your phone.
• Check your bank balance. The full amount needs to be in your linked bank account when you apply.
• Check that Mero Share and your Demat are active. An expired account means a missed application.
• After allotment, check that the right shares appear in your Demat.

Unclaimed rights may be auctioned later, but you won't get anything for them if you missed the window. Don't count on it as a backup plan.

Stay safe

Right issues are a common hook for scams. Use only official channels: Mero Share and the issue manager or company named in the official notice. Ignore "help desk" numbers that pop up in comments or random Facebook pages. Never share your Mero Share password or OTP.

Bottom line

Treat a right offer as a fresh investment decision. Understand why the company needs money, what it will do with it, and whether you'd want more of this company anyway. If you wouldn't buy more at this price, you don't have to just because they asked. Just understand what not applying means for you.

General information, not personal financial advice. Rules, rates and fees change, so check with the official source (SEBON, NRB, CDSC, IRD or the Nepal Insurance Authority) before you act. Have a question? Leave it in the comments.

Got a Right Share Offer? Here's What to Check First

You own shares in a company, and suddenly there's a notice: "1:1 right share issue." It sounds like a gift. It isn't. It's the company asking you for more money.

That isn't necessarily bad, but it does deserve a proper look.

How it works

A right share lets existing shareholders buy additional shares, usually at a price below the current market price (often Rs 100 per share). In a 1:1 ratio, if you own 200 shares you can apply for up to 200 more.

Questions I ask

• Why does the company need the money? To expand? To meet regulatory capital requirements? To cover losses? The answer matters a lot.
• Can I afford it? 200 shares at Rs 100 is Rs 20,000 you need to have ready within the window.
• What happens if I don't apply? Your ownership percentage gets diluted, and the market price usually adjusts after book closure. Doing nothing isn't free either.

Don't miss the practical steps

Note the book closure date (you need to hold the shares by then) and the application window. Apply through Mero Share or the channel stated in the official notice. Unclaimed rights may be auctioned later, but don't count on that.

I've seen people lose out simply because they didn't notice the deadline. Set a reminder on your phone.

Stay safe

Use only official channels. Ignore "help desk" numbers that pop up in comments or random Facebook pages, and never share your Mero Share password or OTP.

Treat a right offer as a fresh investment decision. If you wouldn't buy more of this company at this price anyway, you don't have to just because they asked.

General information, not personal financial advice. Rules, rates and fees change, so check with the official source before you act.

Cash Dividend vs Bonus Shares: Why Bonus Isn't Free Money

Every book-closure season, the excitement is the same: "20% bonus announced!" People rush to buy before the book closure date. Then the price adjusts and they wonder where the gain went.

Let's clear this up.

Cash dividend

The company pays you cash from its profits. If you own 100 shares and it declares a 10% cash dividend on a Rs 100 face value, you get Rs 1,000 before tax. Tax is withheld before it reaches your bank account.

Real money leaves the company and comes to you.

Bonus shares

The company gives you extra shares instead. A 20% bonus on 100 shares gives you 20 more, for 120 total.

But no money left the company. The same business is just cut into more pieces. That's why the market price adjusts downward after book closure. If a share was Rs 600 before a 20% bonus, the adjusted price is roughly Rs 500. Your 120 shares at Rs 500 are worth about what your 100 shares at Rs 600 were.

Think of it as cutting a pizza into 10 slices instead of 8. You don't get more pizza.

Also note: tax on bonus shares is typically payable on their face value, so you may need to pay some cash even though you received no cash.

Which is "better"?

Neither, automatically. A company paying big dividends isn't necessarily healthier than one reinvesting profits to grow. Some Nepali banks have issued bonus shares year after year mainly to meet capital requirements, which tells you something different from "the business is booming."

Before you act

Read the company's official announcement for the book closure date, the ratio and whether AGM approval is still pending. For tax, check with the IRD or a tax professional, since rates and rules change.

Don't buy a share only for its dividend or bonus. Buy it because you like the business at that price.

General information, not personal financial advice. Rules, rates and fees change, so check with the official source before you act.

Cash Dividend vs Bonus Shares: Why Bonus Isn't Free Money

Every book-closure season, the excitement is the same. "20% bonus announced!" The WhatsApp groups go wild. People rush to buy before the book closure date. Then the price adjusts and they wonder where the gain went.

Let's clear this up properly, because the difference between a cash dividend and a bonus share is one of the most misunderstood things in the Nepali share market.

A few terms first

• Face value (par value): the nominal value of a share, usually Rs 100 in Nepal (some companies, like mutual fund units, use Rs 10). Dividend percentages are calculated on this, not on the market price.
• Book closure date: the date the company "closes its books" to decide who's eligible. You need to own the shares (settled in your Demat) before this date to get the dividend or bonus.
• AGM: the Annual General Meeting where shareholders approve the proposed dividend or bonus.

Cash dividend

The company pays you cash from its profits.

If you own 100 shares and the company declares a 10% cash dividend, that's 10% of the Rs 100 face value, so Rs 10 per share. You get Rs 1,000 before tax. Tax is withheld at source before it reaches your bank account.

Real money leaves the company and comes to you. The company now has less cash, and the share price usually adjusts down by roughly the dividend amount after book closure.

Note that a "10% dividend" sounds big, but it's on face value. If the share trades at Rs 800, Rs 10 is only a 1.25% return on the market price. That's called the dividend yield, and it's a more honest way to compare.

Bonus shares

The company gives you extra shares instead of cash. A 20% bonus on 100 shares gives you 20 more, for 120 total.

But no money left the company. The company has simply moved some of its retained earnings into share capital on the balance sheet. The same business is now cut into more pieces.

That's why the market price adjusts downward after book closure.

How the price adjustment works

The adjustment roughly follows this logic:

Adjusted price ≈ price before book closure ÷ (1 + bonus ratio)

So for a 20% bonus on a share at Rs 600: Rs 600 ÷ 1.2 = Rs 500.

• Before: 100 shares × Rs 600 = Rs 60,000
• After: 120 shares × Rs 500 = Rs 60,000

Your total value is the same. (If there's also a cash dividend, the price adjusts for that too.)

Think of it as cutting a pizza into 10 slices instead of 8. You don't get more pizza.

After the adjustment, the price can of course move up or down based on the market. But the bonus itself didn't create value.

The tax catch on bonus shares

This surprises a lot of people. Bonus shares are taxed, typically on their face value, even though you didn't receive any cash.

That's why companies announcing a bonus often also announce a small cash dividend at the same time, which is mostly there to cover the tax on the bonus. For example: "20% bonus and 1.05% cash dividend (for tax purpose)". The cash portion is withheld to pay the tax, and you might receive little or nothing in your bank account.

If there's no cash dividend to cover it, you may need to pay the tax yourself before the bonus shares are credited. Check the company's notice and your DP's instructions.

Tax rates and rules change, so check with the IRD or a tax professional for current treatment.

Why do companies issue bonus shares?

Several reasons, not all of them exciting:

• To meet capital requirements: many Nepali banks and insurance companies have had to increase their paid-up capital to meet regulatory minimums. Bonus shares are one way to do that without asking shareholders for more money.
• To keep cash in the business: instead of paying out cash, the company keeps it for growth or to build reserves.
• To make shares more affordable: a lower per-share price after adjustment can increase trading.
• Because shareholders like them: this is partly psychological. Many investors in Nepal feel happier with "more shares" even when the value is the same.

A company issuing bonus shares year after year mainly to meet capital requirements is telling you something different from "the business is booming".

The downside of bonus shares nobody talks about

When the share count keeps growing, the company needs to keep growing its profit just to maintain the same EPS. If profit doesn't keep pace, EPS falls, and future dividends per share can shrink. I explain this more in my post on EPS and P/E.

Which is "better"?

Neither, automatically.

• A company paying big cash dividends isn't necessarily healthier than one reinvesting profits to grow. Sometimes high dividends mean the company has nothing better to do with its money.
• A company issuing bonus shares isn't necessarily doing well. Sometimes it's just meeting a regulatory requirement.
• A company paying nothing isn't necessarily bad, as long as it's reinvesting wisely.

What matters is the underlying business: cash flow, debt, profit growth, governance. Here's how to read the annual report to judge that.

The "buy before book closure" trap

Every year, people buy shares a few days before book closure to "get the bonus". Then:

1. The price often rises in the days before book closure, because everyone has the same idea.
2. They buy at the higher price.
3. After book closure, the price adjusts down.
4. They may have to pay tax on the bonus.
5. They've paid broker commission on the purchase.

Net result: often a loss. There's no free lunch in buying just before book closure.

Before you act

• Read the company's official announcement for the book closure date, the bonus and cash ratios, and whether the proposal still needs AGM or regulatory approval. Proposed dividends can be changed or rejected.
• Remember settlement takes a couple of days. If you buy too close to book closure, the shares might not be in your Demat in time.
• Check tax with the IRD or a tax professional.
• Bonus shares can take some time to appear in your Demat after the AGM. Check Mero Share.

Bottom line

Don't buy a share only for its dividend or bonus. Buy it because you like the business at that price. Dividends and bonuses are the result of a good business, not the reason it's good.

General information, not personal financial advice. Rules, rates and fees change, so check with the official source (SEBON, NRB, CDSC, IRD or the Nepal Insurance Authority) before you act. Have a question? Leave it in the comments.

"NEPSE Is Up 40 Points!" What the Index Does and Doesn't Tell You

Every evening the news says something like "NEPSE rose 40 points today." Then you open your portfolio and it's red. What's going on?

What the index is

The NEPSE index is a single number that summarises how listed shares moved overall, calculated with a specific method. Bigger companies count for more. A few large banks and hydropower companies moving a lot can push the whole index up or down.

So the index is a rough picture of the market as a whole. It isn't a picture of your shares.

Why your portfolio can disagree with it

• If you hold mostly small or mid-sized companies, the big names moving the index may not matter much to you.
• If you're heavy in one sector, say microfinance, a bad day for that sector hits you hard even on an "up" day.
• A rising index doesn't mean every share rose. Often it's a handful doing the lifting.

There's more than one index

NEPSE also publishes a Sensitive index, a Float index and sector indices (banking, hydro, insurance and so on). When someone quotes a number, check which one they mean. The sector indices are often more useful for comparing against what you actually own.

Don't read tomorrow from today

One big green day doesn't mean a bull market has started, and one red day isn't a crash. The index tells you what happened. It says nothing reliable about what's next, and nothing about whether a particular company is healthy.

Use it as background, then look at your own holdings and goals.

General information, not personal financial advice. Rules, rates and fees change, so check with the official source before you act.

"NEPSE Is Up 40 Points!" What the Index Does and Doesn't Tell You

Every evening the news says something like "NEPSE rose 40 points today." Then you open your portfolio and it's red. Or the opposite: the index fell, and somehow your shares went up.

What's going on? The short answer is that the index and your portfolio are measuring different things. Here's the longer answer.

What the index actually is

The NEPSE index is a single number that summarises how listed shares moved overall. It's calculated using a defined method, and the important thing to know is that it's weighted by market capitalisation, which means bigger companies count for more.

Market capitalisation is just the share price multiplied by the number of shares. A large commercial bank with a huge number of shares has a much bigger effect on the index than a small hotel or manufacturing company.

So when a few large banks or big hydropower companies move a lot, they can push the whole index up or down, even if most smaller companies barely moved.

The index is a rough picture of the market as a whole. It isn't a picture of your shares.

What "40 points" really means

Points by themselves don't tell you much. A 40-point move when the index is at 2,000 is a 2% change. The same 40 points when the index is at 3,000 is about 1.3%.

Always look at the percentage, not just the points. A headline saying "NEPSE crashes 50 points!" might be a fairly normal day of movement.

Why your portfolio can disagree with the index

• Your mix is different. If you hold mostly small or mid-sized companies, the big names moving the index may not matter much to you.
• You're heavy in one sector. If you own mostly microfinance or hydro, a bad day for that sector hits you hard even on an "up" day for the index.
• A few companies did the lifting. A rising index doesn't mean every share rose. Often it's a handful of large companies carrying it while most others are flat or down.
• Corporate actions. If one of your companies just had book closure for a bonus or right share, its price adjusts down. That isn't a real loss, but it can make your portfolio look red.

It's a good habit to look at the advance-decline numbers: how many companies rose versus fell that day. If the index is up but 150 companies fell and only 60 rose, the "rally" was narrow.

There's more than one index

NEPSE publishes several indices, not just the headline one:

• NEPSE Index: the main one, covering listed companies
• Sensitive Index: based on a group of companies that meet certain criteria (often called "Class A")
• Float Index: calculated using only shares that are actually available for public trading, not promoter shares that are locked in
• Sector sub-indices: banking, development bank, finance, microfinance, hydropower, life insurance, non-life insurance, hotels, manufacturing, trading, investment and others

When someone quotes a number, check which one they mean. For your own purposes, the sector indices are often more useful. If you hold mostly banks, compare your bank shares against the banking sub-index, not the overall NEPSE.

For exact definitions and current methodology, check NEPSE's official website. Methods and constituents can change over time.

A short history lesson

NEPSE's history shows why you shouldn't treat any single level as "normal":

• The index has gone through long stretches of rising and falling, often linked to interest rates, liquidity in the banking system, political events and government policy.
• In 2021, low interest rates and lots of new investors pushed it close to 3,200.
• When NRB tightened policy and interest rates rose, it fell below 2,000 within about two years.

If you'd joined in mid-2021 and looked at the index two years later, you might have thought the market was broken. If you'd joined in late 2022, it might have looked like a bargain. Same market, different starting points.

What moves the index in Nepal

Our market has some unique drivers. Big movers include:

• Interest rates and liquidity: when banks have plenty of money to lend and rates are low, share prices tend to rise. When liquidity is tight, they tend to fall. Nepal Rastra Bank's monetary policy is watched closely for this reason.
• Margin lending rules: limits on loans against shares can affect how much money flows into the market.
• Political news: government changes, budgets and policy announcements.
• Bank results: because banks are such a big part of the index, their quarterly results matter a lot.
• Sentiment: rumours, social media hype and fear can move prices quickly, especially in the short term.

Don't read tomorrow from today

One big green day doesn't mean a bull market has started, and one red day isn't a crash. Even a week of gains doesn't tell you much about the next month.

The index tells you what happened. It says nothing reliable about what's next, and it tells you nothing about whether a particular company is healthy. A strong company can fall on a bad index day; a weak company can rise on a good one.

Technical analysis people will draw lines on the NEPSE chart and make predictions. Some of it might be useful for traders. But if you're a long-term investor, daily index movements are mostly noise.

How I use the index

• As context: is the overall market mood positive or negative right now?
• As a rough benchmark: over several years, has my portfolio done roughly as well as the market, or much worse? If much worse, maybe I should look at a mutual fund instead of picking shares myself.
• Not as a signal to buy or sell anything.

If you want to judge a company, the index won't help. You need to look at the company itself. Here's how I read an annual report without an accounting degree.

General information, not personal financial advice. Rules, rates and fees change, so check with the official source (SEBON, NRB, CDSC, IRD or the Nepal Insurance Authority) before you act. Have a question? Leave it in the comments.

Placing Buy and Sell Orders in TMS Without Costly Mistakes

Your first order on a broker's TMS can feel nerve-wracking. Lots of numbers changing, a clock running, and a button that spends real money. A few basics make it much less stressful.

What an order really is

When you place a buy order, you're saying, "I'll buy this many shares at this price." Someone has to be willing to sell at that price for it to go through. If no one is, your order just sits there. Placing an order doesn't mean it will execute.

A simple example

Say a share last traded at Rs 520. You place a limit buy at Rs 510. If the price drifts down and a seller accepts Rs 510, you get your shares and you didn't overpay. If the price climbs to Rs 540 instead, your order never fills. That's the trade-off with limit orders: you control the price but not whether it happens.

Same thing on the sell side. Set your minimum too high and you might watch the price touch Rs 595 while your order at Rs 600 sits there all day.

My personal checklist before clicking "Buy"

• Is it the right company? Some symbols look very similar.
• Quantity and price: did I add an extra zero?
• Do I have enough collateral or funds loaded?
• Do I know the broker commission and other charges on this trade?

After the trade

Check the confirmation, keep a record (screenshot or download), and complete settlement steps on time. When you sell, that includes the EDIS transfer in Mero Share. Ask your broker exactly how settlement and deadlines work, because missing a step can mean penalties.

And please don't buy something just because a Telegram group says it's "about to fly." That's how most beginners lose money.

General information, not personal financial advice. Rules, rates and fees change, so check with the official source before you act.

Placing Buy and Sell Orders in TMS Without Costly Mistakes

Your first order on a broker's TMS can feel nerve-wracking. Lots of numbers changing, a clock running, and a button that spends real money. I remember checking the quantity field about five times before clicking "Buy" on my first trade.

A few basics make it much less stressful, and they help you avoid the expensive mistakes beginners make.

Primary vs secondary market

When you apply for an IPO, you're buying from the company itself. That's the primary market.

Once the shares are listed on NEPSE, investors trade them with each other. That's the secondary market. The company isn't involved anymore. You're buying from another investor who wants to sell, through brokers and NEPSE's trading system.

That's what TMS is for.

What an order really is

When you place a buy order, you're saying, "I'll buy this many shares at this price." Someone has to be willing to sell at that price for it to go through. If no one is, your order just sits there.

Placing an order doesn't mean it will execute. That catches a lot of beginners off guard.

Understanding the TMS screen

When you look up a share in TMS, you'll typically see:

• LTP (Last Traded Price): the price of the most recent trade
• Change and % change: compared with the previous day's close
• Market depth: a list of buy orders (bids) and sell orders (asks) waiting at different prices, with quantities
• High / low: the day's range so far
• Volume: how many shares have traded today

Market depth is the most useful thing on the screen. If the best sell order is at Rs 525 and the best buy order is at Rs 518, the gap between them (the spread) tells you how liquid the share is. Big spreads and small quantities mean you might struggle to buy or sell at a fair price.

A simple example

Say a share last traded at Rs 520. You place a limit buy at Rs 510.

• If the price drifts down and a seller accepts Rs 510, you get your shares and you didn't overpay.
• If the price climbs to Rs 540 instead, your order never fills.

That's the trade-off with limit orders: you control the price but not whether it happens.

Same thing on the sell side. Set your minimum too high and you might watch the price touch Rs 595 while your order at Rs 600 sits there all day.

There are other order types and settings in TMS, and each one behaves differently. Don't use one until you understand exactly what it does. Ask your broker if you're unsure.

Price limits

NEPSE has daily price bands, so most shares can't move beyond a set percentage up or down in a single day. If you try to place an order outside that range, TMS won't accept it. This is why you sometimes see a share "stuck" at the upper or lower limit with a huge queue of orders and almost no trades.

Check the current rules for the exact limits, as they can change.

My personal checklist before clicking "Buy"

• Is it the right company? Some symbols look very similar, and the same group may have multiple companies listed. One wrong letter and you've bought a different share.
• Quantity and price: did I add an extra zero? Buying 1,000 kitta instead of 100 is an expensive typo.
• Do I have enough collateral or funds loaded?
• Do I know the total cost? Broker commission, SEBON fee and DP charge are added to your purchase. On small trades, these can be a noticeable percentage.
• Why am I buying this? If the only answer is "it's going up today" or "someone in a Telegram group said so", I close the app.

Understanding the costs

Every trade has a few charges:

• Broker commission: a percentage of the trade value, usually on a sliding scale (smaller percentage for bigger trades)
• SEBON fee: a small regulatory fee
• DP charge: a fixed amount per company when shares are transferred
• Capital gains tax: when you sell at a profit. The rate for individuals depends on how long you held the shares. Holding longer has typically meant a lower rate.

Get the current fee schedule from your broker. Because of the fixed DP charge, buying a tiny quantity like 5 or 10 kitta of a cheap share can mean the fees eat a big chunk of any gain.

After the trade: settlement

A trade on TMS isn't fully finished when it executes. There's a settlement period of a couple of working days, during which:

• If you bought: you pay the full amount to your broker (if not already covered by collateral). The shares then arrive in your Demat.
• If you sold: you need to do EDIS in Mero Share, authorising the transfer of shares from your Demat. Then the money (minus fees and tax) is paid to you.

Missing the EDIS deadline or not paying on time can mean penalties, or your trade being closed out. Ask your broker exactly how settlement and deadlines work, and set a phone reminder.

Also check the confirmation and keep records. Screenshot or download your contract notes. You'll need them for tax and if anything goes wrong.

Cancelling or modifying orders

If your order hasn't executed yet, you can usually cancel or modify it in TMS. Once it's executed, it's done. There's no "undo".

Partially filled orders are common. You wanted 200 kitta, 80 got filled, 120 are still waiting. Keep an eye on your order book.

Beginner habits that save money

• Start small. Make your first few trades tiny, just to learn the process.
• Don't chase. If a share is up sharply and you missed it, let it go. Chasing usually means buying near the top.
• Avoid the first and last minutes if you're nervous. Prices can jump around more then.
• Keep a trade journal. Write down why you bought and what would make you sell. Review it later. You'll learn more from this than from any YouTube video.
• Don't trade on rumours. "Bonus coming next week!" posts are often wrong, and sometimes deliberately spread by people looking to sell.

Protect your account

Never share your TMS password or OTP. Don't give anyone remote access to your phone or computer "to help you trade". If something looks wrong, like trades you didn't place, call your broker immediately using the number on their official website.

And please don't buy something just because a Telegram group says it's "about to fly". That's how most beginners lose money. Before buying, try at least reading the company's annual report and checking its EPS and P/E.

General information, not personal financial advice. Rules, rates and fees change, so check with the official source (SEBON, NRB, CDSC, IRD or the Nepal Insurance Authority) before you act. Have a question? Leave it in the comments.

IPOs in Nepal: What I Check Before Hitting "Apply"

In Nepal, applying for IPOs is almost a national hobby. A new issue opens, the family WhatsApp group lights up, and everyone applies for 10 kitta on Mero Share without really knowing what the company does. Some families apply in five or six names.

I get it. It's cheap (Rs 1,000 for 10 kitta at Rs 100 each), it's easy, and for years IPO shares often listed well above Rs 100. Getting an allotment felt like winning a small lottery.

But that habit has taught many people the wrong lesson: that IPOs are free money. They're not. Here's how I think about them.

First, how IPOs work in Nepal

An IPO (Initial Public Offering) is when a company sells shares to the general public for the first time. The process usually goes like this:

1. The company gets approval from SEBON (Securities Board of Nepal) and publishes a prospectus (offer document).
2. An issue manager handles the process and announces the opening and closing dates.
3. You apply through Mero Share (using ASBA). The amount gets blocked in your bank account.
4. If the issue is oversubscribed, which popular ones always are, allotment is done by lottery. Lucky applicants usually get the minimum 10 kitta.
5. Unsuccessful applicants get their blocked amount released.
6. After allotment, the shares are credited to Demat accounts and the company eventually gets listed on NEPSE, where trading begins.

There are also reserved quotas in many issues, for example for locals in project-affected areas (common in hydropower), employees, mutual funds, and Nepalis working abroad. Check the prospectus to see whether you're eligible for any of them.

Things worth remembering

• Applying doesn't mean you'll get shares. Popular issues are oversubscribed many times over, and most applicants get nothing.
• Getting shares doesn't mean profit. Some IPOs have traded below their issue price after listing, and some have stayed there for a long time.
• Your money is blocked in your bank account until allotment is done, so don't apply with money you need that week.
• Past IPO gains don't predict future ones. The days when almost every IPO doubled on listing were tied to specific market conditions. Those conditions change.

What I actually read in the prospectus

The offer document is long, often more than a hundred pages, but you don't need to read every page. I look for:

• What the company does and how it makes money. Can I explain it in two sentences?
• What it will do with the money it raises. Building something new? Paying off loans? Something vague?
• Recent financials. Is it profitable? Is revenue growing? How much debt does it carry? Are the numbers audited?
• Net worth per share. How does it compare with the Rs 100 you're paying?
• The "risk factors" section, which most people skip. The company is legally required to tell you what could go wrong. Read it.
• Who the promoters are, and what their track record looks like.
• The credit rating, if one is given. It's not a guarantee, but it's one more data point.
• Lock-in periods for promoter shares. When those lock-ins end, a lot of shares can hit the market.

Extra questions for hydropower IPOs

Hydropower makes up a big share of IPOs in Nepal, so I've got a few extra questions just for them:

• Is the project actually generating electricity yet, or still under construction?
• If under construction, how much is done? Have there been delays or cost overruns?
• Is there a power purchase agreement (PPA) with NEA? On what terms?
• Is the transmission line ready, or is the project waiting for one?
• How much debt does the project carry relative to its equity?
• Has the area been affected by floods or landslides?

A project that's years away from generating and has already gone over budget is a very different investment from one that's been producing for three years.

Apply within your own plan

Even a 10-kitta application is still buying part of a company. Ask yourself:

• Would I buy this company's shares at a fair price after listing? If not, why am I applying?
• If I get allotted and the price falls below Rs 100, would I hold or sell?
• How many companies in this sector do I already own? (See my post on diversification.)

It's perfectly fine to skip IPOs you don't like. You don't have to apply for every single one.

After allotment: don't forget

• Check the result on Mero Share or the issue manager's website.
• Once the shares are listed, the first days of trading can be very volatile. Prices can rise for several days in a row and then fall sharply.
• If you sell, remember broker commission, capital gains tax and EDIS in Mero Share. My post on placing orders in TMS covers this.
• Keep a record of your purchase price (Rs 100 per share for a standard IPO) for tax calculation later.

Red flags

Walk away if you see any of these:

• Anyone promising a "guaranteed allotment" for a fee. Allotment is by lottery. Nobody can guarantee it.
• Anyone asking for your Mero Share password to "apply for you".
• Anyone telling you to take a loan to apply in multiple family members' names.
• Fake IPO announcements circulating on social media. Always check the SEBON website or a known issue manager.
• Links sent by unknown people claiming to be a "new IPO application portal".

Bottom line

IPOs can be a good way to get into solid companies at a fair price. But applying for an IPO is buying part of a company, so it deserves the same thought as any other share purchase. Read a little, understand what you're buying, and apply because you like the business, not because the WhatsApp group said so.

General information, not personal financial advice. Rules, rates and fees change, so check with the official source (SEBON, NRB, CDSC, IRD or the Nepal Insurance Authority) before you act. Have a question? Leave it in the comments.

IPOs in Nepal: What I Check Before Hitting "Apply"

In Nepal, applying for IPOs is almost a national hobby. A new issue opens, the family WhatsApp group lights up, and everyone applies for 10 kitta on Mero Share without really knowing what the company does.

I get it. It's cheap, it's easy, and for years IPO shares often listed well above Rs 100. But that habit has taught many people the wrong lesson.

Things worth remembering

• Applying doesn't mean you'll get shares. Popular issues are oversubscribed many times over, and most applicants get nothing.
• Getting shares doesn't mean profit. Some IPOs have traded below their issue price after listing.
• Your money is blocked in your bank account until allotment is done, so don't apply with money you need that week.

What I actually read

The offer document (prospectus) is long, but you don't need to read every page. I look for:

• What the company does and how it makes money
• What it will do with the money it raises
• Its recent financials. Is it profitable? Is debt manageable?
• The "risk factors" section, which most people skip
• Who the promoters are

For a hydropower IPO, I also want to know if the project is actually generating yet, or still under construction.

Red flags

Anyone promising a "guaranteed allotment" for a fee. Anyone asking for your Mero Share password to apply for you. Anyone telling you to take a loan to apply in multiple family members' names. Walk away.

Applying for an IPO is buying part of a company, so it deserves the same thought as any other share purchase.

General information, not personal financial advice. Rules, rates and fees change, so check with the official source before you act.

Demat, Mero Share and Broker Account: Which One Does What?

When I first wanted to buy shares, someone told me, "Just open Demat and Mero Share, and get a broker." I nodded like I understood. I didn't. I thought they were three names for the same thing.

If you're in the same spot, here's the plain version, plus the steps to get set up and the mistakes to avoid.

The short answer

Demat holds your shares. Mero Share lets you see them and apply for IPOs. The broker lets you buy and sell on NEPSE.

Now the longer version.

Demat account: your locker

Shares in Nepal are held electronically, not as paper certificates. (Older investors may still have physical certificates that need to be converted, or "dematerialised", which is where the name comes from.)

A Demat account is where your shares sit. You open it through a Depository Participant (DP). Most banks have a capital company that acts as a DP, and many brokers do too.

When your Demat is opened, you get a 16-digit BOID (Beneficial Owner ID). This number is important. You'll use it for IPO applications, transfers and almost everything else. Write it down somewhere safe.

Think of it like this: CDSC (CDS and Clearing Ltd.) runs the central vault. Your DP gives you a locker in that vault. Your BOID is your locker number.

Mero Share: your window into the locker

Mero Share is the online service run by CDSC. Through it you can:

• See what shares are in your Demat
• Apply for IPOs, FPOs and right shares
• Check IPO allotment results
• Do EDIS, the step that authorises transfer of shares after you sell them
• Check your transaction history
• Calculate your average purchase cost for tax purposes

You usually activate Mero Share through the same DP where you opened your Demat. There's a small yearly fee for both, typically paid automatically.

For IPOs, Mero Share works together with your bank account through a system called ASBA. When you apply, the money is blocked (not taken) in your bank account. If you get shares, the amount is deducted. If you don't, the block is released. You'll need a CRN (Customer Reference Number) from your bank to link it.

Broker account: how you buy and sell after listing

Once a company is listed on NEPSE, you can't buy its shares through Mero Share. You buy and sell them through a licensed stockbroker, a member of NEPSE.

When you open a broker account, you get:

• A client code
• A TMS (Trade Management System) login: the online platform where you place buy and sell orders yourself

You'll load funds or collateral into TMS before buying, and your broker charges a commission on each trade. There are also small regulatory fees and a DP charge when shares move. Ask your broker for their current fee table before you start.

You can have accounts with more than one broker, but most people do fine with one.

Which accounts do you actually need?

• Only want to apply for IPOs? Demat + Mero Share + a bank account with a CRN.
• Want to buy and sell listed shares too? All of the above + a broker account with TMS.
• Want to invest in open-ended mutual funds? Often just Demat + the fund manager's own process, though it varies.

Getting set up: what you'll typically need

Requirements change, so check with your DP or broker, but generally:

• Citizenship certificate (or passport for some cases)
• Recent passport-size photos
• Bank account details (and often a cancelled cheque or bank statement)
• PAN number (needed for many brokers, and increasingly important for tax)
• KYC forms with your address, contact details and nominee
• For minors: the guardian's documents and the child's birth certificate

Many banks and brokers now let you do most of this online with video KYC. Some still need a branch visit. The whole process usually takes a few days.

Add a nominee. Many people skip this. If something happens to you, a nominee makes it much easier for your family to claim the shares.

Order of steps for a beginner

1. Make sure your bank account is active and in your name.
2. Open a Demat account with a DP and get your BOID.
3. Activate Mero Share and set a strong password.
4. Get your CRN from your bank and link the bank account in Mero Share.
5. When you're ready to trade listed shares, open a broker account and get TMS access.

Common mistakes I see

• Different names or details across accounts. If your name is spelled differently in your bank, Demat and broker records, things will fail. Make sure they match your citizenship exactly.
• Forgetting EDIS after selling. If you sell shares through TMS, you need to authorise the transfer in Mero Share within the deadline. Missing it can lead to penalties.
• Letting accounts expire. Demat and Mero Share need yearly renewal. Keep enough balance in the linked bank account.
• Old information. A TikTok or YouTube video from 2022 might show steps or fees that have since changed. Check with your DP or broker directly.

Please protect your logins

Scammers love Mero Share and TMS accounts. Once someone has your login, they can sell your shares or apply for things in your name.

• Never share your password, PIN or OTP with anyone, including a "helpful" agent on Facebook, a cousin who says he'll apply for IPOs for you, or a caller claiming to be from CDSC.
• Use only the official Mero Share website and app, and your broker's official TMS link. Fake lookalike websites exist.
• Use a different password for Mero Share, TMS and your email.
• Log out on shared computers, and never use cyber café computers for this.

More on this in my post about spotting investment scams.

Once you're set up, the natural next step for most people is their first IPO application. Here's what I check before hitting "Apply".

General information, not personal financial advice. Rules, rates and fees change, so check with the official source (SEBON, NRB, CDSC, IRD or the Nepal Insurance Authority) before you act. Have a question? Leave it in the comments.

Demat, Mero Share and Broker Account: Which One Does What?

When I first wanted to buy shares, someone told me, "Just open Demat and Mero Share, and get a broker." I nodded like I understood. I didn't.

If you're in the same spot, here's the plain version.

Demat account: your locker

This is where your shares are held electronically. You open it through a Depository Participant (DP), usually a bank's capital company or a broker. You'll get a BOID number. Think of it as the locker where your shares sit.

Mero Share: your window into the locker

Mero Share is the online service run by CDSC (CDS and Clearing Ltd.). You use it to see what's in your Demat, apply for IPOs and right shares, check allotment results, and handle things like EDIS when you sell. You usually activate it through the same DP.

Broker account: how you buy and sell after listing

Once a share is listed on NEPSE, you buy and sell it through a licensed broker. Most brokers give you a TMS (online trading) login. This is the "shop" where trades happen.

So in short: Demat holds, Mero Share shows and applies, the broker trades. For IPOs you only need Demat + Mero Share + a bank account. For buying and selling listed shares you also need the broker.

Getting set up

You'll typically need your citizenship, a photo, bank details and KYC forms. Many banks now let you do most of it online. Fees and steps change, so check with your DP or broker directly instead of trusting a TikTok video from 2022.

Please protect your logins

Scammers love Mero Share and TMS accounts. Never share your password, PIN or OTP, not with a "helpful" agent on Facebook and not with a cousin who says he'll apply IPOs for you. Use only the official website and apps.

General information, not personal financial advice. Rules, rates and fees change, so check with the official source before you act.