SEBON Warns Against "Informal" Pre-IPO Deals: No Legal Ground for Public Sales.
The Securities Board of Nepal (SEBON) has cautioned the public against purchasing "Pre-IPO" shares through informal channels like WhatsApp, Facebook, and SMS. The regulator clarified that selling such shares to the general public is illegal, warning that any public offering to more than 50 people requires prior formal approval from the board.
The Securities Board of Nepal (SEBON) has officially intervened following a surge in unauthorized "Pre-IPO" share promotions circulating across social media platforms. In a public notice issued today, the board expressed serious concern over companies soliciting investments via WhatsApp, Viber, and Facebook under the guise of upcoming public issues. SEBON clarified that current securities laws do not recognize the sale of Pre-IPO shares to the general public through such informal means. Under the prevailing legal framework, any company intending to offer shares to more than 50 individuals simultaneously must undergo the formal public issuance process and secure mandatory approval from the regulator. The board emphasized that inviting the public to trade shares without explicit permission is a direct violation of the law. SEBON has urged investors to exercise extreme caution and avoid engaging in these high-risk, unregulated schemes. The notice concludes with a stern warning that both the companies promoting these illegal offerings and the individuals involved in such transactions may face severe legal action. Investors are encouraged to rely only on official SEBON-approved channels for capital market participation to ensure the safety of their investments.
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