Share allotment in Nepal refers to the process of distributing shares to investors who have applied for an Initial Public Offering (IPO) or Further Public Offering (FPO). Understanding this process is crucial for anyone looking to invest in the Nepali stock market through NEPSE (Nepal Stock Exchange).
What is Share Allotment?
Share allotment is the final step in the IPO subscription process where companies distribute shares to successful applicants. After the IPO application period closes, the company and its issue manager determine which investors receive shares based on the subscription rate and allotment criteria.
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| Share Allotment in Nepal |
How Does Share Allotment Work in Nepal?
1. Application Process
Investors apply for IPO shares through:
• Meroshare (most common online platform)
• C-ASBA (Centralized Application Supported by Blocked Amount)
• Authorized broker offices
2. Subscription Scenarios
Undersubscribed IPO: When applications are less than available shares, all applicants receive their requested allocation (minimum 10 shares).
Oversubscribed IPO: When demand exceeds supply, shares are distributed through a lottery system. This is the most common scenario in Nepal's active market.
3. Allotment Methods
Nepal follows a pro-rata and lottery-based system:
• Category A (Mutual Funds): 5% of total shares
• Category B (Institutions): Specific percentage allocated
• Category C (General Public): Remaining shares distributed via lottery
Share Allotment Categories in Nepal
General Public Allotment
Most individual investors fall under this category with these rules:
• Minimum allotment: 10 shares (if selected)
• Maximum application: As specified in the prospectus
• Selection method: Computerized lottery system
Employee Allotment
Company employees often get preferential allotment with:
• Reserved quota (typically 5-10%)
• Higher probability of allocation
• Sometimes at discounted rates
Institutional Investors
Mutual funds, insurance companies, and financial institutions receive separate allocations based on regulatory requirements.
How to Check Share Allotment Result
Online Methods
1. Meroshare Portal
• Visit www.meroshare.com
• Login with your credentials
• Navigate to "IPO Result" or "Allotment Status"
• View your allotment details
2. Company Website Most companies publish allotment results on their official websites within 2-3 days after the lottery.
3. SEBON Website Securities Board of Nepal (SEBON) publishes official results at www.sebon.gov.np
4. Mobile Apps Several stock market apps provide instant allotment notifications and results.
Share Allotment Timeline in Nepal
• IPO Opening: Day 1
• IPO Closing: Day 3-7 (typically 3 days)
• Allotment Process: Day 8-10
• Result Publication: Day 11-13
• Share Crediting: Day 14-18
• Trading Commencement: Day 20-30
What Happens After Share Allotment?
If You Get Allotted
1. Shares are credited to your DEMAT account
2. Purchase amount is debited from your linked bank account
3. Excess amount (if any) is refunded
4. You can hold or trade shares on NEPSE once credited
If You Don't Get Allotted
1. Full application amount is unblocked/refunded
2. No charges for unsuccessful applications
3. You can apply for the next available IPO
Tips to Increase Your Chances of Allotment
1. Apply for Less Competitive IPOs - Research subscription rates from previous IPOs
2. Apply Early - Ensures your application is processed without technical issues
3. Use Multiple DEMAT Accounts - Family members can apply separately (legally)
4. Monitor Market Sentiment - Apply during market corrections for better odds
5. Understand Company Fundamentals - Focus on quality companies for long-term returns
Common Issues in Share Allotment Process
Technical Problems
• Meroshare login issues during peak traffic
• Bank blocking failures due to insufficient balance
• Application rejection from incomplete details
Solutions
• Complete all KYC requirements in advance
• Verify bank account linking with your broker
• Apply during off-peak hours
• Keep digital copies of all documents
Regulatory Framework
Share allotment in Nepal is regulated by:
• SEBON (Securities Board of Nepal): Primary regulatory authority
• Nepal Stock Exchange (NEPSE): Trading platform oversight
• Companies Act: Corporate governance framework
• Issue Management Guidelines: IPO-specific regulations
Understanding Allotment Ratio
Example: If 1,000,000 shares are available and 5,000,000 shares are applied for, the allotment ratio is 1:5 (or 20%). This means statistically 20% of applicants will receive allotment through random lottery.
Tax Implications
Capital Gains Tax
• 5% tax on capital gains for individuals
• 10% tax on capital gains for institutional investors
Dividend Income
• 5% tax on cash dividends
• Stock dividends are generally tax-free
Frequently Asked Questions
Q: How long does share allotment take in Nepal? A: Typically 7-10 working days after the IPO closes.
Q: Can I apply for an IPO without a DEMAT account? A: No, a DEMAT account is mandatory for IPO applications in Nepal.
Q: What is the minimum number of shares I can apply for? A: Usually 10 shares, but check the specific IPO prospectus.
Q: Can I sell shares immediately after allotment? A: No, you must wait until the company is listed on NEPSE and trading begins.
Q: Is there any fee for applying to an IPO? A: No direct application fee, but brokers may have account maintenance charges.
Conclusion
Share allotment in Nepal is a transparent, lottery-based process regulated by SEBON to ensure fair distribution of IPO shares. Understanding the process, timeline, and checking methods helps you navigate the system effectively. Whether you're a first-time investor or experienced trader, the Nepali stock market offers opportunities through this systematic share allotment process.
Ready to invest? Open a DEMAT account with a registered broker, complete your KYC, link your bank account, and start applying for IPOs through Meroshare today.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always conduct your own research and consult with a licensed financial advisor before making investment decisions.
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