Nepal Rastra Bank has introduced stricter and more transparent regulations governing the purchase, sale, and transfer of founder shares in banks and financial institutions. The central bank issued the revised provisions through amendments to the Unified Directive 2082 for licensed Class “A”, “B”, and “C” financial institutions.

The move comes at a time when concerns over financial governance, ownership transparency, and hidden beneficial ownership in the banking sector have become increasingly important. Under the new framework, individuals or entities acquiring founder shares beyond a specified threshold will now face significantly stronger disclosure requirements.

According to the revised circular, any purchase or transfer of founder shares that results in ownership equivalent to at least 5 percent of a bank’s paid-up capital or exceeds Rs. 2.5 million in value will require submission of extensive ownership and background information. The rule applies whether the ownership threshold is crossed through a single transaction or multiple transactions over time.

The new provisions require the actual beneficial owner of the shares to disclose complete personal and ownership details. This includes full identity information, address, family background, and declaration of the ultimate beneficial ownership structure.

Buyers must also submit self-declarations confirming compliance with prevailing laws and disclose whether they have been involved in any criminal activity, legal dispute, investigation, judicial proceeding, administrative action, or alternative dispute resolution process either in Nepal or abroad. If involved in any such process, they must provide complete details and the current status of the case.

To strengthen financial discipline and integrity checks, the central bank has also made it mandatory for investors to declare whether they have any unpaid government liabilities, taxes, or official dues. Additionally, disclosure of inclusion in any domestic or foreign credit blacklist or financial misconduct list has become compulsory.

The revised regulation further requires investors to disclose any potential conflict of interest with banks and financial institutions. Nepali citizens purchasing founder shares must also declare whether they own assets outside Nepal or hold beneficial ownership rights over foreign assets.

Beyond financial disclosures, investors will need to provide details of their professional background, previous institutional involvement, leadership responsibilities, recognitions, penalties, and evidence of financial conduct and performance history.

The new rules extend beyond individuals. If the shareholder is a company or institution, any beneficial owner holding 15 percent or more—directly, indirectly, individually, jointly, or through a group—must also submit similar disclosures and documentation.

The directive additionally applies to existing board members, chief executive officers, and senior management officials currently serving in banks and financial institutions. Institutions must collect updated information whenever there is a change in ownership or relevant disclosures and submit those updates to the central bank.

Banking analysts believe the tighter regulations could help reduce the risk of opaque capital entering the financial system, improve transparency in ownership structures, and strengthen long-term governance standards across Nepal’s banking sector.

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