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The Over-the-Counter (OTC) Market at the Nepal Stock Exchange (NEPSE) serves as a secondary tier for companies that are not listed on the main board, including those that have been de-listed or failed to meet initial listing criteria. OTC Deregistration is the formal regulatory process of removing a company’s securities from this platform. This transition typically occurs when a company successfully upgrades to a full NEPSE Listing, converts from a public to a Private Company, or undergoes a formal Liquidation process.
₨ 100,000.00
The registration of companies on the OTC floor is governed primarily by the NEPSE OTC Market Bye-laws. For many firms, the OTC market is a temporary regulatory “waiting room” designed to provide liquidity to shareholders while the company works toward full compliance or structural change. The process of deregistration is the final legal step in a company’s lifecycle on the exchange. Whether the company is moving toward a primary market debut or exiting the public sphere entirely, a formal de-listing from the OTC is required to terminate its reporting obligations to NEPSE and the Securities Board of Nepal (SEBON).
In accordance with Section 86 of the Securities Act, 2063, regarding the power of the Stock Exchange to de-list or deregister securities, and Section 136 of the Companies Act, 2063, which governs the cancellation of a company’s registration, an entity must satisfy rigorous criteria to exit the OTC platform. A legally sound deregistration requires the company to first pass a Special Resolution at its General Meeting authorizing the exit, followed by obtaining a formal “Cancellation Certificate” from the Office of the Company Registrar (OCR) if the entity is converting to private or liquidating.
Furthermore, the company must settle all outstanding annual OTC fees and transaction charges owed to NEPSE, and in cases of voluntary conversion, the promoters may be legally obligated to provide a fair “Exit Option” or buyback scheme for minority shareholders to protect their investment interests. Failure to finalize this process correctly leaves the company liable for ongoing regulatory fines and can lead to the blacklisting of directors under SEBON’s enforcement guidelines.
