SEBON’s IPO Crisis Exposed: Promises on Paper, Collapse on Listing

• Adv. Prashanna Devkota

Nepal’s political institutions weren’t the only ones shaken by the Gen-Z uprising of September 2025. When young people gathered in the streets demanding an end to corruption, governance failures, and economic stagnation, the impact rippled far beyond politics. The financial system felt it almost instantly. Trading on the stock market halted again and again, confidence sinked, and the Securities Board of Nepal (SEBON) suddenly found itself under a harsh and uncomfortable spotlight.

While the streets demanded accountability from political leaders, investors found themselves asking another urgent question: How can SEBON promise fairness when it can’t even maintain consistent, transparent regulation?

And the turmoil didn’t end there. Just as the protests were settling, SEBON employees launched a prolonged strike that shut down most of the regulator’s daily work. IPO approvals froze, routine processes stopped, and disclosure reviews gathered dust. With oversight missing in action, uncertainty soared and liquidity on NEPSE thinned out. While the streets demanded accountability from political leaders, investors found themselves asking another urgent question: How can SEBON promise fairness when it can’t even maintain consistent, transparent regulation?

Even before the uprising, trouble was already brewing. SEBON’s IPO pipeline now about 75 companies long had become a source of deep suspicion. Companies were added and removed with little or no explanation. Parliamentary committees began questioning SEBON’s non-transparent decision-making. And new policies, like banning hydropower IPOs before commercial operation, signaled both an acknowledgment of risk and a desperate attempt to regain trust. But beneath these shifting rules lies the real crisis: the quality of the companies trying to go public.

For many young retail investors, this feels like deception they invested based on promises that collapsed the moment trading began.

A worrying pattern has taken hold. Companies approach SEBON with glowing financial projections high net worth, bold earnings forecasts, and beautifully crafted prospectuses. Yet once they list, the story changes overnight. Earnings per share drop sharply, net worth shrinks, and revenue projections evaporate. For many young retail investors, this feels like deception they invested based on promises that collapsed the moment trading began. At the heart of this problem is a harsh loophole as while companies must justify poor performance after listing, there is no real consequence for inflating or fabricating projections before the IPO. This gap has allowed projection-based manipulation to grow unchecked system.

The Gen-Z movement didn’t just expose political failures; it laid bare long-ignored weaknesses in Nepal’s financial oversight. IPO approvals have become political debates, investor groups are openly challenging SEBON’s criteria, and the regulator’s strike showed just how fragile the system really is. When the regulator itself breaks down during a moment of crisis, how can trust survive?

If SEBON hopes to rebuild credibility, decisive reforms are no longer optional they’re urgent. The board must set clear, consistent IPO eligibility standards, enforce penalties for deceptive projections, improve investor education, ensure that institutional shutdowns never ruin the market again, and maintain an open, honest dialogue with lawmakers and industry players. Transparency and cooperation not confusion and conflict are what the market needs.

Nepal is at a turning point. IPOs are more than just opportunities to raise money they’re promises made to the public. When those promises are based on unrealistic projections, when oversight is inconsistent, and when regulators fall silent in moments of instability, the entire system suffers. For SEBON, this is a moment of truth. Either it closes loopholes and restores accountability, or it watches trust erode further.

Young investors the same generation that demanded political change are now demanding honesty and clarity from their regulator. And this time, SEBON cannot afford to ignore them.