The foreign-employment IPO quota: how migrant workers get 10% reserved shares in Nepal

A cousin who has been welding in Qatar for three years asked me last Dashain why his friends back home kept applying for IPOs while he sat out, watching from a labour camp. He assumed the share market was closed to anyone holding a foreign labour permit.

It is the opposite. Since late 2022, every company going public in Nepal must hold back a tenth of its shares specifically for people like him. The reserved pool is often less crowded than the one residents fight over, and the whole thing runs from a phone in Doha.

The rule, and where it came from

The reservation traces to the FY 2079/80 government budget, which asked the Securities Board of Nepal (SEBON) to channel remittance into the capital market. SEBON delivered it through the Securities Issuance and Allotment Directive, amended in Kartik 2079 (early November 2022). The wording is direct: a company issuing shares to the public must "allocate 10 percent of the shares to be issued to the public for the Nepali people who are working abroad after obtaining labor approval from the relevant body" (myRepublica, New Business Age).

That 10% sits alongside the other carve-outs every issue makes. The cleanest way to see the full pie is the Himalayan Reinsurance IPO of Mangsir 2080 (December 2023), the largest issue to use the quota:

Allotment group	Units reserved	Share of public issue
Foreign employment	30,00,000	10%
Mutual funds	15,00,000	5%
Company employees	6,00,000	2%
General public	2,49,00,000	83%
Total public issue	3,00,00,000	100%

Source: Investopaper, ShareSansar. The mutual-fund and employee slices vary issue to issue; the foreign-employment 10% does not.

This is a different door from the one residents use. The general IPO lottery and its 10-kitta rule still apply to the 83% general pool. The foreign-employment quota is a separate, smaller pool with the same Rs 100 par mechanics.

Who qualifies

One document decides it: a valid labour work permit (Shram Swikriti) from the Department of Foreign Employment. A student visa or a tourist visa does not make you eligible. The market here is the roughly 700,000 workers who take a labour permit each year, not the diaspora at large.

Banks opening the account also expect:

• Your passport with the work visa stamp.
• Proof of remittance, usually Rs 50,000 or more sent through formal channels in the last six months.
• If you are still in Nepal when you open the account, an airline ticket showing imminent departure.

The remittance condition is the one that catches people. Money carried by hand or sent through hundi leaves no bank trail, so the account that lets you apply is the same remittance savings account you should be using to send money home anyway. One habit unlocks two things.

Setting it up from abroad

You need four pieces, and none of them require flying home.

1. An ASBA-enabled remittance savings account in your own name. Several banks open these online; Global IME, for instance, runs the whole flow through its web portal.
2. A Demat account, opened through online or video KYC under the foreign-employment or NRN category. Upload the passport, photo, signature, and labour permit. The Demat costs roughly Rs 50 a year.
3. A CRN (C-ASBA Registration Number) from the bank that holds your account. This links the account to your applications.
4. MeroShare login credentials from CDSC.

Once those exist, applying is identical to the resident flow covered in the first-share TMS walkthrough: open MeroShare, go to My ASBA, pick the issue marked for foreign employment, enter the number of units and your CRN, and submit. The money is blocked, not spent, under ASBA until the allotment runs.

Most rejections come from avoidable mistakes: an expired work permit, no remittance in the prior six months, a lapsed Demat, or the wrong account linked to the CRN. The same Demat and MeroShare errors that lock residents out lock you out from 4,000 km away, where fixing them is slower.

How much, and what you actually get

The floor is 10 units. At the Rs 100 par value most IPOs use, that is Rs 1,000. A premium-priced issue costs more per unit: Himalayan Reinsurance at Rs 206 needed Rs 2,060 for the minimum application (par Rs 100 plus a Rs 106 premium).

The maximum is set per issue. Himalayan Reinsurance let foreign-employment applicants ask for up to 300,000 units; a smaller hydropower issue might cap it at 20,000. Applying for the maximum does not mean receiving it.

Allotment is a hybrid: applicants up to a threshold get units more or less as applied, and those above it enter a lottery for extra units. In Himalayan Reinsurance, everyone who applied got between 10 and 40 units; of the 96,538 eligible for extra units, 29,021 won an additional 10 in the lottery. Whatever is not allotted is unblocked back into your account under ASBA, so the worst case is your money sat frozen for a couple of weeks.

Is it actually less crowded?

Sometimes sharply so. Two patterns show up.

When the company is large and well-known, the quota gets mobbed. Himalayan Reinsurance drew 34,211 foreign-employment applicants chasing 45.8 lakh units against 30 lakh reserved — a record at the time, beating the previous high of 30,348 applicants. That one went to a lottery like any popular issue.

But the typical issue is a small hydropower or minerals company that few migrant workers have heard of. Names that have run the foreign-employment tranche include Upper Syange Hydropower, Manakamana Engineering Hydropower, Supermai Hydropower, Sonapur Minerals, and Nepal Republic Media. For these, the reserved pool is often under-subscribed, and unsubscribed shares roll into the general public's pool. A worker who applies to the quieter issues, not just the famous ones, raises the odds of an allotment well above what a resident gets in the general scramble.

(The blog could not find a published clause naming the exact reallocation mechanics or a day-count for refunds; both are described consistently across sources but not quotable from the directive itself. Treat the "rolls into general public" behaviour as the reported norm, not a guaranteed rule.)

After you own the shares

The tax treatment is exactly a resident's, which is the point worth knowing before you assume foreign status changes anything:

• Cash dividends: a flat 5% TDS, deducted before the money reaches you, and final. You file nothing further on it.
• Capital gains on listed shares: 7.5% if held more than 365 days, 10% if a year or less from FY 2083/84 (up from 5% and 7.5%), withheld by the broker or CDSC at settlement.

Repatriation of Nepal-source dividends and sale proceeds works through your bank within NRB limits; larger amounts need NRB approval routed via the bank with a tax-clearance. For a broader picture of what an NRN can and cannot move in and out, the NRN investing guide covers the boundaries, though the foreign-employment quota is the simplest entry of them all because it uses an ordinary resident-style Demat.

What you actually need to know

Three things:

1. The 10% is real and it is yours. Every IPO since Kartik 2079 reserves a tenth of its public shares for workers on a valid labour permit. You do not need to be in Nepal to use it.
2. The setup is the work, not the application. Once the remittance account, Demat, CRN, and MeroShare login exist, applying takes two minutes. Build them before the next issue opens, not during it.
3. Apply widely, not just to the famous issues. The quiet hydropower IPOs are where the foreign-employment pool goes under-subscribed and the odds tilt your way.

A labour permit already costs you years away from home. The reserved quota is one of the few things the system actually hands back. Got an issue you are unsure about, or a setup step that stalled? Email parjanya57@gmail.com.

This post is part of the Nepal Money Basics guide — the investing section.