Old paper share certificates in Nepal: how to dematerialise them and recover stranded bonus shares and dividends

An uncle in Lalitpur keeps a plastic folder in the steel almirah. Inside: share certificates with his name typed on them, some from a bank whose name has since changed twice, a finance company that merged away, a hydropower allotment from before anyone in the family had heard of Mero Share. He has not sold any of it because, in his words, "they said paper doesn't work anymore."

Paper does work. It proves ownership, and it entitles him to every bonus share and dividend those companies declared. What it cannot do since Magh 2072 is trade. The fix is a form and about ten working days, and the folder is often worth more than its owner thinks because of what piled up behind it.

Why paper shares got stuck

Nepal's stock market went demat-only for trading on Magh 1, 2072, mid-January 2016. The Kathmandu Post reported that 170 of 239 listed companies had dematerialised by then, with about 1 billion shares, promoter shares included, still waiting. ShareSansar counted 31 suspended companies on the first day; the Post said SEBON had suspended 69. Either way, from that week the certificate in the almirah could no longer be sold through a broker.

The Securities Central Depository Service Regulation 2067 section 34 is the legal hook: trading on NEPSE is in demat form only. It does not say paper ownership ends. The CDSC FAQ is explicit that you can hold part of a holding physical and part in demat. Only what you trade must be dematerialised.

Plenty of people never made the switch. CDS and Clearing data cited by Onlinekhabar in Mangsir 2081 put the shares still outside demat at about 75 crore kitta. No SEBON or CDSC deadline that would void the remaining paper turned up in any notice I could find, so there is no cliff. There is a slow leak, though: dividends that cannot be paid and drift toward a fund.

The demat process, step by step

The procedure sits in CDSC's own byelaw, the Securities Central Depository Service Byelaw 2068 (Viniyam 22, as amended in 2077), and in the CDSC FAQ.

CDSC states that shareholders pay no charge for dematerialisation; fees apply to the reverse process, turning demat back into paper. A wrong entry in the system can be corrected through CDSC for Rs 100 per amendment. Both FAQs are a few years old, so confirm with your DP before you go. The demat and Mero Share charges post covers the annual fees you will pay once the account exists, and buying your first share covers opening one.

Odd lots can be dematerialised, so a certificate for 37 kitta is fine; selling it afterwards follows the odd-lot rules.

Finding the right registrar

Every listed company appoints a registrar to share transfer (RTA), almost always a bank's capital subsidiary. CDSC publishes the official RTA list with contact details and the number of client companies each one handles: NIBL Ace Capital 34, Global IME Capital 33, Prabhu Capital 31, Laxmi Sunrise Capital and NMB Capital 21 each, Muktinath Capital 20, Nabil Investment Banking 16. Nepal Doorsanchar acts as its own RTA.

For merged companies the certificate goes to the successor's registrar. A Kumari Capital notice from August 2026 about lost Kumari Bank certificates lists shares that were originally issued by NCC Bank and Kasthamandap Development Bank, both of which merged into Kumari. The bank merger post covers how swap ratios turned one company's kitta into another's.

Why a DRF gets rejected

The CDSC FAQ lists the usual reasons, and the byelaw's issuer agreement lists the few grounds on which a company may refuse.

One case has no published answer: a name on the certificate that does not match the citizenship certificate, a spelling change or a different name order. I found no CDSC or SEBON procedure for it. Ask the registrar in writing what they will accept before filing, since a refused DRF restarts the clock.

Lost, torn or burnt certificates

Section 33 of the Companies Act 2063 covers this. If a certificate is lost or destroyed, the holder informs the company's registered office. If the request looks reasonable after inquiry, the company issues a duplicate on payment of the duplicate fee set in its articles of association. The Act fixes no fee, so it varies by company.

In practice registrars first publish a 35-day public notice listing the lost certificate numbers and inviting objections. Kumari Capital's August 2026 notice listed eight entries; Nabil Investment Banking published similar ones in November 2025 and July 2026. If nobody objects within 35 days, the duplicate is issued, and you dematerialise it in the normal way. My rough planning figure is two months from notice to demat credit, since the notice alone takes five weeks. A CDSC information officer told Onlinekhabar the same: confirmed loss or destruction goes to the company.

When the holder has died or the shares need to move

Paper shares in a dead parent's name cannot be dematerialised by the parent, so the heir does it through their own DP. The CDSC FAQ (questions 69 and 70) sets the route:

• The heir corresponds with each company the deceased held shares in.
• The heir files a DRF with their own DP, attaching attested copies of the death registration certificate, the deceased's citizenship, the heir's citizenship and the relationship certificate (नाता प्रमाणित).
• Other heirs give their consent (मञ्जुरीनामा) in person.
• The DP sends the request to CDSC with a 35-day public notice; if no claim arrives, the shares move.

For shares already in demat, the transmission post has the details, and the assets-after-death guide covers the relationship certificate. A partition (अंशबण्डा) needs both parties' citizenship and the Malpot or court-passed deed. A court-ordered transfer needs the decision and the court's dispatch number. All of these go as a DRF at the receiving person's DP.

The bonus and right shares you may not have collected

Here is where old folders get interesting. CDSC's FAQ says that when an investor had no demat account, rights and bonus allotments were issued in physical form. They were not forfeited. Companies handled them differently:

• Printed and held for collection. Soaltee Hotel prepared bonus certificates for physical holders in 2020 and postponed distribution during Covid. Agricultural Development Bank asked holders to collect in person with the original certificate and citizenship.
• Credited to demat only. Siddhartha Bank and Chilime, around 2018, credited bonuses to demat accounts and told physical holders to dematerialise to receive them.

Right shares were a form from the company or its RTA, with a subscription deadline. A right issue the holder never subscribed to is gone; the rights, bonus and dividend post explains why. Bonus shares are different because they cost nothing to receive.

So the request to the registrar is wider than "please dematerialise this." Ask for a statement of every bonus allotment, uncollected certificate and dividend recorded against your folio or certificate numbers since the original purchase. A 1,000-kitta holding in a bank that issued a 10% bonus every few years can be a much larger holding on the register than on the paper in the almirah.

The cash dividends, and the five-year clock

Since a SEBON directive in 2016, listed companies deposit cash dividends straight into shareholders' bank accounts. An old certificate holder with no bank account on the register simply does not get paid, and companies told Onlinekhabar in Magh 2081 that this is exactly what blocks their payments to paper holders.

The money waits, but not forever. Section 182(9) of the Companies Act moves a dividend unclaimed for five years from the general meeting's decision into the Investor Protection Fund under Section 183, after a newspaper notice giving at least a month. Reliance Finance's Mangsir 2082 notice gave 30 days and asked holders to demat and update their PAN in the same breath.

Source: Office of the Company Registrar figures reported by Onlinekhabar, Mangsir 2081.

The Act itself sets out no claim-back procedure. The Company Registrar's office told Onlinekhabar that shareholders can claim at any time and the company applies to the fund to return money from what it deposited. The refund line says how often that happens: about 15 paisa back for every Rs 100 sitting there, in a year (my arithmetic). Treat the five-year notice as the real deadline. The unclaimed dividends post has the registrar lookups and the claim documents.

Indian rules that keep turning up

Search results for this topic are mostly Indian, and three of those rules do not apply here:

• India barred transfers of physical shares from April 2019. Nepal's rule is about trading; family, death and court transfers of paper shares still run through a DRF.
• India's 21-day demat timeline and its RTA confirmation-letter step are SEBI rules. Nepal's clock is 7 working days at the DP, 3 at the RTA.
• India issues bonus shares in demat only. CDSC's FAQ says Nepali holders without demat accounts got physical allotments.

What you actually need to know

1. Paper still means ownership, and demat is free and quick. A DRF with the ISIN at your own DP, 7 working days to the registrar, 3 for approval, no DP fee. Lost certificates need a duplicate first, usually after a 35-day notice.
2. Ask the registrar for the whole history, not just the conversion. Bonus shares issued in paper and dividends that could not be paid are recorded against your certificate numbers, and they can be larger than the original holding.
3. The old dividends are the urgent part. Five years after each AGM they move to the Investor Protection Fund, which returned Rs 8.54 lakh of its Rs 57.46 crore in a year. Get a bank account and PAN on the register first.

Sorting out a family folder with a company that has merged twice? Email parjanya57@gmail.com with the company names on the certificates and I'll help trace the current registrar.

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