What is the difference between promoter shares and ordinary shares in Nepal?

Both have the same Rs 100 face value and carry identical dividend, bonus, rights and voting entitlements per share. The difference is not economic, it is about liquidity and restriction. Promoter shares are the founding owners' stake, subject to lock-in, transfer restrictions and regulatory approval to sell. Ordinary shares are the public float that anyone can buy and sell freely on NEPSE. The promoter group's control comes from holding the majority of shares, not from any special class of share.

Why do promoter shares trade cheaper than ordinary shares?

Because they are hard to sell. Promoter shares face transfer restrictions, need regulatory approval to change hands, sit under lock-in periods, and trade in a thin separate market with few qualified buyers. That illiquidity, plus an old NRB rule that promoter shares list at no more than 50% of the ordinary price, pushes their price well below the freely traded ordinary share. The discount is commonly in the 30% to 50% range.

What is the lock-in period for promoter shares in Nepal?

The standard lock-in is three years from the date of IPO allotment, under Section 38 of the Securities Registration and Issue Regulation, 2073. The shares are flagged in the CDSC depository so any transfer is automatically blocked until the period ends. For banks and insurance companies, converting promoter shares to ordinary shares additionally needs central-bank or regulator approval.

Can promoter shares be converted into ordinary shares?

Yes. For most sectors under the single-ISIN system, promoter shares automatically convert to public shares once the three-year lock-in ends. For banks and insurers, conversion needs central-bank approval and is done in capped batches, often around 10% at a time, while keeping the promoter holding at or above the 51% minimum. Once a share is converted to ordinary, it cannot revert to promoter status.

Do promoter shares get the same dividend as ordinary shares?

Yes. A promoter share and an ordinary share of the same company have the same Rs 100 face value and receive the same cash dividend, bonus shares, and rights issues. They also carry equal voting rights per share. The promoter group's influence over the board comes from owning the majority of total shares, not from any extra right attached to the promoter share itself.

Promoter vs Ordinary Shares in Nepal: The Price Gap

Q: Can a retail investor buy promoter shares on NEPSE?

Generally not the way you buy ordinary shares. Promoter shares change hands mainly through auctions to qualified buyers, with regulatory compliance for bank shares. Since December 2025, a holding of 2% or less of a bank's paid-up capital no longer needs NRB approval to buy or sell, while larger blocks still do, and new promoters must pass a fit-and-proper test. So the door is open a crack for small holdings, but it is not the free market that ordinary shares trade in.

A reader messaged me last winter, convinced he had spotted free money. NICA Asia ordinary shares were trading near Rs 340, but the NICAP line was sitting at Rs 193, the same bank at roughly 57 paisa on the rupee. Same company, same dividends, almost half the price. He wanted to load up. The problem was that he could not buy them, and even if he could, he would have inherited the exact illiquidity that made them cheap in the first place.

Promoter shares are one of the most misunderstood corners of NEPSE. The price gap is real and large, but it is not a discount you can capture the way it looks. Understanding why takes apart what a promoter share actually is, why it trades below the ordinary share, and what it would take to move one.

They are the same share, economically

Start with what does not differ. A promoter share and an ordinary share in the same company have the same Rs 100 face value and the same claim on dividends, bonus shares, rights issues, and votes (Kathmandu Post). If the company declares a 15% cash dividend, both lines receive it. If it issues bonus shares, both get them in proportion. There is no preference, no extra voting weight, no senior claim attached to the promoter share itself.

The promoter group's power comes from how many shares it holds, not from a special class. The founders collectively own the controlling block, so they control the board through ordinary majority voting. That is concentration of ownership, not a privileged share. The "promoter" label is a regulatory and liquidity status, not a different security.

What makes the two lines diverge is everything around the share: who is allowed to buy it, when it can be sold, and how easily.

Why the promoter line trades at a discount

If the rights are identical, why does the market price the promoter share so far below the ordinary one? Because the promoter share is hard to sell, and an asset you cannot easily exit is worth less.

A few mechanics stack up here (ShareSansar):

An old NRB rule held that promoter shares list at no more than 50% of the ordinary share price, anchoring the discount from the start.
Transfers historically needed CIB clearance for the buyer and a 35-day notice offering the shares to existing promoters first.
Every bank promoter-share transaction draws NRB scrutiny and source-of-funds disclosure.
The buyer pool is small, so the separate promoter market is thin and often barely trades.

That last point is the one my reader missed. The NICAP price of Rs 193 against NICA's Rs 340, a gap of about 43% as of mid-June 2026, is not a quote you can hit at will. Promoter lines like NICAP and NABILP often sit frozen at a single price for months because almost nothing trades. The discount and the illiquidity are the same fact seen from two sides. Across well-known pairs the gap clusters in the 30% to 50% range, consistent with that historical 50%-of-ordinary listing cap.

The three-year lock-in

The first restriction a promoter share carries is time. Promoter shares are locked in for three years from the date of IPO allotment, under Section 38 of the Securities Registration and Issue Regulation, 2073 (Niti Partners). The shares are flagged inside the CDSC depository, so any attempt to transfer them before the period ends is automatically blocked.

Under the single-ISIN system, that lock-in now has a clean expiry: for most sectors, the shares automatically convert to public shares at midnight on the three-year anniversary (Kathmandu Post). Banking and insurance companies are the exception: their conversion still needs central-bank approval, so a bank's promoter shares do not free up on a fixed date the way a hydropower company's might. The exact additional waiting period for bank conversions is set by NRB directive and varies, so treat the bank case as "needs regulator sign-off" rather than a fixed number of years.

Conversion and transfer: why retail can't just buy in

Two routes take a promoter share into ordinary hands, and neither looks like the open market.

Conversion turns a promoter share into an ordinary one. For banks, this is done in capped batches, often around 10% at a time, requires AGM and regulator approval, and must keep the promoter holding at or above the 51% minimum that NRB mandates (MeroLagani). The minimum promoter:public ratio for banks is 51:49, down from the old 70:30, which is why NIC Asia and its peers sit close to that split. Once a share converts to ordinary, it cannot go back.

Transfer sells the promoter share as a promoter share, and this is where retail investors hit the wall. Promoter blocks change hands mainly through auctions to qualified buyers. A 2025 example: Nepal Investment Mega Bank auctioned 850,000 promoter units with a minimum bid of Rs 111 per unit and a minimum lot of 125,000 units (ShareSansar). A 125,000-unit minimum lot is not a retail purchase.

The door has opened slightly. Since December 2025, a holder of 2% or less of a bank's paid-up capital no longer needs NRB approval to buy or sell promoter shares, though larger blocks still do, and new promoters must pass a fit-and-proper test (Lagani News). NRB also caps any single person, firm or family at a maximum holding in a bank, and bars cross-holding between banks. So small promoter holdings are now more tradable than they were, but this is still a different, slower, approval-gated market than the one ordinary shares trade in.

Why a promoter would convert or sell

If promoter shares are cheaper and restricted, why give them up? Usually for liquidity or under compulsion. A promoter who converts to ordinary can sell at the higher ordinary price. Sometimes the regulator forces the issue: when NRB barred banks from holding stakes in each other, NIDC's 10% block in Nabil was auctioned to the public and converted to freely tradable ordinary shares, which is why the once-traded NABILP line effectively disappeared (ShareSansar). When a large promoter block converts and hits the public market, it adds to the free float and the available supply of ordinary shares.

This is also the subject of a live fight. In early 2026, CDSC pushed to give every listed company separate ISINs for promoter and public shares, to stop locked-in promoter shares being sold illegally under a single identifier. Independent power producers estimated the move would affect around 870 million shares worth roughly Rs 87 billion across 58 energy companies, and SEBON has taken action against two hydropower companies for pre-lock-in sales (Kathmandu Post). The dispute is unresolved, but it tells you how much value is parked in promoter shares waiting for a clean way to convert.

Tax, and spotting the promoter line

The capital-gains tax on selling a promoter share is the same as any listed share: 5% for individuals holding more than a year, 7.5% for a year or less, withheld at settlement. The full capital-gains-tax-on-shares mechanics apply unchanged. Do not confuse listed promoter shares with shares of an unlisted company, which are taxed at a higher rate.

On NEPSE, the promoter line is easy to spot: it carries a "P" suffix on the ordinary ticker. NABIL becomes NABILP, NIC Asia becomes NICAP. If you see a familiar bank trading at an unfamiliar low price, check the symbol before you get excited; the "P" explains the gap, and the first-share walkthrough covers what you can actually trade.

What you actually need to know

Same rights, different liquidity. A promoter share earns the same dividend and carries the same vote as an ordinary share. It trades 30% to 50% cheaper purely because it is locked, restricted, and hard to sell, not because it is a worse claim on the company.
The discount is not a free lunch. You generally cannot buy promoter shares the way you buy ordinary ones; they move through auctions with large minimum lots and regulatory approval. The 2% small-holding exemption since December 2025 helps at the margin, but the market stays thin.
Conversion is the real event. Promoter shares free up after a three-year lock-in, automatically for most sectors and with central-bank approval for banks. When a big block converts to ordinary, that is what actually changes the float and the price, which is why the 2026 dual-ISIN fight matters.

If you have inherited or hold promoter shares and are trying to work out whether you can sell them, or how to value them honestly, email parjanya57@gmail.com and we can sort out which rules apply to your holding.

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