KATHMANDU, Jan 20: The Securities Board of Nepal (SEBON) has lowered the mandatory seed capital requirement for mutual funds to as low as five percent from the previous 15 percent, aiming to encourage the launch of more schemes and expand mutual fund participation in the secondary market.
SEBON introduced the change by amending the Collective Investment Schemes (Regulated Fund) Regulations, 2010, adopting a more flexible policy for mutual funds issuing new schemes. Officials said the revised provision is expected to strengthen investor confidence and promote growth in the mutual fund industry.
Seed capital refers to the initial investment made by fund managers to launch a scheme and demonstrate commitment before public subscription. Until now, fund managers were required to invest 15 percent seed capital in every scheme they operated.
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Under the revised provision, the required seed capital has been reduced to either 10 percent or five percent, depending on indicators such as the fund manager’s experience, past performance, asset quality, and compliance record.
According to SEBON, fund managers with more than three years of operational experience and total scheme capital exceeding Rs 1 billion will be required to maintain seed capital of 10 percent. Meanwhile, fund managers operating schemes with total capital of more than Rs 5 billion and whose average net asset value per unit over the past three years exceeds the unit price of newly launched schemes will be required to maintain only five percent seed capital.
SEBON said the move will help improve the performance standards and creditworthiness of scheme managers while strengthening regulatory compliance. The regulator also expects the expansion of mutual fund schemes to enhance demand and liquidity in the country’s secondary market.
At present, 41 closed-end mutual funds are listed on the Nepal Stock Exchange, while 12 open-end schemes are traded directly through respective fund managers. As of mid-December 2025, mutual fund schemes in Nepal held a cumulative investment portfolio of Rs 52.79 billion in listed and unlisted companies.
