NEPSE basics

Promoter shares vs ordinary shares in Nepal.

Two share classes in the same company, often at very different prices. The difference is not quality — it is liquidity, a three-year lock-in, and who is allowed to sell to whom.

5 min read · Updated · 26 August 2026

The short answer

Promoter shares belong to the founders. Ordinary shares belong to the public. Both generally receive the same dividends and bonus shares. Promoter shares carry a three-year lock-in after the IPO and transfer restrictions after that, so they trade at a discount to ordinary shares of the same company.

Who holds what

When a Nepali company is formed, the founders — the promoters — put up the initial capital and take promoter shares. These are the people whose names appear in the company registration.

Later, the company goes public. It issues ordinary shares through an IPO, the public applies through MeroShare, and those shares list on NEPSE and trade freely.

Same company, same business, same dividend per share. The difference is what you are allowed to do with the certificate.

The three-year lock-in

Promoter shares are locked for three years after the IPO. During that window they cannot be sold.

The reason is straightforward and worth respecting: it stops founders raising money from the public and immediately selling out. Their money stays in alongside yours for a defined period.

One detail catches people out. The lock-in may be counted from allotment or from listing — the day the shares actually begin trading. Many hydropower prospectuses specify listing. Since a company can list months after allotment, the two dates are not interchangeable. The SEBON-approved prospectus for that specific company is the document that decides it.

Why the price gap exists

It is common to see the promoter shares of a listed Nepali bank trading well below its ordinary shares on the same day — sometimes a little over half the price.

The company has not changed between the two lines on the screen. What differs is how easily you can get out. A promoter share comes with restrictions on who may buy it and approvals required to transfer it. Anything harder to sell is worth less, in every market in the world.

So the discount is not a bargain in itself. It is the market pricing the restriction. A promoter share is cheaper for the same reason a locked deposit pays more than a current account.

Converting promoter shares to ordinary

After the lock-in, promoter shares can be converted — but the process is deliberate, not automatic:

The company passes a resolution at its general meeting.
It obtains approval from SEBON and NEPSE.
It applies to CDSC to execute the conversion.

There are limits on the proportion of the promoter holding that may be converted, so a company cannot simply move its entire founding stake into public hands at once.

Regulators have also been working on this area — including proposals to give promoter and public shares separate identifiers so the two can never be confused in the settlement system. If you are trading around a conversion, check the current rules rather than relying on an article, including this one.

What this means for you as an ordinary investor

Mostly, it means read the ticker carefully. Promoter lines are usually distinguished in the symbol, and a price that looks surprisingly low for a company you know is often the promoter line rather than an opportunity.

It is also worth knowing when a large block of promoter shares becomes eligible for conversion, because that changes how many shares could reach the open market.

Common mistake to avoid

Assuming a cheap price means a cheap company. Comparing a promoter price against an ordinary price and concluding the stock is undervalued is comparing two different things. Compare like with like — ordinary against ordinary — which is what our compare tool is for.

Pro tip

Before acting on any promoter-share situation, read the company’s prospectus for the lock-in start date, and confirm the current transfer rules with your broker. This is one of the few corners of NEPSE where the rules have been actively changing, and where being a year out of date genuinely costs money.

If you are still getting oriented, start with what NEPSE is and how the market is structured.

Common questions

Answered plainly.

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

Promoter shares belong to the founders and the institutions that set the company up. Ordinary shares, sometimes called public shares, are the ones sold to the public through an IPO and traded freely on NEPSE. Both usually carry the same rights to dividends and bonus shares, but promoter shares are restricted in when and to whom they can be sold, which is why they trade at a lower price.

How long is the lock-in period for promoter shares?

Three years. The lock-in runs from allotment following the IPO, though many prospectuses — hydropower issues in particular — state that it runs from the listing date, meaning the day the shares start trading on NEPSE. The SEBON-approved prospectus for the company is the document that settles which applies.

Why do promoter shares trade cheaper than ordinary shares?

Because they are harder to sell. A buyer of promoter shares inherits the transfer restrictions and the regulatory approvals that come with them, so the market pays less for them. The gap can be large: it is common to see promoter shares change hands at a substantial discount to the ordinary shares of the same company on the same day.

Can promoter shares be converted into ordinary shares?

Yes, but not automatically and not without permission. The company must pass a resolution at its general meeting, obtain approval from SEBON and NEPSE, then apply to CDSC for the conversion. There are also limits on how much of the promoter holding may be converted.

Can an ordinary investor buy promoter shares?

Generally through the auctions and transfers that the company and the regulator approve, rather than by clicking buy on the TMS like an ordinary share. Because the rules and the approvals matter here, this is a case to check the current position with your broker rather than assume.