Many investors in Nepal’s stock market are unknowingly paying heavy fines for not transferring their shares after selling them. In some cases, the penalty has even been higher than the profit they made from the sale. This charge can cost up to 20% of the total sale amount.
This penalty is known as a “Closeout Penalty.”
Most investors now buy and sell shares online using the Trading Management System (TMS). After selling shares through TMS, the seller must transfer the shares to the buyer by the next day through the online system (MeroShare). The trade is completed only after the seller transfers the shares. Once transferred, the shares are deducted from the seller’s Demat account and added to the buyer’s account.
If the seller doesn’t transfer the shares, they are fined 20% of the total sale value.
For example, if you sell shares worth Rs 100,000 and fail to transfer them, you will be fined Rs 20,000. Out of that, 25% (Rs 5,000) goes to the government as tax, and 75% (Rs 15,000) goes to the buyer as compensation.
Why It Happens
Many new investors don’t know they need to transfer shares after selling them. They assume it happens automatically. Most closeout penalties occur because sellers, especially IPO sellers, don’t complete the EDIS (Electronic Debit Instruction Slip) process on time.
When you sell shares, your broker sends you a message saying your shares are sold and you need to complete WACC (Weighted Average Cost of Capital) and EDIS in MeroShare. If you don’t do this by the next day, your broker may try to contact you via email or phone. But if your contact number is wrong or you don’t respond, you’ll still face the penalty.
This issue doesn’t affect new investors only; many experienced traders also forget to transfer their shares.
What Is WACC and Why It Matters
WACC (Weighted Average Cost of Capital) determines the average purchase price of your shares.
After selling, your first step is to calculate WACC in MeroShare under “My Purchase Source.”
You’ll see a list of your purchases and can tick the boxes for the shares you’ve sold. You can also edit purchase prices if you got shares through merger, bonus, or right shares (but making false edits is illegal).
After confirming, click “Proceed → Declare → Confirm Update.” This completes your WACC declaration.
Step 2: Declare Holding Period
Next, go to “My Holding” under the same menu.
Here, you’ll see how long you’ve held each share.
If you’ve held shares for more than 1 year (365 days), you pay 5% capital gain tax; if less than 1 year, you pay 7.5%.
Confirm and declare your holding period before proceeding.
Step 3: Complete EDIS (Transfer Shares)
After completing WACC and holding declarations:
Go to “My EDIS” in MeroShare.
Click “Transfer Shares.”
Select all the shares you sold and click “Proceed.”
Then click “Declaration → Submit.”
Once this is done, your shares are successfully transferred to the buyer’s account, and you avoid the 20% closeout penalty.
When EDIS Doesn’t Work
Sometimes EDIS doesn’t work during “book closure” periods (usually 3–7 days). Many investors ignore it, but after book closure ends, EDIS becomes active again, and you must transfer immediately.
If you still don’t, you’ll be fined.
In rare cases, technical problems with MeroShare may delay transfers. In those cases, brokers and CDSC usually provide some flexibility.
Also Read:
What is TMS? NEPSE TMS Login URL and Step-by-Step Guide to Buy and Sell Shares Online
Which Nepali Banks Don’t Charge ASBA Fees? Updated C-ASBA Charges 2025
Who Owns Nepal’s Banks? Major Shareholders and Ownership of Nepali Commercial Banks