What is Closeout Fine in NEPSE? How to Avoid it?

what is closeout fine

Many newcomers in the stock market do not know about closeout fine. During the first 6 months of FY 78/79, the following stat was recorded regarding closeout. 

  • Total transaction unit – 1,85,31,67,269 Units
  • Total amount – Rs. 8,80,18,94,00,000 
  • Closeout Transaction –  95,75,568 Times
  • Closeout fine – Rs. 7,39,38,000

So, in this article, we are going to clear your answer regarding the closeout fine in Nepse. we also tell you how to avoid closeout in stock transactions. 

What is closeout in Nepse?

When you sell shares but you do not transfer shares within the settlement time (T+1 i.e within 24 hours) then it’s called closeout. After selling shares, it is mandatory to transfer the share from your Demat account to the buyer. Following are the reason for the closeout.

  1. Forget to transfer share
  2. Sell shares that you do not have in your Demat account
  3. Sell more share than your DP balance

Note – DP balance is the total number of shares in the Demat account. If your DP balance in TMS and Mero Share balance is different, then you have to consider Mero Share balance is a valid one. 

DP Balance
TMS > DP Holding

How to transfer shares? 

After selling shares in the secondary market, there are two ways you can transfer your share. 

  1. EDIS
  2. DIS

Electronic Debit Instruction Slip (EDIS) is a way of transferring share online through the Mero Share system. You can perform my purchase source, calculate holding, and transfer share from the EDIS option.

Debit Instruction Slip (DIS) is another method you can transfer your share. You can submit a slip to your broker requesting to transfer your share to the buyer. In this case, you have to be physically present at the broker’s office to submit your slip. If you do not have a Mero Share account, then you can transfer share manually through a broker.

How much is closeout fine?

If you are penalized closeout, you have to pay 20% of the total share transaction as a compensation fee. That 20% will be given to share buyers. Out of 20%, amount government takes 25% as windfall gain tax. Only 75% of the amount will be received by the buyer.

How to pay the closeout fine?

The best option is to avoid closeout as much as possible. But if in case you get closeout then you have to pay it at any cost. There are many ways you can pay a closeout fine. 

  1. Deposit the amount in the broker’s account physically.
  2. Transfer the money to the broker’s account through mBanking, ConnectIPS.
  3. Directly load the amount through collateral.

How is closeout fine calculated in Nepal?

Closeout fine is calculated on the basis of the total share amount. The buyer receives the fine amount. For example, if your total transaction amount is 10,000. Then the seller has to pay 2000 (20% of 10,000) as a closeout fine. And out of 2000, buyers have to pay 500 (25% of 2000) as windfall gain tax and keep 1500. 

How to avoid closeout fine?

In order to avoid closeout, you have to be careful about transferring the share within 24 hrs. Once you sell the shares, you will receive the SMS and email. You have to proceed the transferring process immediately after you get the SMS.

Just follow the following steps.

  1. Check your balance (total number of shares) in Mero Share before placing sell order
  2. Make sure you type correct scrip while selling
  3. Transfer the share on the same day of selling
  4. If any issue occurs during WACC, My Holding, EDIS. Immediately contact your broker.
  5. Submit DIS to your broker

Other Tips

 
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