Kathmandu: The current Fiscal Year 2077/78 is coming to an end within three days. But so far not a single life insurance company has been able to hold a general meeting of the last FY 2076/77. A public company must hold it’s AGM within six months of the completion of the FY.
Furthermore, interestingly even five companies have yet to hold the AGM of the FY 2075/76. Asian Life Insurance, Met Life, Gurans Life, Rastriya Bima Sanstha and Sun Nepal Life are lagging behind to hold a AGM of FY 75/76.The state owned Rastriya Beema Sansthan has not been yet published its audited financial report for more than a decade. IME Life is holding its annual general meeting for the fiscal year 2075/76 on July 15.
This situation has arisen due to the inability of Beema Samiti to regulate the insurance companies strictly. Some companies say that AGM was delayed due to the Beema Samiti’s inability to facilitate in the financial audit. Some insurers argue that the financial report was delayed due to Covid19 and delay in actuarial valuation. But the companies have yet to hold the AGM of FY 75/76.It has raised questions on the corporate governance of these companies.
The AGM has not been held for more than 10 years due to internal disputes of Rastriya Beema Sansthan. Despite facilitations from the side of the regulatory authority Beema Samiti, the institution has not been able to prepare the audit as it has not been able to procure some of the required documents. Some time ago, the Ministry of Finance had instructed the institution to prepare an audit report as soon as possible and resolve the dispute. It has been two or three years since the institute said that the entire audit will be completed within a short time.
The companies were in a dilemma when the regulatory authority implemented the provision of 100 percent provisioning for futures bonus from last FY. Recently, it has facilitated the insurers to submit a plan for future bonuses to be arranged within the next five years. Samiti has also given instructions for 100 percent provisioning can be done within the next five years.
Many well-known insurers have not been able to fit in the sensitive index of NEPSE as the AGM was not held on time. If the AGM cannot be held as per the rules, then good governance of the company is questioned. On the other hand, shareholders cannot get dividends on time. Similarly, the bonus rate to be received by the insured cannot be determined.