Kathmandu: Nepal Re-insurance Company Limited has revised the dividend declared by the company. A meeting of the board of directors held on Tuesday revised the dividend as per the directive of the Insurance Board. Earlier, a total of 20 percent dividend was declared. It proposed to pay 16.5 percent bonus share and 3.5 percent cash dividend of the existing paid up capital. The company has decided to issue 16.5 percent bonus share and 2.5 percent cash dividend of the paid-up capital as per the revised dividend.
Currently, the company’s paid-up capital is Rs. 10 billion. After the proposed bonus share distribution, the company’s paid-up capital will reach Rs. 11.65 billion. The company has been saying that it needs more capital to expand its branch network in India and other countries. On the other hand, the company has been demanding more capital to expand its business and compete with the new reinsurance company.
Despite the company’s demand for additional capital, the major shareholder, Government of Nepal has been reluctant to shoulder its responsibilities. If the Government does not want to invest in the right shares under its obligation, the company has been proposing to bring in another organization or individual but the Government has not made any decision in this regard yet.
The Insurance Board has given permission to Himalayan Reinsurance last May to make it competitive among the companies doing business in reinsurance. The company has been demanding more capital for business expansion as another competitor has already entered the market. Experts have been saying that this capital is not enough if you really want to do business in reinsurance. Rumors that the company would issue bonus shares and issue rights shares had boosted the company’s share price in the secondary market. Meanwhile, the company’s share price had exceeded Rs. 2,000 per share.