Kathmandu. The Insurance Board has has announced new provisions regarding share ownership structure for merging companies,
The circular issued on Monday by the Law and Regulation Division of the Board, states that a minimum of 30 percent share of the insurance company to be established after the merger process should be in the owned by public shareholders. So, the promoters can hold maximum of 70 percent of the total issued capital.
The regulatory authority has directed the companies, which have already obtained in-principle consent for the merger/acquisition or are willing to take in-principle consent, to make at least 30 percent share of the total issued capital to the public. The ratio of the insurance fund and the mandatory reserve fund of the insurance company to be established after the merger process should be as prescribed.
If the insurance companies, which have already obtained the in-principle consent for the merger, wish to cancel the merger process, they must submit an application to the Board with the appropriate reasons, including the consent of the Board of Directors and the Joint Merger or Acquisition Committee. If there is a satisfactory reason for the application received in this way, the Board may withdraw the in-principle consent. Due to such provision, now that the insurers under merger process can not cancel the merger unanimously without prior written consent from the Board.