Kathmandu. LIC India, the parent company of Indian joint ventur, LIC Nepal(LICN), is set to pour an additional IRs. 806.7 million for right share capital.
According to Indian media, the insurer’s board on Tuesday has approved the investment of approximately NRs 1.29 billion.
LIC Nepal’s current paid up capital is Rs 2.65 billion. The company’s paid-up capital will reach Rs 3.92 billion after the addition of investment from founder investor LIC India.
At present, based on the capital provided by the parent company, the company is able to issue 80 percent of its shares with the remaining shareholders. On this basis, the company’s paid up capital will exceed Rs. 4.77 billion.
The Insurance Board of Nepal has made a provision for all life insurers to maintain a minimum paid-up capital of Rs. 5 billion and non-life insurance companies to maintain a minimum paid-up capital of Rs 2.5 billion. The Board has given a deadline of 2079 BS to all the insurance companies to maintain this capital.
Even if LICN decides to bring money from the parent company, its approval will have to be obtained from the Insurance Board. It is seen that the company can raise the prescribed paid-up capital by issuing a few percent bonus shares after the issuance of the right shares. LIC plans to raise capital without merger or acquisition with any other company. While the Insurance Board is preventing other companies from issuing rights shares, LICN has planned to raise capital through rights shares.