Prabhu Insurance Company and Ajod Insurance Company have signed a memorandum of understanding(MoU) for merger. Rajendra Malla, Coordinator of merger committee of Prabhu Insurance, and Chirinjivi Dwa, Coordinator of merger committee of Ajod Insurance Company, signed the agreement in a special program held today.
It becomes the last merger agreement between insurers in current fiscal year 2078/79 as it is the last day today. The insurers have opted for MoU within the current fiscal year to grab the benefits offered by Government for merger and acquisition agreement within current FY.
According to the MoU between the two companies, a swap ratio of 0.70 rupees has been agreed between Prabhu and Ajod. After the merger, the name of the company will be Prabhu Insurance. Sanchit Bajracharya of Prabhu will be the Chief Executive Officer(CEO) of the company after the merger, while Ajad Shrestha will Chair the Board of Directors.
It has been agreed that there will be four directors from Prabhu and three from Ajod Insurance after the merger. It has been agreed to keep the remaining two directors as consultants. At present, Prabhu Insurance’s paid-up capital is Rs. 1.28 billion. Ajod Insurance has Rs. 1 billion .After the swap ratio agreed between the two companies, Ajod Insurance’s Rs 70 crore will be added to the paid up capital of Prabhu Insurance. Based on the swap ratio, the paid-up capital of the integrated company will reach Rs.1.98 billion.
The minimum paid-up capital for non-life insurer is Rs.2.5 billion which must be maintained by the end of Chaitra 2079.
Further, additional share capital can be raised with the distribution of bonus share and issue of right share.