Kathmandu: LIC Nepal(LICN) has proposed to issue 88.45 percent right shares to meet the minimum paid up capital requirement as per the directives of the Insurance Board. The meeting of the board of directors held on Bhadra 13, 2079 has decided to issue 88.45 percent right shares.
At present, the decision to issue 88.45 percent right shares of Rs. 2 billion 65 crore 32 lakh rupees of current paid-up capital has been submitted to the Insurance Board and other regulatory bodies for approval. Based on the current paid-up capital, LIC Nepal is about to issue raise Rs. 2 billion 34 crore 68 lakh through rights shares.
While the regulatory authority, Insurance Board, is taking a stand that insurance companies should meet paid-up capital through means other than rights, LIC Nepal has announced the decision to directly issue rights shares. How the regulatory authority will respond to such a proposal of LIC Nepal is now going to be a matter of curiosity for the rest of the insurers.
LIC Nepal will be able to issue rights shares only after the Board approves the proposal and approves it from the upcoming annual general meeting.
According to the new provision, a life insurer must maintain at least Rs. 5 billion paid-up capital by the end of Chaitra 2079.
The decision of the board of directors of LIC India, which owns 55 percent of LIC Nepal, to invest Rs. 806.7 million Indian rupees i.e. 1.29 billion NPR in LIC Nepal against rights shares was announced by the Indian media in the last June.