Kathmandu: The promoter shareholders of half dozen of life insurance companies have prevented the public shareholders from fair representation in the board of directors(BODs).
Life insurance companies LIC Nepal, Nepal Life, Gurans Life, Surya Life, Asian Life and Prime Life Insurance have deprived the public shareholders from justifying representation in the BODs. The promoters of these companies have converted their shares and their share holding ratio has been changed from 70:30 to 51:49 percent. But still there is a majority of the promoter group in the BODs of these companies.
Among these companies, there are 3 promoters, 1 public shareholder and 1 independent director in the company with a five-member BODs. Similarly, in the seven-member BODs, there are 4 from the promoters group, 2 from the public shareholders and 1 independent director.
Since, ordinary shareholders invested almost half of the total paid-up capital, there should be more representatives in the BODs compared to the previous shareholding ratio, but the representation in the BODs has been remained as same as it was during the shareholding ratio of 70:30.
In order to benefit from the secondary market, the promoters of insurance companies have converted their shares into public shares. Due to the weakness of the regulatory body, the promoter shareholders of these companies are still hesitant to give more space to the public shareholders for proper representation in the BODs. Securities Exchange Board of Nepal(SEBON) and Insurance Board should pay attention to this matter to protect the interests of common shareholders.