Kathmandu: Nepal Life Insurance Company (NLIC) has defied the provision of investment directives issued by the Nepal Insurance Authority. It has been found that NLIC’s board of directors involved in embezzlement of the insurer’s funds for their vested interest.
NLIC has invested NPR 76.4 million to purchase right-shares issued by Nepal Life Capital Limited. Nepal Life Capital is the subsidiary of NLIC. NLIC has purchased a total of 764,745 units of right shares at a face value of NPR 100 per share.
Nepal Life Capital had announced the issue and sales of right shares at the ratio of 1:05 for its promoters. The Board of Directors has invested 76.64 lakh 74 thousand 500 rupees to purchase 50% right shares of Nepal Life Capital without taking the prior approval of the authority. Nepal Life has 51 percent stake in the Capital.
According to the provisions of the Life Insurance Investment Directive 2079 (Second Amendment) the insurer must obtain pre-approval from the Authority before making any additional investment in its subsidiary company.
According to Sushil Dev Subedi, the spokesperson of Nepal Insurance Authority, Nepal Life Insurance has not obtained any approval for further capital infusion to Nepal Life Capital Limited. He has informed insurancekhabar that clarification has been sought from the insurer.
The summary of the explanation given by Nepal Life to the Authority reads as follows, “The investment was made prior to the pre-approval from Nepal Insurance Authority to meet the deadline of submission of application for right shares purchase.
NLIC had applied to the Authority on 17th Asar, 2081 just nine days prior to the investment deadline. Interestingly, the Capital had announced the issue and sales of right-shares on 25th of Jestha 2081, almost one month prior to the deadline.
Development of NLIC’s investment for Right-shares:
1st Paush 2080: The 92nd meeting of BODs of Nepal Life Capital proposed to issue right shares at the ratio of 1:05.
24th of Paush 2080: The 10th AGM of the Capital approves the resolution to issue of 50% rights shares.
25th Jestha 2081: Public notice of the issue and sales of rights shares at the ratio of 1:0.5
Asar 17, 2081: NLIC submits application to the Nepal Insurance Authority to purchase right shares
Asar 25, 2081: NLIC makes payment to the Capital for right-shares purchase without receive prior approval from the regulatory authority.
Asar 30, 2081: The meeting of BODs of the Capital allots right-shares to the applicants.
Nepal Life’s board of directors and management have repeatedly disobeyed the instructions of the authority. Contrary to the instructions of the authority, the board of directors has implemented the employees bylaws. Even in the Board of Directors, the promoter shareholder illegally represents as a public shareholder.
